Monday, February 27, 2012

The Promise of Online Advertising

On February 1st, 2012, Facebook filed papers in preparation for an Initial Public Offering, which is expected to take place sometime later this year.  This may be one of the largest IPOs ever, and is expected to result in Facebook achieving a $100 billion market capitalization.  That would give Facebook CEO and founder Mark Zuckerberg a paper wealth of $28 billion.

Facebook is the latest incarnation of an intoxicating vision we've heard about for some time now: customized, behavioral marketing.  This will revolutionize the marketing experience for companies and consumers alike, helping to connect people with the exact products and services they need, for little cost and with no effort.

Who wouldn't like that?

To understand this model, its helpful to remember where we've been.  Let's use television as an example.  It used to be that TV networks would produce a half hour or hour show, possibly about a group of four Vietnam vets who went around blowing up everything in sight in order to solve various problems, all without actually injuring anybody.  The TV networks would pay for the cost of producing and broadcasting the show by selling air time during the broadcast to companies who wished to advertise their products to the viewers of the show.  The nature of the show would help the companies to determine the types of viewers most likely to be watching, and thus to target their advertising effectively.  For the A-Team, one might reasonably expect a high population of males between the ages of 7 and 30.  Adult females?  Not so much.

Sadly, the advertisements we got were mostly for toothpaste and paper towels.  Maybe not the best fit for the target audience.  I'm not entirely sure why that was.  Maybe the lack of sophisticated computers back then limited their ability to figure out that 18 year old guys were not obsessed with decisions over which brand of paper towels to buy.  Maybe the ad execs were all out to lunch.

Today, instead of television, we've got cool, targeted advertising venues like Google, Youtube and Facebook.  Instead of relying on Nielsen to figure out roughly who is watching which show, we have direct access to detailed characteristics about a person.  Facebook not only knows I'm a male over 35, it knows about my taste in books, movies and music.  It can probably make some shrewd guesses about my politics, my interest (or lack thereof) in sports, and my relative socio-economic status.  What a wealth of data!  I can now look forward to sophisticated, targeted advertisements that are aimed directly at me.  It will be like they're reading my mind, figuring out exactly what I want moments before I decide I want it.  Advertisements will be transformed from an annoying distraction into something eagerly anticipated.

It will be cool.  It will be awesome.  It will transform everything.

Just as soon as those ad execs get back from lunch.

Because, for reasons surpassing my understanding, the ads I see are still as mundane and pointless as they've ever been.  I just checked my Facebook page, and found advertisements for:
Visa (I haven't applied for a new card in over 15 years)
Heineken (I don't drink)
An electronic cigarette (I don't smoke)
Restaurants located in Bucks County (I don't know where that is)
And many more.

I don't mean to single out Facebook here.  I recently received a targeted advertisement from an Internet provider (who shall remain nameless, but their initials are AT&T).  The email suggested that I might like to upgrade to a faster internet service.  I don't fault AT&T for emailing me - I'm an existing customer, so it doesn't really count as spam.  Maybe they checked my account logs and noticed that I do max out the bandwidth from time to time.  This was actually a good advertisement, because I would like to have faster internet speed.  This is advertising at it's best - a focused, targeted advertisement, sent directly to somebody who is looking for that service.

There was just one teensy, tiny problem.

AT&T doesn't offer faster internet service in my zip code.

Don't tell me they don't know my zip code, because they use it to mail me a bill each month.  And don't expect me to believe that it takes a human to check on the service availability, because I was able to look it up using the link they provided.  For whatever reason, AT&T simply finds it convenient to advertise their services to people they know they can't deliver them to.

So call me an advertising skeptic.  Don't ask me to believe that sharing my personal data will benefit me.  It's not that I don't like the vision, I do.

It's just that before it can become reality, those ad execs are going to have to come back from a very, very long lunch.

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