• by Joe Mandese  @mp_joemandese, January 23, 2023

“At some point over the past few decades, we, as a society, have decided, intentionally or not, to accept the process of viewing ads in exchange for consuming ‘free’ content on the internet,” Brooklyn Law School professor Jonathan Askin writes in a petition to the Federal Trade Commission (FTC) calling for regulations of the programmatic ad industry. Remove the word “internet” and the same thing could be said of all ad-supported media over the past few centuries.

My point: The underlying value exchange of ad-supported media has not changed fundamentally with the evolution of media. What has changed is the value being exchanged.

Prior to the past few decades, it was based on the value of our attention. Since then, it has shifted to the value of our identity -- or some proxy of it.

And the bigger, untold story behind that isn’t that the ad industry shifted from contextually targeting people through media to behaviorally targeting them based on their identity, it’s that the underlying inventory being traded shifted from advertising time and space to the people who are experiencing it.

And while few ad people like to acknowledge it, the ad industry effectively began trading human beings like financial derivatives.

Sure, we use technical ad-tech jargon like first-, second- or third-party data, “attribution,” “conversions,” “identity resolution” -- and nowadays, “data clean rooms” -- but fundamentally what we’re doing is buying and selling people based on what we think data identifying them in some way says about them.

We can call it “anonymized,” “non-PII,” “probabilistic” or “deterministic,” or any newfangled descriptor connoting that it is both safe and permissible, yet surgically precise.

The bottom line isn’t whether the data science of the skills of ad-industry professionals is good at using it -- it’s that the fundamental value exchange has shifted from buying and selling media to buying and selling the people experiencing it.

And if you cut through the 65 pages of Professor Askin’s complaint, that’s the main thing he’s up in arms about.

The secondary things are that bad actors have figured out new ways of exploiting that unsavory value exchange for fraudulent gain, that the science itself doesn’t work that well -- and that in order to make it work efficiently, the ad industry has become beholden to a few powerful walled-garden gatekeepers it believes have the best ability to filter through the signal-to-noise ratio to actually deliver the individuals they are looking to buy and sell.

Most of Askin’s case is correct, although I personally believe it already is covered under the laws and regulations administered by the FTC and that they just need to be enforced.

One point I’d take issue with is his assertion that the FTC needs to accelerate its role as an “antitrust enforcer,” because of the near monopolies some of the big digital platforms represent.

While it is true that Amazon, Google, Meta and Microsoft represent a disproportionate share of digital advertising revenue, most of it comes from small- and medium-sized businesses that wouldn’t otherwise be able to compete with the world’s biggest brands if they didn’t have access to them, so I actually think -- in this regard -- the Walled Gardens are actually anti-anti-trust.

One exception raised in Professor Askin’s petition might be The Trade Desk, which increasingly is approaching a monopolistic hold on the biggest advertisers and agencies, though not the long tail of digital advertising.

The bottom line is I think much of what Professor Askin asserts has merit, but most of it preexists digital advertising, or is already covered by laws, regulations, and increasingly new ones emerging to protect the consumer privacy provisions.

But it’s nonetheless an indictment against an industry that has built its primary value exchange around trading people like financial derivatives instead of buying and selling ads that give them free access to content they want to consume.