Advertising broke the internet

It is inconceivable that we should allow so great a possibility for service, for news, for entertainment, for education, to be drowned in advertising chatter

This could be a prescient quote from earlier this millennium about the Internet. But in fact it’s a quote by then Secretary of Commerce, later President, Herbert Hoover in 1922 commenting on the fancy new medium of radio.

It didn’t end well for radio, as the few people who still tune in could tell you as they suffer through the average of 16 minutes of ads per hour that commercial stations broadcast today. And, as surely everyone reading this knows, online the ad invasion has been even more insidious.

It resulted not just in pages cluttered with spammy adverts, all clamouring to distract us from the content we came for, but in an epidemic of misinformation on social media that has torn apart communities and culture.

Because, as online publishers and platforms sought to monetise their users, the small amount of money they made from showing advertisements to each person, forced them to try and keep each user onsite longer, and coming back more frequently, leading them to publish spammy content, or reward users who posted clickbait and misinformation.

Today’s Internet is monetised on a quantity, not a quality, basis.

Because of this drive for ad revenue publishers and app developers have designed their very products and editorial policies, not to help people communicate, form communities or develop positive cultures, but to hook users in and not let them go. Hence why we call Facebook, TikTok, Snapchat and similar sites, “walled gardens” — they’re attention traps and in 2021 most of us are stuck in the same few.

Of course, it wasn’t supposed to be like this. The original vision for the web was one of openness and sharing, with the goal of spreading knowledge and understanding globally. Of giving everyone a voice and a chance to build a better life for them, their family and community.

But intentions don’t dictate outcomes when new technologies are involved. Plato noted this way back in 370 B.C. when he (ironically) wrote about how the ‘invention’ of the written word rewired our brains and how we perceive others:

“The parent or inventor of an art is not always the best judge of the use of his own inventions. This invention of yours…is an aid not to memory, but to reminiscence, and you give your disciples not truth, but only the semblance of truth. They will be hearers of many things and will have learned nothing; they will appear to be omniscient and will generally know nothing; they will be tiresome company, having the show of wisdom without the reality.”
– Plato, “Phaedrus” (370 BC)

Again, he could have been talking about social media and sensationalist media’s role in misinforming the public today. Writing turned out to be positive, the Internet still can — if we embrace new technologies with the right attitude and approach.

Advertising is (a necessary) evil

It would be easy to write off advertising entirely, as if the first 468×60 banner advert in 1994 started some inevitable descent into Dante’s fiery ad-fuelled inferno. But this isn’t the case, advertising is an essential tool for monetising digital content, experiences and apps.

The alternative — a world consisting of only paid-for apps and paywalls — would ensure content and apps would just be developed for large groups of, well-off, consumers — massively restricting choice and diversity. Many of the positives of today’s Internet would go along with its negatives.

We can’t throw the baby out with the bathwater, put the genie back in the bottle, or dismantle a global infrastructure built on advertising overnight — if at all. And luckily we don’t need to. What we need to do to fix it, is to understand how the advertising-content ecosystem works today, and build a better solution for it.

First step — know your enemy

The first step is understanding how brand marketers, and their supporting agencies and partners, plan their advertising campaigns — this dictates what technology solutions they turn to.

As a consumer you probably hear a lot about, and even more so experience, targeted advertising — brands seeking out just the right person at the right time for their ad using a plethora of digital signals and invasive cookies. Targeting that pre-Internet media could only do in much more basic ways (the TV show you are watching, magazine you’re reading and so forth).

But that’s only about half of advertising — or more precisely 40% of it. Because there’s “activation” advertising — ads that want you to “click now” and buy or do something in that moment. Then there’s “brand” advertising — ads that want to remind you a brand exists, what it’s for, and ready you to buy it at some point in the future when you’re in the market. The two work hand in hand, and research says you should do 60% of one and 40% of the other.

Field & Binet, “The Long and Short of It” (2013)

This means some of the time advertisers want to reach very specific people, who are primed to buy then and there, and sometimes they want to reach as many people as possible who might be future consumers. The way online advertising is priced it costs more to reach very targeted audiences (per eyeball) than it does to reach very broad ones.

So while the creepy 40% of advertising that targets you specifically might get your notice, it’s the 60% that’s just trying to reach as many people as possible, as cheaply as possible, that’s more responsible for junking up websites and apps. Advertisers will “spray and pray” — buying ads as cheaply as possible to reach as far as possible.

“Your customers are just like your competitors’ customers, & their customers are like yours. This means their buyers are up for grabs. So, target the whole market — all sorts of different people.”
– Byron Sharp, “How Brands Grow” (2012)

The value exchange is broken

The original vision of the Internet valued the idea of disintermediation, cutting out life’s proverbial “middle men”, and allowing individuals to communicate and transact directly — reducing costs and empowering users. But the behind-the-scenes story of the Internet since the 2010s has been of intermediation — putting more technology layers and businesses between individuals. Each taking a cut and birthing many Unicorns in doing so.

And what we know about adding layers into any value chain is, it moves margin from the original creator of content, or purveyor of a product, to others further down the chain and raises costs to the end-user. Nowhere has this happened more than in content publishing — where we see journalism’s value being virtually destroyed by their content being not only given away for free on social networks, but those networks monetising the eyeballs on that content, without any recompense to those who invested in creating it at all.

This is further exacerbated by the development of a number of “marketing technologies” — those which enable advertisers to seek out their ideal audience online and target them with the right ads at the right time. This may happen on the publishers website, ostensibly funding their content creation, but because of the layers, and inefficiencies, in how these technologies work today a publisher receives less than half of the money paid by an advertiser — the rest going to middlemen.

Which isn’t great for advertisers either — quite where one third of their money goes is untraceable and where their ads are displayed, and who they are seen by, is more speculative fiction than fact. In fact, an estimated 30% of ads are seen by bots not humans at all.

So we’re in a lose-lose situation right now, the people who create content aren’t being adequately rewarded for it; and advertisers are wasting money on ads that may not be seen by the right people at best, or seen at all, at worst.

However, while technology may have created this problem, it can also be the solution.

Building the VHS, not the Betamax, solution

But a solution in theory, and solution in practice can be quite different things. History is littered with technologies that are better than their competitors but which failed to be adopted for any number of reasons. In the case of the advertising industry there is massive human and financial capital invested in certain ways of doing things.

Behind the scenes of “ad land”, as it is called, are a small group of billion dollar behemoths with Orwellian (“Omnicom”) or ominous (“Group M”) names who own the vast majority of advertising agencies. These are vertically integrated and own everything from the strategy and creative ideation of advertising, to the production of adverts and the serving of them to end users. It’s their way or the highway.

90% of digital “display” advertising (digital adverts seen on websites and in mobile apps) — worth over £340 billion — is bought and sold through programmatic advertising exchanges. These exchanges sit between supply side and demand side platforms — where websites/apps manage the ad inventory and viewers they have (supply), and advertisers manage their campaign creative and choose who to target it to (demand).

In a fraction of a second an ad exchange matches a user on a website to an advertiser who is looking for someone of their ilk, and closes the deal. In this short time all of the platforms involved in between take a slice of the revenue and leave the content creator starved of half the money paid by the advertiser.

This system isn’t going anywhere. It has too many other advantages to both publisher and advertiser (let’s just say the advertising profession is rife with long lunches and backroom deals), and these billion dollar ad behemoths are too invested, and too slow moving, to change how they work.

Alkimi Exchange to the rescue

What is needed is something to plug into the existing advertising technology stack that fixes many of the problems, without requiring anyone to change how they do business. Something like… Alkimi Exchange.

Alkimi simply does a better job than existing ad exchanges — plugging directly into supply and demand side platforms and matching bids much more cheaply, and with much greater transparency, than previously possible.

It uses the Constellation’s Hypergraph network to do so at a speed that was previously not possible with even with other transparent, decentralised technology, like blockchains — allowing existing exchanges to use this as an excuse to be costly and opaque.

But now with Alkimi in the mix advertisers will be much more sure about where their ads are being seen and by whom, and crucially, publishers will get much more of the money spent on targeting their visitors. This means that they can afford to charge higher prices for ads, putting fewer of them on each page and letting us focus on the content that attracted us there in first place.

And they can worry less about publishing as much spammy, click-bait content, as possible to attract us, and invest more back in quality journalism and content.

Replacing quantity with quality. And fixing the value exchange between advertiser, publisher and consumer.

And finally, the $ADS token that powers this new generation of advertising exchange, facilitating payment of the (very small) fees Alkimi charges, will bring additional benefits to token holders who will be able to stake it. In doing so effectively allowing consumers to profit from the ads they, and other internet users, view — finally turning advertising from a “necessary evil” into a valued, and valuable, part of our digital lives.