When I was growing up and I sat around and watched TV I used to complain to my Dad about the ads. Back when I was a boy growing up in regional Australia, we had two TV stations. The clumsily named CBN8/CWN6 station was the commercial station and we had ABC. ABC was good for the Test cricket so we had one station for everything else.
My Dad took a different approach. He said I should watch the ads and be thankful that we had ads running because they allowed us to watch TV for free. Ads gave me the opportunity to sit in my lounge room and have TV shows only a few years out of date sent to a box in my house and, apart from the initial purchase of the hardware, I paid nothing to the company providing this service. Free To Air (FTA) TV was indeed a concept to be embraced – and the same concept applied to radio.
Jump forward just a few years and we have modern equivalents in Web sites and social media and music streaming. When Google was started on 4 September 1998, Sergey and Larry were hypothesising about a better search system as part of their PhD studies at Stanford University. They initially were not focusing on how to make a company that would one day be valued at US$837 billion.
In the same way as TV and radio made money from selling advertising, Google started its path to financial stardom by selling ads. Independent companies perform surveys to determine how many people are watching certain TV shows and those organisations determine advertising prices based on that information. Web sites can easily determine how many people are visiting them and charge advertising dollars based on that information.
But it gets better than that.
Google could see raw numbers and can even track information about previous searches (more on that in a minute) but Facebook changed the landscape dramatically.
Surveys of people watching TV typically ask for your age and sex and maybe a few interests so advertisers can determine where they should advertise. Facebook knows your age and sex and where you live and maybe a little more. With this extra information, Facebook can deliver even better value with targeted information to advertisers. Facebook is not valued at US$606 billion because it provides a free program that allows people to keep in touch. Its value is driven by the advertising dollars that companies across the world spend on the platform. And the reason they spend money on Facebook – and other similar platforms – is because they can target their advertising at a very narrow band of people that fit into their target market. Why use a confetti approach to marketing when you can deliver the information directly to the eyeballs of people who are in your target market?
I am often asked if smartphones are ‘spying’ on conversations that people have. A few friends are sitting around the coffee shop and discuss a new makeup product. The next time they open up their smartphone or PC, the identical products they have been discussing are suddenly popping up in Facebook or in searches! It seems creepy (it is a little) and people are convinced that Siri is listening in the background and then being a traitor and feeding the information to advertisers.
What is happening is that the searches you perform in Google and your activities and demographics across Facebook and your social media sites are continually building a ‘marketing’ picture of you. This will then determine the type of ads you see. A combination of who you are, your previous interests and your current searches means that, with a little confirmation bias thrown in for good measure, it only seems like your phone is spying on you. What is really happening is that you are effectively giving the advertisers information they want via your normal activities.
Can you stop the advertising? You can fine tune some settings but the short answer is no. Some providers are trying a model that allows you to pay for the service and have no ads. How much would you be prepared to pay for an ad-free version of Facebook, for example? YouTube Premium is YouTube’s ad-free version (with a few extras) and they charge $10 per month.
If more sites go down this path, I just hope we don’t see the same outcome as Pay TV. The promise was that you would pay for your TV viewing in return for no ads. We now still pay a monthly fee for Pay TV – and we also get the ads!