how bad is Ads-based business model for the internet?
You are the product as a user of all free services on the internet, solely by providing data to these providers (willingly or not) that they then sell to advertisers. That’s their business model, and you are the commodity in it.
You are the product
The free internet, or free service delivered over it, recreates what has originally been spotted about the marriage of TV and Ads.
Technology has enabled advertisers to build way more accurate targeting algorithms, and those algorithms thrive on every bit of information on you or your behavior and interests.
We are giving that information for free. We are also giving advertisers access to us through our contact info (email/address) or our connected accounts (apps/devices).
So how bad is it?
Put simply, the negative impact of this model and what it enables to buyers in terms of manipulation of people’s actions, is not new.
What is different with the internet is the scale of it.
I’ll just use a simple model to get a feeling on the scale differen. Let’s borrow the simple RICE model that’s used for prioritization in product development.
I’ll be changing it slightly tho to calculate the ratio between TV and Internet mediums in regards to Ads manipulation power. TV values will be normalized to 1 and Internet estimated relative to it.
- Reach on the Internet is def. way higher than TV. Let’s assume 500 million people in US have access to a US TV channel. A US-based online publisher or service provider has reach to all internet users around the world (~5 billion). So 5 billion / 500 million = 10 times the reach (not thinking about targeting etc here, just a rough estimation of avg. reach increase).
- Profit will replace Impact and will represent relative profits made to service providers through this model. Knowing that TV ads are more effective, let’s assume that Internet ads make 10% of the profit that TV ads make.
- Cost will replace Effort and will represent relative running costs of services + production costs of ads. I’ll assume costs in internet medium are 10% of those in tv medium.
- I’m somewhat confident of these estimations, so I’ll go with 80%.
Then: Score = (Reach * Profit / Cost) * Confidence
| Medium | Reach | Profit | Cost | Confidence | Score |
|---|---|---|---|---|---|
| TV | 1 | 1 | 1 | 1 | 1 |
| Internet | 10 | 0.1 | 0.1 | 0.8 | 8 |
The manipulation through ads has become a bigger problem the with internet, compared to TV, by at least 8 times.