The enduring, profitable myth of online advertising

The big internet companies – they know all about us, right? Facebook tracks us, evaluates our preferences and weaknesses and thereby knows enough to make us do whatever Mark Zuckerberg chooses, right? Google watches us search and read and like or dislike and uses its supercomputers to extrapolate a world where we are all but guaranteed to buy whatever they want to sell us, right? These companies know us better than we know ourselves…right?

Actually, wrong. It is a curious irony that in an era where concerns over online privacy and ownership of data run ever higher, the big ‘internet platform companies’ – Amazon, Microsoft, Apple, plus Google and Facebook and a host of smaller lookalikes – don’t really have the knowledge and the capabilities that critics ascribe to them. Yet it is in their interests to make it seem as if they do have these satanic powers, because by making it seem so they can sell advertising space to the companies that crave such knowledge. 

In the world of marketing the knowledge derived from customer data is called ‘attribution’. Attribution is the foundation of the astonishing growth of ‘Big Tech’. Attribution is the reason that Facebook’s ad revenue in the second quarter of this year was $28.5 billion (while revenue for other things like subscriptions was less than $0.5 billion). Attribution is the reason that Google is the biggest advertising channel in the world (Google’s revenue in 2020 was $182.5 billion, of which over 80% came from advertising). 

Yet attribution is a myth. An enduring and very profitable myth but a myth all the same, based on a lot of techno-marketing hot air. It is the deepest of deep fakes.

To get under the skin of attribution we first need to look at advertising before Google. The old agency world of Madison Avenue hasn’t gone away: the ‘creatives’ still dream up the ads, but they have been humbled and shrunken by the growth of digital marketing. The world’s biggest legacy advertising business, WPP, has revenues in the billions, but despite trying to muscle in on the ‘data-driven’ digital marketing world their sales are only a tenth of Google’s advertising revenue.

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