Is this the future of Advertising?


One Possible Future

The online advertising industry today aids over $300 million in economic activity is expected to reach an estimated $40 billion by 2014.   The industry has quietly grown to become a massive force.  The FTC is taking notice and proposed changes could potentially have profound effect on ecommerce, online publishing and advertising.  At the core of the argument is the question of tracking the activity of web use.  There are those in one camp that say nothing should be tracked, that every piece of information collected without the direct permission of a web surfer is invasion of privacy.   The other side would say tracking allows a consumer to be exposed to  advertising  that is targeted to their interests therefore enhancing the overall experience while reducing costs to the advertiser which can be passed onto the consumer.

Its not an easy question to answer and I’d be lying if I said the vision of the future portrayed in that video isn’t somewhat unnerving.  The internet has opened up huge markets to smaller companies unlike any previous advancements in technology or policy.  If I owned a small boat from which I ran a fishing business, I would need to sell the fish at some margin above my cost.  If I had no idea where the fish were, then its likely my costs would be higher because I have to expend more time and resources in finding them.   But if I have technology that allows me to scan the ocean and find that fish more efficiently then I will be able to extract the same profit at a lower cost  which can be passed on to the consumer.  On the reverse side of this, I worry that an employer could make hiring decisions based on private data or insurance companies digging deep into personal information such as exists on social networks.

Small and medium sized internet businesses operating in e-commerce or publishing need to be nimble and operate on tighter budgets.  An end to tracking would not wipe out commerce on the web, but it could potentially raise the cost of finding consumers.  It becomes less efficient!  Small Companies already are seeing increased competitiveness from the likes of Amazon and eBay entering every product category.   The industry is pushing the FTC to allow for self regulation, proponents of change would prefer a government mandate and even a full fledged agency to monitor.  I am a believer in the power of market demand.   Demand will drive new technological developments from  innovative companies that will give more power to the consumer to control what information is shared yet serve the needs of advertisers in the marketplace.