On the Moral Superiority of (Web) Advertising

Wednesday Jul 3rd 2013 by Mike Elgan
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Advertiser-supported search engines represent a transfer of wealth from the world’s rich to the world’s poor – without onerous taxation.

“There’s no such thing as a free lunch,” according to an old American idiom.

What that means is that when something is called “free,” it’s really paid for in other ways or by other people.

The saying may have originated with the advertisement of “free lunch” to 19th Century saloon customers. That lunch was usually salty -- ham, cheese and crackers -- which made people want to order more beer. And, of course, it was the beer money that really paid for the “free” lunch. (Some bars do a version of this by serving “free” salty nuts or other snacks.)

Today, we’re awash in “free” stuff. The big social networks are “free.” The search engines, cloud-based email services are “free” and thousands of mobile phone apps are “free.” And many other things are not free. For the most part, hardware isn’t free. And many software and services cost a price of admission. Most people pay a lot for Internet access on their mobile devices.

Most of the free stuff we have access to is advertiser supported. Tracing the money trail back, the company provides the “free” service to users but are paid by advertisers, who get their money from the stuff they sell to people who respond to their ads.

Why People Hate Advertising

Advertising has a bad public image in some quarters, and I believe there are three reasons for this.

The first is that we often see advertising in places that don’t give us anything in return -- we pay a “tab,” but don’t get the “free lunch,” so to speak.

For example, if we see a billboard blighting scenic views on the side of a highway, that company isn’t paying for anything we’re using. If we don’t buy the product advertised, our own experience of driving is diminished somewhat so that other people can communicate about some potential purchase.

The second source of displeasure with ads comes from the one-to-many media of the past. The ultimate example of this is TV. Before cable, there were only a few stations and everybody watched them. Because people don’t all have the same interests, wants and needs -- because they could not tailor ads to everyone’s individual desires -- they had to “manufacture” desire.

In other words, the purpose of advertising was not to find out what you want and offer it to you. The purpose was to convince you to want something, so advertising has served as a constant source of pushiness, always telling us what we should want.

And the third reason people hate ads is that advertisers are constantly looking for new places and new ways to advertise.

Advertisers compete with each other for our attention by showing us ads that we’re not used to, either by making them different or placing them in different locations. So it seems like public surfaces that used to be ad-free get ads.

Our long history with advertising has felt like an imposition, rather than something that was benefiting people.

Why People Should Love Advertising

The world has changed -- and the world of advertising is changing. It’s time to change our opinions about advertising, too.

The biggest change is globalization combined with the growing importance of Internet-based services.

Let’s take a fundamental example: Internet search. Google is the biggest by far, but Microsoft Bing and Yahoo Search are also big.

These services clearly provide an incredibly valuable service to people all over the world. They bring information, education, insight and knowledge about extremely valuable local services. Sometimes they can even help save lives. And they’re paid for with advertising.

But here’s the thing: Only a minority of Internet Search users actually buy stuff advertised on Search engines. Some people pay for it. Everybody uses it.

If people couldn’t use search engines unless they paid for it directly, say with a subscription fee, then most of the world would be cut off from this vital resource because they couldn’t afford it. The rich would literally get richer because they would have the economic advantage of search engines and the rest would be left out.

Fortunately, thanks to the advertising monetization model, this isn’t the case.

Advertiser-supported search engines generally represent a transfer of wealth from the world’s rich to the world’s poor. And this takes place without onerous taxation.

It’s true, however, that in order to gain access to search engines and other advertiser supported resources, people need Internet connectivity, which can be costly.

Most people in the industrialized world don’t realize that their exposure to advertising is also paying for bandwidth for millions of people in poorer areas.

Companies like Google and Facebook make deals with local carriers around the world in which the companies pick up the tab for access when people are using their services.

One recent example is that Google announced a deal with a carrier called Airtel in India called Freezone in which users (who normally pay by the minute for data) are not charged for minutes while they are accessing Google Search, Google+ and Gmail.

Companies like Google aren’t doing this for charity. They’re hoping to find targets for advertisers in these local economies, and probably also to create wealth so people become bigger buyers.

Programs like this exist throughout Asia and Africa and provide people who live on a few dollars a day with life-transforming services at zero cost.

No, there’s no free lunch. This service is paid for ultimately by people who buy stuff based on online ads.

The most extreme way to contrast ad-supported vs paid is to compare Google+ (Although Google+ has no advertising, it’s ultimately paid for by advertising on other Google services) with App.net (a subscription-based social network).

They’re both social networks. Google provides a massive social good by bringing a valuable social network to the world’s poor; App.net excludes the world’s poor, providing its best benefits only for the rich.

Yes, App.net has a free tier now. But you can follow only 40 users and data is capped. App.net’s $5 per month or $36 per month is far beyond the reach of the majority of people, many of whom are living on a few dollars per day. So if you’re poor, you can join App.net, but must remain a second-class citizen on that network.

The other great trend in advertiser-supported online services is that they’re getting more relevant. The major companies are harvesting personal data and context and increasingly serving up ads for things we really want to buy.

In other words, they’re finding out what we really want, rather than trying to manipulate us into wanting the things we don’t want.

For people concerned about privacy, there are ways to keep personal data private and get less-relevant advertising. And it’s also possible to block ads. Either way, the ads are paying the bills for everybody.

As technology moves forward and Moore’s Law makes things cheaper, I would love to see far more products available through advertiser-supported monetization.

For example, there’s no reason why computers, laptops, tablets and mobile phones might become ad-supported.

And when the online information and communication services are “free,” the bandwidth is “free” and the hardware is “free,” millions of people around the world will be able to start a business, get information, stay in touch with family, educate themselves and do other things and all without paying a dime.

Of course, there’s no such thing as a free lunch. But thanks to advertising, we can chip away at the global digital divide and help put food on the table for millions of people around the world by simply buying stuff we want to buy.

Advertising is the morally superior form of monetization because it’s inclusive, it transfers wealth from rich to poor and it does all this without forced taxation or real sacrifice on the part of anyone.

And that idea shouldn’t be such a hard sell.

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