Upwave Director of Engineering George London is participating in important collaborations within the World Wide Web Consortium (W3C) Web Advertising Business Group with the aim of protecting consumer privacy in browser-based advertising. In addition to his technical insights, George contributed the following noteworthy section to a paper the group is drafting. The section is titled “Why is Digital Advertising Socially Important?”:
Imagine digital advertising withered or disappeared, perhaps because of legislation or technological changes. Who would be hurt? Obviously the technology companies who profit off digital advertising would disappear. But if digital advertising were to contract to the point where it’d be no longer viable to operate businesses funded by digital advertising, there would also be other less direct casualties, in particular:
Publishers
About a third (35%) of newspaper ad revenue now comes from digital advertising. Research shows that only about 11% of people are willing to pay for news subscriptions, and that half of all U.S. news subscriptions go to the Washington Post or New York Times, which means all other national news outlets (as well as regional and local news outlets) are disproportionately dependent on ad revenue.
Smaller news outlets have already been struggling over the last decade, and the business models they currently have are highly tenuous. The current COVID-19 pandemic has proven to be a grim natural experiment highlighting just how tenuous those business models are. The economic and media conditions surrounding COVID-19 have led to reductions of 1/3 to 1/2 in advertising spending in news media, which has led to layoffs and furloughs affecting ~36,000 news media employees (and counting). The current loss of revenue is still less than the decline of 50-60% in revenue that Google itself has estimated publishers stand to lose if current cookie-based advertising techniques are disabled and not adequately replaced.
A robust free press is essential for a free and open society, and the explosion of freely available information about every topic imaginable on the web has been an incredible boon to human development and happiness. For as long as newspapers have existed (all the way back to the 1700s) newspapers have relied on advertising to fund journalism and distribution. As more and more media moves online, non-digital advertising is waning rapidly. If all advertising moves to digital channels which independent or sub-scale publishers can’t access then those publishers (and the numerous social benefits they provide) will simply disappear.
Consumers
Much discourse about the health of the media focuses on consumers’ willingness to pay for news; too little focuses on consumers’ ability to pay. An annual subscription to The New York Times costs ~$191/year. A subscription to the Wall Street Journal costs $515/year. In other words, a subscription to just one single publication can cost 1.5% of the U.S. median individual income. The fact is that paying for all the information necessary to be a well-informed citizen is prohibitively expensive for many people (even moreso for people in marginalized communities or in less wealthy countries). This is why so many news organizations have dropped their paywalls during the current pandemic, which of course only increases those news organizations’ dependency on advertising.
In a real sense, consuming advertising is selling one’s attention. For the many people who do not have disposable money to spend on news, there is real value in being able to sell their attention in exchange for information and services they’d be otherwise unable to access. If consumers are going to sell their attention, it’s in their interest to get the highest price they can for that attention.
If digital advertising disappears, or the value of advertising drops precipitously, the wealthy will still find a way to get the information they need. Everyone else won’t.