As Google faces heat for abusing its dominant position in online advertising, Tim Hwang’s Subprime Attention Crisis takes a closer and a dim view of the ‘money machine’ that has fuelled the rise of tech giants.
Earlier this week, it was reported that Italian regulators had opened an investigation whether Google was abusing its dominant role in the country’s online advertising market. This comes within days of the US Justice Department’s antitrust action against the American tech giant for unlawfully maintaining a monopoly in search services and search advertising.
But what if these huge mansions built by Google and other Silicon Valley giants rest on foundations of sand? That’s the contention of Tim Hwang in his timely polemic, Subprime Attention Crisis.
Hwang, a writer and technology researcher who once was Google’s global public policy lead on artificial intelligence, has donned several hats to do with the mechanics and culture of life online. For his labours, Forbes once called him “the busiest man on the Internet”.
In Subprime Attention Crisis, he trains his sights on digital advertising, “the money machine that has fuelled the meteoric rise of the most prominent tech giants and content creators of the modern era”. It’s advertising that has made the internet what we experience today, instead of following other collective and organic pathways.
In essence, Hwang asks two questions: does online advertising work and is it transparent in its processes? The answers are important because the business of the internet nowadays is, by and large, an advertising business. Core services like online search and social media are available free of charge largely because advertisers underwrite the costs of developing them.
A change in this model would affect all of us—whether it’s through higher levels of subscriptions for online services or even, in Hwang’s vivid hypothetical example, being asked to pay per trip for using Google Maps.
Worryingly, he contrasts the current scenario with that of the subprime crisis of 2008 when widely-circulated groups of risky mortgages caused the financial crash.
How did digital advertising become so dominant? From the start, it sold itself as being traceable, trackable, and quantifiable. Algorithms, cookies, and other methods of online monitoring meant that ads could be delivered to specific audiences defined in a variety of ways, from age to sex to income and more. (This extends, of course, to political preferences and unauthorised surveillance but that’s for day.)
The advantages over conventional advertising are clear: advertisers have more control over how their messages are distributed and can choose how best to achieve specific goals.
As Jesse Frederik and Maurits Martijn wrote in a related piece for The Correspondent in 2019, “we no longer live in the age of Mad Men, but of Math Men”.
However, as Hwang observes, advertising packages attention: it is not the attention itself. If the ad is ignored, the money spent delivering it is effectively wasted.
He points out that when the first banner ads appeared on Wired magazine’s website in 1994, they generated a remarkable click-through rate of 44 percent. Data from Google’s ad network suggests that the average click-through rate for a comparable display ad in 2018 was a paltry 0.46 percent.
Another experimental analysis of online search ads in 2014 concluded that “brand-keyword ads have no measurable short-term benefits”. They generated engagement mostly among loyal customers otherwise already informed about the company’s product.
If that isn’t disconcerting enough, there are also issues of bad placement as well as the rising use of ad blockers. The former could lead to ads being invisible, while the latter indicates that people are willing to take steps to prevent ads from reaching them in the first place. One study even showed that 59 percent of smartphones in India implemented ad blocking.
Add to this the fake traffic driven by click farms and botnets, and the picture looks decidedly less rosy than it’s made out to be. It’s no panacea; some online advertising works, certainly, but in certain contexts and for particular products.
The other side of the coin is the way online advertising is bought and sold. Here, Hwang trains his guns on programmatic advertising: the purchasing of ad inventory in real-time through an automated bidding system.
Algorithms working on behalf of buyers interact with those on behalf of publishers to choose the winners of auctions to deliver selected ads. This, as Hwang writes, “is a mind-bending, globe-spanning infrastructure designed to deliver billions of advertisements at split-second speeds every minute of every day”.
In theory, it’s a robust, fine-tuned way to buy and sell attention to generate revenue. Nonetheless, Hwang wonders if this system mirrors the unhealthy dynamics produced by commodification in the 2008 financial markets.
He finds resonances in a paper on global financial risk presented by Raghuram Rajan in 2005. This outlines the effects of a shift from transactions “embedded in a long-term relationship between a client and a financial institution” to those “conducted at arm’s length in a market.”
More specifically, Hwang points to the system’s opacity, as well as the dominance of platforms such as Facebook and Google. This could cause price mismatches, not to mention inflated results, such as when Facebook was accused of undercounting the number of viewers to overstate the average time users spent in watching videos.
Advertising budgets, Hwang feels, are pouring into this market bubble because they have nowhere else to go. Lack of transparency and unrealistic expectations could be the sand that halts the gears of online advertising.
It’s not as though there isn’t already an awareness of activities such as click fraud and ad blocking, along with efforts to overcome them. Hwang asserts, though, that a lot more ought to be done.
He calls for independent bodies to conduct rigorous research that sheds light on opaque aspects. Elements of the bubble could then be targeted selectively, “tapping the brakes here and swinging a wrecking ball there”, to reshape the size and structure of the marketplace.
Higher standards of mandated disclosure from all parties concerned are also critical. This would lead to more reliable metrics on aspects of brand safety, performance, and declarations of conflict.
John Wanamaker, an early advertising industry pioneer, is supposed to have once remarked: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” According to Hwang, we’d better find out before it’s too late.(Sanjay Sipahimalani is a Mumbai-based writer and reviewer.)