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Ad Revenue Bubble

Madison Avenue used to mean something. Advertising once had a kind of exclusivity. A cold-blooded adaptation of Freudian psychology by Bernays and other demagogues for the purpose of controlling the uncontrollable. It had unique social, economic, and political value. The machines of advertising, along with its henchmen, marketing, PR, and consumerism, were long alone in their secular ability to reach, distract, and pacify the masses. And advertising’s effectiveness has continued to grow commensurate with the rate of populations and our modern banking system’s iniquitous conjuring of money through credit.

Just when the age of consumerism thought it had been beaten by the emergence of the me-generation and the self-actualizing, SRI adapted Bernay’s Engineering of Consent principles to the individual’s need for self-expression with their VALS system. Almost simultaneously, advances in automation, and the tragic smothering of reason and responsible sustainability by personal and corporate greed introduced abundantly willing and affordable off-shore labor, generating a glut of personalized products. And because it was all being driven by insatiable desires rather than practical needs, it ensured that supply could never catch up to demand.

So what’s the only thing that could top the perfectly orchestrated storm of predatory lending practices, the cheap manufacture of an endless stream of unessential artifacts, ever-escalating and news-worthily communicated global tensions and crises, and a geometrically growing population whose increasing unease could only be pacified and controlled through obedient gathering and consumption? Google.

Another product of Stanford, Google was an efficient collection of algorithms that found its calling in advertising. Prior to that, the search business, for all its practicality, was barely able to sustain itself, and saw its share of casualties and consolidation (Altavista, HotBot, Infoseek, Inktomi, DogPile, etc.). Now Adwords/Adsense, Yahoo’s Panama, Microsoft’s AdCenter, Amazon’s Content Links, Kontera, IntelliTXT, GoClick, LookSmart, Miva, Kanoodle, and an army of sub-syndicators, affiliates, and bottom-feeding get-rich-quick opportunists are amassing quite a bit of wealth. Google rose to dominance with their string of advertising-related acquisitions (Applied Semantics, dMarc, Adscape, Doubleclick), but even their other acquisitions (YouTube, Grandcentral, and Dodgeball, in particular) have become or likely will become yet-another platform for delivering targeted advertising. And it’s only a matter of time before their mapping technology + GPS gives us Google location-based advertising. They just can’t stop. And you really know you’ve made it when your ecosystem evolves its own criminal element, clickfraud, estimated to be worth somewhere between $1.37 and a few billion dollars, depending on who you ask. True, online advertising pre-dated Google, and Google has a lot of aspiring company today from other media, games, services, and mobile offerings (News Corp, Microsoft’s Massive, Second Life, There.com, Apptera, EnPocket, AdMob, mFoundry, Jingle’s free411, and countless others irresistibly, if not occasionally reluctantly but necessarily, drawn the current web-advertising model), but Google is its undeniable archetype.

So how might this Third Age of Advertising play out? Madison Avenue used to mean something, but it doesn’t anymore, not because they’ve lost their knack for getting people to buy tokens of meaning and self-worth, but because they’ve become a voice lost in the din of a crowd – a victim of a denial of service attack launched against their audience by the online model. Ad creation and placement used to be pricey, there was a barrier to entry, and relative scarcity. That is no longer the case. While it might be impossible for supply to outstrip desire-driven demand for goods, the same is not true for the infinite stream of online advertisements for those goods.

Online advertising is socially acceptable spam that also happens to be a magnet for get-rich-quick schemers and criminals reminiscent of the sub-prime mortgage industry. 99% of it is filtered out automatically by the lateral intraparietal area of the brain and the second-pass filter of conscious discretion, so to make the remaining 1% effective it must increasingly litter the landscape of the Internet, and consumes vast amounts of its most precious resource, bandwidth. It is the environmental villain of the Internet whose profligate consumption is rivaled only by illicit email spammers and P2P sharers. And how have we responded to the latter? With a multi-billion dollar anti-spam and traffic-control industry. Although we today tolerate online advertising, it is by some measures only marginally less pernicious than these other offenders. At it’s rate of growth, it’s only a matter of time before it catches up to email spam on the annoying-scale, and we start seeing the emergence of anti-ad appliances. The whole model seems outrageously inflated, and is bound to burst, or at least go through a heavy correction.

Many argue that online advertising is what allows many free web-sites to stay free, but perhaps we could use a bit less “free” content and some more meaningful content. Despite its having been smothered to death by the ad revenue model, the subscription model is respectable. Things are often worth what they cost.

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