Ad tech, content, and the next internet bubble

Gilad Edelman, reviewing Subprime attention crisis by Tim Hwang, for Wired:

Similar conditions were in place when mortgage-backed securities flooded the market in the early 2000s. These financial instruments traded at prices far above their true value, because the average trader had no idea they were backed by toxic assets. Once the truth came out, the bubble burst.

Hwang thinks online ads are heading in the same direction, since no one really grasps their worthlessness. There are piles of research papers in support of this idea, showing that companies’ returns on investment in digital marketing are generally anemic and often negative. One recent study found that ad tech middlemen take as much as a 50 percent cut of all online ad spending. Brands pay that premium for the promise of automated microtargeting, but a study by Nico Neumann, Catherine E. Tucker, and Timothy Whitfield found that the accuracy of that targeting is often extremely poor. In one experiment, they used six different advertising platforms in an effort to reach Australian men between the ages of 25 and 44. Their targeting performed slightly worse than random guessing. Such research indicates that, despite the extent of surveillance tech, a lot of the data that fuels ad targeting is garbage.

See also: Brad Esposito on the content collapse.

We believe that a piece of content with a million views has a million views. Everyone has bought in to the narrative, so as long as things stay that way nothing can go wrong. But anyone who works within the media will tell you, or will know deep down, that it’s not all blue skies. We’ve all seen things go viral and wonder why.

Sure, there is an insider audience within the media sphere that understands all of this. That knows the difference between a three second view and a three minute view. That knows the difference between local shares and international shares when you go to market. That knows how to sell what they’ve been told has value. Who can blame us? But the general population, so regularly forgotten by the mediaclass instructed to inform them, see this content and its success as a positive. As a fact. As a reality. Our jobs depend on it. It’s the way the water’s flowing – why would you swim upstream?

A whole lot of money is tied up in things that, at the end of the day, don’t hold much value. I wonder what will happen people start to reckon with that.