If ad tech is not sustainable, what can publishers do?

May 24, 2016
Category: Tech & Tools

This is the third installment of an ongoing series by Melody Kramer looking at ad tech and the future of publishing. In the first, she interviewed Aram Zucker-Scharff about the major issues facing publishers. The second installment examined what happens when publishers don’t own their data. In this article, she talks to researcher Dave Carroll about alternative payment models, rebuilding trust with consumers and bringing more voices into the discussion about ad tech.

Last September, Dave Carroll, an associate professor of media design at The New School’s Parson’s School of Design, began writing about ad tech on Medium.

His first piece compared trackers to fracking wells:

They tunnel deep into a place that they probably shouldn’t go, poisoning the well as they dig deeper toward personalization and retargeting. Consumers know they’re being stalked and most hate it. Those who don’t care so much about privacy are starting to lose their patience with ad tech’s bloat, exposed as technology that’s ill-suited for mobile at scale because it drains batteries and data-plans, among other offenses. It literally sucks. It’s all a ridiculously toxic enterprise to avoid investing in alternatives to the Internet’s original sin: the fallacy that ad banner performance trumps branding.

Subsequent pieces tackled the severity of the situation and what publishers’ future options may be.

After his initial trilogy of pieces was published, Carroll began receiving invites to closed events about adblocking, ad tech and the future of publishing. I talked to Dave about his concerns about the industry, and proposed ways it could be reformed.

When I first started reporting on ad tech, I found it really difficult to understand the space. And I think this was on purpose — it’s purposefully layered to conceal actions. You use a fracking metaphor to talk about the industry. Why fracking?

Yes, learning about ad tech has been a project for me too, because it’s hidden in plain sight/site, just under the surface, planted like a well on a publisher’s page, yet burrows deep into our devices (our property), extracting energy and value into a complex commodities and arbitraged derivatives market. Just like Wall Street, it’s nearly impossible to approach it, with the greatest minds in a generation put to the task of making it that way.

We need a metaphor, as clumsy as they may be, to not only understand what ad tech really is, distinct from advertising and publishing itself, but also to emphasize how this technology appears to be a harmful necessity, like hydrofracking. Gas at the pump is cheap because of fracking’s effects on the global markets. We’re living through a bubblicious content surplus online because ad tech makes it too cheap to automate a revenue share by refining data into the derivatives of impression marketplaces powered by algorithmic trading “desks” despite the high costs of unpriced externalities. Neither economic models seem sustainable. Fracking accelerates carbon extraction and combustion. Ad tech accelerates the erosion of privacy at the expense of journalism. Both can be imagined implicitly as tragedy-of-the-commons problems, that fracking and ad tech are just everyone acting in their best interests, ruining everything for everyone, without a countervailing collective action.

Imagining ad tech as an invasive and unsustainable technology helps us realize, like fracking, it is regulable. States have banned fracking. States could ban ad tech if enough constituents starting to consider the harms and risks to privacy and security, our identities and private property, that consumers increasingly pay for ad tech with their data and batteries as our media migrates to mobile, that it powers fraud and deceptive marketing on an epic scale, and that it pollutes the incentives to create media with its deeply flawed metrics and opaque automation.

In the article where you used the fracking metaphor, you also posed two questions to yourself: What is the “renewable energy” for digital content and advertising? And what new model could disrupt ad tech data fracking and renew content creators’ ability to increase profitability and product control while rebuilding trust with consumers?

As others have pointed out, especially Joe Marchese, the ad impression is a deeply flawed proxy for an abstraction of our attention. The impression is exchanged freely without being coupled to the resource being mined and commoditized, our attention, which is most certainly a finite resource. There are only 24 hours in a day. Yet digital ads are sold on the assumption there is not even a theoretical limit to the possible impressions.

This reminds me of how extracting carbon for combustion without pricing the externalities of climate change (e.g.. a carbon tax) means this commodity is sold on the assumption that there is no theoretical limit to the carbon that can be pumped into the atmosphere. This creates the condition to seek renewable energy. The rapid rise of Tesla exemplifies a market demand for transformative technology is robust.

Advertising could be reformed by any combination of market forces, industry self-regulation, and democratic regulation. The collective action problem, where adversarially symbiotic industries would need to exert restraint, is what all of this hinges upon. We see some efforts from the trade bodies and big players seeking to further monopolize the market. They have this idea that the formats of the ads are causing adblocking and there’s evidence to support that hypothesis. But they aren’t solving the privacy and security issues that are more structural and require a significant disruption or democratic regulation to resolve.

So a “renewable energy” for publishing and advertising would need to form disruptive rethinks that dispense with conventional wisdom that “it can’t be done.” Things like advertisers being accountable to themselves, consumers paying for content, privacy and security being respected, publishers growing a sustainable business and upgrading rather the degrading their user experience. The way a Tesla is upending the auto market. It looks like a normal car from the outside but on the inside it’s fundamentally different. It has a “frunk” and doesn’t need routine oil changes.

I read yesterday that ad blocking may cost U.S. media owners billions of dollars by 2020. Are we at a tipping point? And what are concerns that we should be thinking about beyond dollars?

Ad-blocking saves people money and other trade group research shows plenty of people intend to try it, according to the 2015 DCN Consumer Ad Block Report, which came out last December. We’re at a tipping point because ad-blocking is really starting to impact the affected industries, at least psychologically. The economic impact has so far been vastly overstated, referring to the PageFair/Adobe report that pretty much every adblocking article cites despite being debunked by Alex Kantrowitz of BuzzFeed as defying economics 101. But the tragedy-of-the-commons effect is driving our velocity toward Facebook and Google, who are benefitting the most from the adblocking dynamic.

So I’m worried about monopolization. This is an issue not just for democracy and transparency as we are seeing with the remarkable uproar over Facebook’s suppression allegations via Gizmodo. To me, these reactions to Facebook represent the underlying anxiety we are collectively sublimating with regards to two companies that consume us as much as we consume them.

I’m worried about the way in which ad tech and monopolizing platforms erode our privacy. What does privacy even mean anymore? Is it the right of seclusion or is it the right to be reasonably unobstructed from constructing our own identity — the right to own our own identities? I’ve realized that in the EU and elsewhere in the world, they use entirely different language than in the US. They prefer “data protection” over the word “privacy” because it’s so much more specific and a concept that has been updated for the digital age. There’s a term that a privacy policy cleverly never defines: privacy.

I worry about the way our lives can be unknowingly affected by our online behavior and despite what the industry touts, we don’t have appropriate choices, consent, and control. It’s not really up for discussion. 200 million ad-block users proves that.

Publishers insist that people won’t pay for content, yet people are paying for adblockers. What does that say — and what kinds of payment models should publishers be experimenting with?

I find it irritating that it’s considered incontrovertible evidence that when you ask a group of potential customers if they would pay for something and how much, that settles it. Much of the perception about these ideas of consumers refusing to pay is based on this methodology of consumer sentiment analysis. It’s laughable. The only way to know if people will pay is to offer them an actual product to buy. By asking if people would instead, a business researcher is being lazy and delivering a result someone wants to hear to support a confirmation bias. The conventional wisdom prevailing. Meanwhile, Silicon Valley titans test ideas in the market.

Publishers seem to be thinking that getting into bed with Facebook and Snapchat is innovative because that’s what most users want. I hope they continue to allocate resources to new business model creation. I wish they had a more receptive attitude to new startups in the game such as Blendle and Brave. I’ve tried both and they show tremendous potential to address core underlying structural problems with digital media. But they are currently stymied by legacy publishers failing to recognize a critical collective action opportunity. There aren’t enough publishers currently on Blendle to make it the Netflix of news. Publishers will need to swallow their pride and sign up with Brave’s new device-based user data model to decontaminate the market from ad tech.

Beyond this, I think publishers should experiment with in-browser Apple Pay for microtransactions. The key here is a frictionless UX. Apple has the most credit card numbers of anyone. It should be as easy to buy content as it is to buy and play CandyCrush. I’d like to see digital media experiment with free-to-play mobile/casual game economics. What if premium publishers agreed to support a token pack solution, where users could automatically sprinkle virtual coins onto pages that draw down from a digital wallet replenished with a quick thumbprint scan? Seems to me the transaction overhead is worth the potential velocity of money. In certain ways, the Blendle and Brave models could be hybridized if publishers were clever enough to cooperate.

Speaking of cooperating, I’ve also been thinking a lot about a media platform-coop solution, where content creators would co-own their own platform co-op. It’s possible that readers/users could also become co-owning members into the media platform co-op. The first of its kind has appeared in Greece, but I also like to reference Stocksy United which is a multi-stakeholder owned platform co-op that could rescue the stock photography industry from its race to the bottom powered by venture capital.

You’ve talked a lot about whitelisting as a possible solution. Can you talk about what kinds of public negotiations may take place? How does this affect smaller publishers? What happens when advertisers make it through the whitelisting blockers?

Whitelisting is controversial because it embodies access control. However, observers of the digital media industry know that it is comprised of whitehat publishers and advertisers and blackhat fraudsters and cybercriminals. If there is blacklisting then there must be whitelisting, so it’s an unfortunate mechanic of regulation. The publishing and ad tech industry does not draw attention to the fact that the underlying lists that enable adblockers are crowdsourced documents. They’re about as democratic as you can get. Blocklists are as free and open as Wikipedia and most adblockers are open source software. The status quo likes to depict adblockers as villains but the inconvenient truth is that adblock software makers owe it all to a group of volunteers.

Eyeo GmbH, the company behind the world’s most commonly used adblocker, Adblock Plus, maintains a paid whitelist. Adblock Plus allows so-called “Acceptable Ads” and their trackers by default. Most users don’t realize they aren’t blocking all the ads and trackers despite how Eyeo positions and markets their product. The company is instituting an independent body that will govern the Acceptable Ads policy. Eyeo shared a draft of the committee bylaws with me for input, but I agreed to keep it zipped until it’s fully official. I don’t have a lot of confidence in the idea of Acceptable Ads, whether by Eyeo or Google. It tries to round the corners, when the whole model needs a rethink and a redesign.

Companies like Google, Microsoft, Taboola, and Criteo pay Eyeo for the privilege of complying with the Acceptable Ads policy at scale. That means we don’t eliminate the scourges that caused adblocking: spammy ads from spray-and-pray self-service programmatic, the chumboxes of sponsored links that fuel ad fraud and traffic exchanges, and the creepy ad retargeting that lifts the camouflage on advertising surveillance. There is peer-reviewed academic evidence that Acceptable Ads probably won’t succeed unless it becomes significantly more crowdsourced and democratically regulated than the incumbents would like it to be.

Switching gears for a second: How did you become interested in adblocking?

Katie Benner from The New York Times reached out to me for a comment on the release of Apple iOS 9, which would support content blockers. Suddenly, I had a reputation for being an expert on adblocking to uphold. They more I have learned, the more I have realized how much research and practice is needed.

I was primed for it though. In my early career, I worked at a digital agency from 2000-2007 that designed and built campaigns and that was my early direct encounter with ad tech. Then from 2013-2015 I worked on a startup to serve the publishing industry. I realized how disturbingly easy it is to build things on the web and on apps that track our behavior linked to our personally identifiable information. I also realized how disturbingly easy it is to get code on publisher pages that then reaches hundreds of millions of users in an instant to identify them pseudonymously or by their real name if they do something like connect their social media account. When the startup failed, largely because I couldn’t find investors to back a company that faces legacy media businesses, I felt liberated to shine a light on behaviors, practices, and trends that I think most people are terrified to confront.

It seems like a really small community of people are following this ad blocking debate and an even smaller number of people deciding what’s next. Are those people in news or at technology companies? And if the latter, what does it mean if publishers have outsourced reader engagement and data to technology companies? Have publishers lost control?

It’s true. It’s been fairly easy for me to find and meet the most vocal people, so yes, you’re right. But we’re all White men, though. I’m really glad you’ve been working on this topic. I’ve been asking myself where are the women thinking and speaking about adblocking? The issue affects everyone, so there ought to be a more inclusive set of voices contributing to the shaping of the discourse. I don’t think it’s exclusionary. I think new and underrepresented voices would be warmly welcomed in the discussions. More people just need to decide to care.

The voice of the web consumer has been abstracted into eyeballs and data-driven segmentation of judgmental classifications, and so the most important stakeholder in the debate, the user, is still being ignored for the aggregate percentage point to simplify the issues into a oversimplified chart of biased data presented as fact. Research that has attempted to balance quantitative representations of user sentiment with qualitative data such as verbatim are useful to nuance our thinking.

Publishers are very close to losing control to Facebook and Google almost completely. They’ve gobbled up 85 percent of the ad dollar revenue share. They’ve swallowed up the trusted relationship with users. They’re intent on conning all advertisers into their mythical cult of performance-based advertising that is the basis of surveillance capitalism.

If publishers miss this precious chance to restore trust with their users by being smart on adblocking and reset the terms with web consumers, it’s over. The content bubble surely bursts. Native advertising doesn’t solve much. It will be crucial to see if Facebook engagement continues its falling trend as content producers continue to disappear. Facebook is seeing a drop in sharing. Will user sharing become the mechanic that recalibrates the incentives for media even more completely? It’s probably happening now.

You write that most people don’t understand how Facebook creates personalized ads. What should parents do to protect their kids?

The first challenge for parents will be to set appropriate age limits on getting an account. The percentage of parents who probably lie their own kids onto the platform since they don’t have to prove guardianship would be an appalling statistic to measure. This establishes a mutual deception from the start, so then it’s impossible to assess the surveillance implications of Facebook with much ethical footing.

The second challenge for parents will be to teach their kids about data privacy. It’s like a conversation about sex. Neither the parent nor the kid wants to have it, but who else is going to handle it? But we should, because our kids will teach us about how they will become extraordinarily savvy about managing their identities online. They’ll understand the implications of social media surveillance better than us. So setting up an open channel of discussion and supervision about social media is crucial and parents need so much more support.

The third challenge for parents is remembering to opt their kids out of ads which is designed to be a chore. It’s important to do this to protect their privacy and to protect them from fraud and malware which thrive on tracking on targeting. Even though they’re digital natives, it’s up to parents to instill a defensive posture of being online in their own children, to teach them how we are naked online until we put on some clothes, as a rite of passage.

Are we doomed? Is this like the derivatives market pre-collapse?

I expect a collapse of some kind to occur. The current model is unsustainable. It resembles the credit crash of 2007/2008 because it does appear to be a sub prime market in most respects, as far as I can tell. And most industry insiders I meet seem to agree. In this metaphor, perhaps adblocking rate is a leading indicator like the mortgage default rate.

You attend a lot of industry meetings about adblocking that fall under the Chatham House Rule — which allows people to speak freely but also imposes a privacy policy that protects those who are there. Are there consumers there? Who represents them in these discussions?

I’ve been to a Chatham House Meeting with EFF and Mozilla in attendance. They seem to be the only nonprofits active in the space, advocating for the consumer. Otherwise, maybe just me?

Is ad tech an all or nothing proposition? Is there a high-end or “artisanal” ad tech that people might welcome?

Ad tech is weird in that it’s both massively fragmented and increasingly consolidated, totally distributed yet centralizes the industry into a stubborn dependency. So at the moment, it seems to be an all-or-nothing proposition. Digital ads can’t be bought without tracking being sold programmatically on view-ability and performance rather than old-fashioned placement. Surveillance required to facilitate transactions.

I’ve proposed a new kind of ad tech that would be “artisanal” in that it would be premised on a return to better values and ethics to restore our integrity and the craft of advertising. Seems that this would necessitate publishers endorsing an artisanal adblocker that serves as a functional whitelist to enforce endorsable, trusted, premium ad tech. Given the newspaper association’s legal response to Brave, I’m less optimistic about the industry’s ability to act enlightened.

You’ve written a little about a data-sharing button that would give users more control. But many users aren’t aware of how they’re being tracked, and most don’t read privacy policies? How would publishers incentivize people to use a tool like this?

One of the smartest heads on adblocking is Don Marti, and he advocates that publishers deliberately encourage their users to get tracking protection (not adblockers). He argues that advertising works better without tracking so it’s mostly a matter of getting everyone to kick the habit and live healthier.

The Tradeoff Fallacy by Joseph Turow, Michael Hennessy, and Nora Draper informs how most people approach the exchange of privacy for free content. We know we’re getting screwed, but we’re resigned to it. Therefore, there’s a sublimated anxiety that bubbles up. See adblocking and the freakout over Facebook news suppression. Pew research has also documented how Americans have surprisingly sophisticated understandings of data privacy. I see this research as evidence for an untapped potential to give users more power, not less, and how it would benefit the economy and democracy more broadly, even if Facebook and Google go kicking and screaming about it.

How do you get your news about ad tech? How would you recommend learning more about this?

I have developed a serious Twitter habit since delving into this subject. It’s a time-consuming means to find primary sources and cultivate a trust network but seems to be paying off to me. I try to bridge the gap between the research being produced within industry and within academia. Because this issue is unfolding in real-time and the tech media is unfortunately biased on this topic (they can’t openly critique the house of cards that supplies their paychecks), it’s not easy to find the material I’m looking for, which is giving me the impulse to try and create it. It seems like there’s endless discussion about it sometimes, but I still think it’s not nearly enough.

One final question: If you could start all of this over from scratch, what would you do?

If I could time travel back to when I was a grad student in the late nineties, I might have redirected my early work toward the inherent privacy flaws to the web as it was commercializing. Maybe I could have managed to get into the room where DoubleClick succeeded at getting third-party cookies enshrined as a commercial surveillance infrastructure at the root of all that is corrupt with ad tech. That was a fateful regulatory decision within the W3C that architected pervasive and perniciously promiscuous cookie-sync technology that somehow manages to pay for our news by spying on us.

We would need to have instilled privacy-by-design into the web as it became commercialized in the late 90s. We needed to know how tracking should have been limited and controlled and the interests that fought for a greedy wild west who should have been disregarded in favor of integrity and architectures of trust.

If digital ads were forced to be privacy positive from the start because the technical specification of HTTP and HTML required it, they wouldn’t have been industrialized into ad-spam to feed content farms spewing mass produced media into social feeds farming user data to sell the spam that feeds the content farms to feed the feeds to capture ad budgets capturing precious attention through invasions and interruptions, perversely measured by flawed proxies for abstractions priced in real-time by invisible and automated auctions.

Or I could travel back to 2012 when Microsoft and Mozilla failed to enforce the Do Not Track specification in the browser and capitulated to the debate over opt-in vs. opt out tracking and the semantics of user choice and consent. A time machine might let us change the outcome of that debate and [do not track] and opt-in permission marketing could have prevented the ad fraud and ad blocking problems that plague publishing and advertising today.

I wish I could have advocated for a data sharing button in the toolbar and rescue the discussion of privacy settings out of the browser settings panel that most people never change and prioritize the choice into the core browser user interface: Back, Reload, Bookmark, Data Sharing.