Advertising & Marketing

Google & Openness: Allows Adblocking Extensions in Chrome

by on January 4, 2010 · 6 comments

Noam Cohen has a great piece in The New York Times today, In Allowing Ad Blockers, a Test for Google, explaining how Google’s decision about allowing ad blocking extensions for the new beta version of its Chrome browser puts Google’s much-ballyhooed talk about openness to the test. So far, Google is passing, with two such extensions (AdThwart & AdBlock) available in Chrome’s extensions gallery. With a combined 130,000+ users, these tools seem destined to be as popular among chrome users as AdBlock Plus has been among Firefox users: nearly 67,000,000 downloads and, according to the Times piece, 7+million active users.

Google has taken a sanguine attitude towards the issue, perhaps because as Adblock Plus creator Wladimir Palant notes, “Ad blockers are still used by a tiny proportion of the Internet population, and these aren’t the kind of people susceptible to ads anyway.” (In other words, the users most likely to download an ad blocking extensions, are likely to be more “ad-blind” and less likely to click on ads anyway.) Google’s director of engineering has noted how cautiously Google weighed its decision to allow ad-blocking programs “because Google makes all of its money from advertising.” But in the end, as the Times notes:

[H]e explained that the prevailing thinking was that “it’s unlikely ad blockers are going to get to the level where they imperil the advertising market, because if advertising is so annoying that a large segment of the population wants to block it, then advertising should get less annoying.”

“So I think the market will sort this out,” he said. “At least that is the bet we made when we opened the extension gallery and didn’t have any policy against ad-blockers.”

Michael Gundlach, creator of the AdBlock extension for Chrome (no direct connection to Palant’s AdBlock plus for Firefox, despite the similar names),

who once worked for Google in Ireland helping to ensure that ads kept appearing on Web sites, says he does not fear for media companies that increasingly rely on online ad revenue. Sounding like a firm believer of Mr. Rosenberg’s embrace-the-chaos manifesto, Mr. Gundlach said a brighter day would emerge from the challenge of ad blockers.

Extensions like his, he said, will make “every one else change their ways, to make ads more useful. Everyone wins, that’s competition. The ideal result would be to retire this extension because the entire Web was covered with ads that people loved and no one wanted to block them.”

What is this but a call for more relevant and less annoying web ads? Ironically, of course, personalized advertising is currently under attack on all fronts, and some experts have asserted that users don’t really want ads tailored to their interests—or, for that matter, news or discounts, either—on the basis of highly questionable opinion polls, as I’ve described. Continue reading →

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Political Ads: Good for Publishers, Not Harmful to Advertising Overall

by on January 1, 2010 · 2 comments

The negativity of political advertising is a constant complaint and has given rise to no end of proposals to regulate purely political speech despite the plain language of the First Amendment and obvious intention of the founders to prevent government from censoring criticism. The importance of this issue extends well beyond politics: With U.S. political advertising for all media expected to hit $3.3 billion in 2010, political ad spending constitutes a significant source of advertising revenue for all kinds of publishers. To put that number in perspective, it’s just 1.4% of the $241 billion in advertising spending expected for 2010, but is nearly half as large the total spent on display advertising revenue (which makes up 1/3 of total online advertising revenue) in 2008. So as advertising revenues continue to decline and more advertising moves online, political ad spending is an increasingly important source of revenue for publishers of both traditional and new media.

But one of the more powerful arguments against such advertising is that it diminishes the effectiveness of advertising in general for all products and services—and potentially lowers revenue for publishers even more than is spent on political advertising. That’s why some advertisers and even publishers could conceivably support restrictions on negative campaign ads. The problem with this argument is that it’s just not true. That’s the conclusion of this very interesting 1999 Stanford study by Shanto Iyengar and Markus Prior I just stumbled upon: “Political Advertising: What Effect on Commercial Advertisers?”  The authors conclude:

Despite the inherent bias of all forms of advertising, people perceive product ads as generally truthful and interesting. In contrast, political ads are dismissed as dishonest, unappealing, and uninformative. When judged against political advertising, product advertising enjoys considerable public support….

They suggest two explanations for “the significant reputation gap between the two genres of advertising”: Continue reading →

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Are Consumers Mindless Sheep?

by on January 1, 2010 · 21 comments

sheepOne of the themes you come across again and again in public policy debates about privacy, advertising, marketing, or even free speech battles, is the notion that the public at large is made up of mindless sheep being duped at every turn.  And, as Berin Szoka and I noted in our paper “What Unites Advocates of Speech Controls & Privacy Regulation?” if you buy into the argument that consumers are basically that stupid then it logically follows that people cannot be trusted or left to their own devices. Thus, government must intervene and establish a baseline “community standard” on behalf of the entire citizenry to tell them what’s best for them.

But there are good reasons to question the premise that consumers are blind to efforts to persuade or influence them — regardless of what type of media content or communications efforts we are talking about.  I was recently reading Communication Power by Manuel Castells and liked what he had to say about how so many media critics make this false assumption. Castells rightly notes:

Interestingly enough, critical theorists of communication often espouse [a] one-sided view of the communications process. By assuming the notion of a helpless audience manipulated by corporate media, they place the source of social alienation in the realm of consumerist mass communication. And yet, a well-established stream of research, particularly in the psychology of communications, shows the capacity of people to modify the signified of the messages they receive by interpreting them according to their own cultural frames, and by mixing the messages from one particular source with their variegated range of communicative practices. (p. 127)

That’s exactly right, and it is even more true in an age of ubiquitous, interactive communications technologies. “The people formerly known as the audience” have the unprecedented ability to talk back, to compare notes, to collectively criticize and hold accountable those who previously held all the cards in the mass media age of the past.  Most consumers are perfectly capable of judging the merits of advertising, commercial messages, or other content on their own; they cast a skeptical eye toward most claims but process those claims alongside other counter-claims, independent judgments, informational inputs, and “cultural frames,” as Castells rightly argues.  We need to give the public some credit.

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Don’t Write an Email—Close Your Browser!

by on December 20, 2009 · 7 comments

If you don’t like sharing information about your interests with content publishers so they can sell advertisers a chance to win your attention, your remedy is closing your browser. It’s that simple.

But writer Kevin Kelleher has an economically challenged piece on WashingtonPost.com suggesting that Internet users should try to charge content providers money.

He says users should email web companies the following terms: “By collecting, storing, selling, trading, reselling or exploiting for any commercial purposes any information about me, your site agrees to pay me a licensing fee of $100 per month.”

That’s a non-starter from the get-go because users might be worth $10 per year, depending on the company. Negotiating a deal where your use is actually tracked, a price is negotiated, and a payment is securely made would be more privacy invasive than the current state of affairs.

And that model has already been tried. It was called AllAdvantage.com. If ad rates rise again, an “infomediary” might be viable again, but we won’t get there with a silly “campaign” to undo the interest-data-for-content deal.

If you don’t like it, you can just close your browser, or pick carefully among the services that don’t use advertising (like Twitter, so far). That’s a perfectly acceptable choice, and life can be lived well without free Internet-based content.

So, go ahead! Live your values! Walk your talk! Close your browser.

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Mobile Micropayments: Forcing Me to Reconsider the Conventional Wisdom

by on December 18, 2009 · 3 comments

I’ve always generally agreed with the conventional wisdom about micropayments as a method of funding online content or services: Namely, they won’t work.  Clay Shirky, Tim Lee, and many others have made the case that micropayments face numerous obstacles to widespread adoption.  The primary issue seems to be the “mental transaction cost” problem: People don’t want to be diverted–even for just a few seconds–from what they are doing to pay a fee, no matter how small.  [That is why advertising continues to be the primary monetization engine of the Internet and digital services.]

android-market-12-15-09That being said, I keep finding examples of how micropayments do work in some contexts and it has kept me wondering if there’s still a chance for micropayments to work in other contexts (like funding media content).  For example, I mentioned here before how shocked I was when I went back and looked at my eBay transactions for the past couple of years and realized how many “small-dollar” purchases I had made via PayPal (mostly dumb stickers and other little trinkets). And the micropayment model also seems to be doing reasonably well in the online music world. In January 2009, Apple reported that the iTunes Music Store had sold over 6 billion tracks.

And then there are mobile application stores.  Just recently I picked up a Droid and I’ve been taking advantage of the rapidly growing Android marketplace, which recently hit the 20,000 apps mark. Like Apple’s 100,000-strong App Store, there’s a nice mix of paid and free apps, and even though I’m downloading mostly freebies, I’ve started buying more paid apps. Many of them are “upsells” from free apps I downloaded. In most cases, they are just 99 cents. A few examples of paid apps I’ve downloaded or considered buying: Stocks Pro, Mortgage Calc Pro, Currency Guide, Photo Vault, Weather Bug Elite, and Find My Phone. And there are all sorts of games, clocks, calendars, ringtones, heath apps, sports stuff, utilities, and more that are 99 cents or $1.99.  Some are more expensive, of course.

Continue reading →

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Congresswoman, CALM Thyself! LA Times Eschews Eshoo Nanny State Bill to Regulate Ad Volume

by on December 17, 2009 · 7 comments

The LA Times has come out swinging in a devastating editorial against Rep. Anna G. Eshoo’s (D-CA) Commercial Advertisement Loudness Mitigation (CALM) Act,  passed by the House on Tuesday.  As Adam  Thierer and I have discussed (here, here, and here), and as PFF’s Ken Ferree notes here, this silly paternalist law would require the FCC to issue rules that broadcast and cable TV ads:

(1) … shall not be excessively noisy or strident;

(2) … shall not be presented at modulation levels substantially higher than the program material that such advertisements accompany; and

(3) [their] average maximum loudness… shall not be substantially higher than the average maximum loudness of the program material that such advertisements accompany.

The LA Times‘s pithy response: “Ads too loud? Try ‘mute.‘”  Three cheers for trusting users to take advantage of the simple tools available to them to make these decisions for themselves (like the “mute” button on their remote), instead of leaping to legislative solutions:

Eshoo might have the public on her side, but as a representative of Silicon Valley, she should be more wary of having the government dictate technological solutions to problems that individuals can solve themselves. The market is already responding — more than 30% of TV viewers use ad-skipping video recorders. Besides, as dissenting Republicans on the House Energy and Commerce Committee pointed out,“Americans’ televisions still have volume control, and remote controls still have ‘mute’ buttons. Consumers do not need the government to come into their homes and operate their remote controls for them.” With all the challenges facing the country, you’d think lawmakers could find better things to do than invite themselves into their constituents’ living rooms.

Besides the broad philosophical precedent that this elitist law sets (consumers are too stupid and helpless to take care of themselves so government must do it for them), I explained in some detail five other reasons why this law is a terrible idea when I blogged about it in October: Continue reading →

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Anti-Obesity Activists “Grease” Skids for Unconstitutional, Unnecessary Food Advertising Restrictions

by on December 15, 2009 · 5 comments

At a public forum held today by the Federal Trade Commission on “Sizing Up Food Marketing and Childhood Obesity,” activists called on Congress to pass legislation that would heavily curtail food marketing to children, including:

  • Rep. Jim Moran’s (D-VA) “Healthy Kids Act” (H.R. 4053) would direct the FTC to conduct a rulemaking and decide what kinds of foods could be marketed to children, and FCC to ban or seriously restrict broad categories of food and beverage ads shown on children’s programming.
  • Sen. Tom Harkin (D-IA) wants to repeal limitations a heavily Democratic Congress imposed in the late 1970’s on the FTC’s unfairness rulemaking authority over children’s advertising after the agency ran amok.
  • Rep. Dennis Kucinich (D-OH) intends to introduce legislation to essentially tax so-called “fast food and junk food” marketed to children by eliminating the current tax deduction.

It’s easy to pick on advertising as the cause of all of society’s ills, but there’s no hard evidence that food advertising is to blame for childhood obesity or that restricting food ads on television or the Internet will solve the problem.  Howard Beales, now at George Washington University’s business school, wrote the definitive law review article on this topic back in 2004, when he was Director of the FTC’s Bureau of Competition: Advertising to Kids and the FTC: A Regulatory Retrospective that Advises the Present.  It is a true masterpiece.

Dan Jaffe of the Association of National Advertisers, brings his extraordinary expertise on this issue to bear in his comments (full comments in Word doc) to today’s workshop, which update and expand on the themes Howard discussed in his 2004 article. As Dan describes in rich detail, industry is already responding to demands by parents and other consumers with healthier foods and self-regulation.

So, rather than restricting the free speech of advertisers, and thus diluting First Amendment rights in general, the FTC should use its existing authority to punish truly unfair and deceptive claims.  Governments and schools should focus on educating kids and parents about eating healthier and exercising more.

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Online Advertising: The Great Debate, Part II (12/9, 10am Eastern)

by on December 9, 2009 · 5 comments

The New York Times has a great summary of yesterday’s Exploring Privacy workshop at the FTC, where Adam and I made the case that restrictive, preemptive privacy regulations affecting online advertising is likely to harm, not help, consumers. Check out Adam’s excellent summary here. Adotas notes:

… the highlight was the third panel, when Jeff Chester, executive director for the Center for Digital Democracy and an outspoken online privacy advocate, and Berin Szoka, director of the Center for Internet Freedom at the Progress and Freedom Foundation, got into a 10-minute tete-a-tete on the importance of targeting in advertising as well as journalism.

[Jeff] Chester railed against targeting in general and called for a “citizen friendly” system while Szoka the importance of targeted advertising in funding high-cost content. Szoka argued that for users to access certain content at no cost, there is a trade-off in giving up certain types of data.

Jeff and I will be “taking our show on the road” Wednesday morning with a four-way debate moderated by Rob Atkinson of ITIF, also including Howard Beales and Ari Schwartz, as well as the FTC’s Peder McGee. Given the energy level in our discussion at the FTC, this more focused panel promises to be a great discussion of how to maximize the many competing values of consumers—or, more precisely (from my perspective, anyway), how to educate and empower users to make those decisions for themselves.

So don’t miss it if you can attend (1101 K Street, Suite 610, Washington, DC), and be sure to watch the live-streaming if you can’t!

Continue reading →

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Comments at FTC Workshop Panel on Privacy Polls & Surveys

by on December 7, 2009

Today, Berin Szoka and I both testified at the first of three Federal Trade Commission workshops on “Exploring Privacy.” Today’s all-day event featured five panel discussions, and remarks by FTC Chairman Jon Leibowitz, Commissioner Pamela Jones Harbour, and David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. Our TLF co-blogging colleague Jim Harper also testified on the first panel of the day on “Benefits and Risks of Collecting, Using, and Retaining Consumer Data.” I was on the second panel of the day on “Consumer Expectations and Disclosures.” And Berin was on the third panel on “Online Behavioral Advertising.” The fourth panel was on “Information Brokers” and the fifth panel was on “Exploring Existing Regulatory Frameworks.” On my panel, we discussed the usefulness of privacy polls and surveys. I attempted to make a few simple points when asked for my opinions:

  1. While privacy polls and surveys may offer us some interesting insights into how some in the public think about advertising and privacy in the abstract, ultimately, they are no substitute for real-world experiments in which people make real choices, in real time, often with real money, and face many real trade-offs. [See this paper.]
  2. Moreover, such polls and surveys fail to account for the fact that consumers are empowered with real privacy controls so they can make the privacy choices that are right for them, rather than a one-size-fits-all choice imposed by someone else. [See this ongoing series and this paper.]
  3. (1) & (2) are especially the case since privacy is a highly subjective condition. [See this paper by Jim Harper.]
  4. It remains unclear what the harms are that we are trying to protect consumers against. [See this paper and this blog post.]
  5. Because of (1), (2), (3), and (4) we need to understand that rational ignorance may often be at work here. Many consumers likely won’t feel the need to read privacy policies or take steps to “protect their privacy” online.

Continue reading →

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Live-tweeting Today’s #FTC Exploring Privacy Roundtable

by on December 7, 2009 · 6 comments

I’ll be live-tweeting today’s FTC event @TechLiberation here.

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