Advertisers Run The Internet

2022-11-25

The internet doesn't just run on ads. It's built for advertisers, and that has a big impact on us, the users.

Introduction

As you may know, the internet runs on ads. For example, the largest social network in the world, Facebook, made over 90% of its revenue from advertising. The same goes for other tech giants like Google and Twitter. Far from being just a fun little anecdote to share at parties, the implications of the modern web's over-reliance on advertising revenue are far-reaching. And, upon close inspection, you begin to realise that the internet as we have it today has been designed not with users in mind, but to maximise ad revenue.

Why The Internet and Ads are a Match Made In Heaven

If the first thought that came to your mind was 'targeted advertising', then you're right. As a medium, the internet offers unparalleled functionality for those in the advertising industry. You cannot understate how important it is for advertisers to have some guarantee that they are reaching their target audience. By tapping into Big Tech's data pool, online advertisers get to know their potential customers more intimately, allowing them to reach the right people, at the right time, in the best way. When Facebook builds their advertising profile on you, hauntingly portrayed by The Social Dilemma as an imaginary homunculus, they sell this to its advertisers, granting them a tiny window into your soul. When paired with the humble HTTP cookie's user-tracking abilities, advertisers can track you from one site to another. They know when you see their ads, if you click on them, and if that click leads directly to a purchase. With their user profile in hand to serve targeted ads, the next challenge for online platforms is to find a way to make the ads harder to ignore. After all, it's pointless to carefully craft a targeted campaign if users can scroll past your ads. Many methods can be annoying, intrusive, and misleading, such as pop-up ads, auto-play videos, and sponsored search results. In the last decade, chronological feeds have been replaced by increasingly powerful recommendation algorithms, promising users content that is more relevant to them. Yet, in my experience, Twitter's Timeline and the Instagram Feed, to name a few, have all become bloated with 'suggested' and 'sponsored' content instead of posts from people whom I follow. It seems that recommendation algorithms have become more of a mechanism to serve ads and content that's more likely to capture our attention. Video content, especially, lends itself well to advertising, allowing platforms like YouTube to force ads on users before, during, and after they watch something.

Was it always like this?

For those born into the age of Web 2.0, it might be hard to imagine a web without ads, but it wasn't always like this. Early-stage systems like ARPANET had ads banned. When Gary Turk tried to advertise on the network by sending broadcast emails to its 400-or-so users, the response was so negative that no one tried it again for a decade. Instead, the modern history of online ads begins in 1994, when HotWired online magazine posted the first banner ad. Hotwired was the first online magazine to carry ads as the publishers sought to find a way to pay their contributors. Compared to the newspaper and TV ads to which users had become accustomed, these were colourful and interactive, making them so alluring that "10% of those who saw them were inclined to click". Soon after, internet advertisers began to explore the possibility of targeting specific consumer demographics. The launch of Google Adwords (now Google Ads) in 2000 was especially monumental, allowing ad delivery based on keywords. Adwords was an instant hit, generating over $70 million in revenue in its first year. Despite early hesitance to embrace an advertising business model, Facebook soon set up their advertising platform. Today, Meta and Alphabet are the leading pay-per-click advertising platforms, with the former offering extensive audience targeting and the latter relying on Google users' keyword searches. Overall, the rapid growth of many of today's tech behemoths was driven by online advertising.

Is this a problem?

So, the internet runs on ads -- why does that matter? Tech companies and their over-reliance on advertising revenue invariably lead to a situation where their loyalties lie more with the proverbial hand that feeds them. In that vein, the first issue to consider is the ability of corporate influences to shape what gets to live and die on the internet. Whether it is directly or not, advertisers have the power to control what we can and cannot see online. Brand perception is of utmost importance to these companies -- they would rather not see their logos next to negative and divisive content. One can understand most companies' aversion to being associated with hate speech, cyberbullying, and explicit content, but questions arise when they go further. Many popular YouTube creators have spoken out about the platform's demonetisation policies, with some going as far as to develop a streaming platform called Nebula. When YouTube decides on a video's 'ad suitability', this process is opaque and done automatically based on keywords, leaving little room for nuance or context. And, YouTube is certainly not the only perpetrator. Advertisers pay close attention to a platform's content moderation policies, as evidenced by Twitter's revenue drop following Elon Musk's purchase and subsequent promise to bring free speech back. This acts as an incentive for companies to take down content, not for society's benefit in general, but to appease corporate entities whose interests may or may not align with the greater good. The long reach of the web's advertisers also extends far enough to shape the content format of choice on the web. Some formats, e.g. video, lend themselves perfectly to online advertising. Ads are better placed at the start or middle of a video, not next to an article where users can ignore them. We can see this all around, from the push towards more video and audio content to the notion of the 'ideal YouTube video length'. The goal rarely is to find what's best for customers but to find the best way to serve ads. As mentioned earlier, a big part of what fuelled the growth of the online advertising industry was the ability to create targeted ad campaigns. The possibility of better serving advertisers incentivises platforms to collect more data and build more comprehensive profiles of their users. The impact on both users and the platforms is often negative. For users, there's the possibility of advertisers using their vulnerabilities to coerce and manipulate them. A study by The Transparency Project found that Facebook allowed teenagers to be targeted with drug and alcohol ads. The same mechanisms have also been leveraged to target users with a history of eating disorders or addiction. It's also worth noting that user experience takes a hit when users are overwhelmed with ads. Ads can be inconvenient and annoying, especially those of the pop-up and auto-playing variety. For users in the so-called Global South with slow or capped internet connections, being forced to sit through ads can be frustrating and costly as they waste precious time and bandwidth loading large pages bloated with ads. For tech companies, we have seen them at the receiving end in recent years as Apple Inc. rolled out its App Tracking Transparency feature, for example. It allowed users to opt-out of being tracked across apps on iOS devices, putting a dent in their business model. Facebook would later announce that the feature had the potential to cost them up to $10 billion in advertising revenue. The increase in popularity of ad and tracker blockers has also given internet users the power to cut off what is a vital source of income for these tech giants. These companies cannot afford to sit back and rely on ad revenue given the options at users' disposal to block them.

Still businesses in the end

Most people might find it hard to imagine companies like Facebook and Google as for-profit organisations because they offer their services for free. In reality, turning a profit is of utmost importance to these companies. Despite some early attempts by a few tech giants to resist paying their creators, it soon became clear that content creators and, subsequently, influencers provided a way to boost user engagement and retention. After all, compared to a platform like Netflix that produces original content, the likes of Twitter and Instagram rely on their users to generate content that keeps users engaged. And, without providing some incentive for those people to continue to create, they risk losing the thing which keeps the advertiser revenue coming. There are many enormous costs associated with running a platform that caters to hundreds of millions of people around the globe. Companies like Google and Netflix have spent billions of dollars on the global infrastructure that allows them to handle traffic from all their users. From data centres and edge points-of-presence (PoPs) to the research and development required to keep our favourite online platforms growing and evolving, running a tech giant is expensive. It might be surprising to hear that, despite making over $5 billion in revenue in 2021, Twitter still ended the year with a net loss of over $200 million. With this in mind, we might start to ask questions about the feasibility of 'always-free' business models as adopted by these companies. Some have pointed out that these platforms can offer us their services for free because we are the product, not the consumer. This is problematic because one doesn't need to squint their eyes to see the enormous power these platforms have to influence our lives. Whether it's bots and trolls being used to influence elections, the prevalence of cyber-bullying and its impact on the youth, increased polarisation on social and political issues, or our allegedly shrinking attention spans, these platforms shape our lives and the world in which we live. Yet, they are not designed with our interests at heart. By accepting these freebies, we effectively hand over control to those who fund the platforms, ensuring our continued exploitation as our favourite platforms evolve in ways that take them further away from the public good. All this leaves us in the uncomfortable position in which paying for these services that have, thus far, been free could be better. It seems to me, at least, that this is an idea of which neither users nor the respective platforms would be in favour. For users, however, this would offer a straightforward means of exerting control over these platforms. As paying customers, we can have some say in how the platforms operate. Most of them already offer a premium tier with additional functionality and an ad-free experience. But, the numbers of paying customers remain in the minority of users. YouTube, for example, charges $11,99 for Premium and, despite having over 2.5 billion daily active users, has just over 20 million paying subscribers. Even if we factored in the other 60 million that pay for Music or both, it's still easy to see that this constitutes a small percentage of YouTube's $28 billion revenue. If we attempt to view things from the platform's angle, we see little incentive to push their customers to pay for their services. Aside from the fact that there is way more money to be made from advertising than from paying customers, if customers had to pay, they would pay more attention to what the platforms have to offer. After all, it's easier to see the value of a platform like Netflix (and other streaming sites, in general) compared to Twitter or Instagram. The former provides a service that users would struggle to find anywhere else, while most people use the latter two for sharing memes and doom scrolling when they are bored. They can be a good source of entertainment and information, but they also have enough downsides to make paying for them questionable. Free access also affords users the flexibility to jump back and forth between different platforms with ease. On the other hand, the so-called 'Streaming Wars' have shown that this is not the kind of rising tide that lifts all boats. In this sense, demanding payment becomes almost like an ultimatum, and most platforms would rather share your attention than have none of it.

Looking Forward

The growth of these hybrid media/advertising companies has blurred certain ethical lines, especially in information dissemination. When the lens through which we view the world is tainted by entities whose priorities are brand identity and public perception, there is bound to be some conflict of interest. Most online spaces have already been fine-tuned for advertisers, and tech platforms' priorities lie more in finding ways to monetise their users than doing what's best for them. The impact of this is evident, with most platforms built around AI algorithms designed to capture attention, not inform. Many people in the tech world still believe that Web3 will offer a way past this corporate-controlled web, returning control to the people. Critics have pointed out, on the other hand, that the same corporate interests have already positioned themselves well enough to maintain their grip on our technosphere. Whichever way the cookie crumbles, it should remain as cause for concern how little say we have in how the media that govern how we view the world are designed or controlled. Replacing free services with paid-for ones may be a solution, but the onus would be on the various platforms to assure users that their data will not continue to be harvested and sold. The burden would also fall upon them to improve their services to entice users to pay their subscription fees. That could have the added benefit of putting more pressure on these companies to truly innovate in a contest to outdo each other. As for the users, we must start to recognise that, for all the benefits that the free, ad-supported internet brought, it has a dark side that we cannot ignore. The internet as it is today is akin to the planet on which we live. Whilst seemingly being made to host billions of life forms, a single species dominates our home. We build, shape, and destroy with little consideration for how our actions affect the rest of the planet's inhabitants. In the same way, the platforms that control our digital spaces and their corporate overlords have built cyberspace to serve their interests, leaving the rest of us to deal with the consequences.