Blue Ocean Simplification: Google's New Ad Scheme

Google renews a centuries-old advertising method

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Successful blue ocean strategy moves oftentimes involve simplification. Overengineering or overcomplicating products and services is a common issue that adds cost not commensurate with value and, all too often, even removes value. Oftentimes, these simplified solutions resemble products and services from a simpler era.

Google has taken a step to radically simplify targeting ads that will save money and also remove the creepiness factor of advertisements following people around the web: cohorts.

Some background: right now websites put a small piece of information on your local computer called a cookie that identifies and remembers you. Originally, these cookies had benign uses: they would make it so you didn’t have to log in to retrieve where you were and make the user experience flow better between web pages.

As web advertising took hold, advertisers realized they wanted to know who the people viewing various sites were so they could better target ads. To achieve this, they relied on cookies that followed people around the web collecting information about them.

It didn’t take long for this to spiral out of control with advertisements “following” people from website to website. Check out a pair of shoes on a shoe shopping site and you’d keep seeing ads for exactly that pair when reading the news.

Sites collected ever-more information, cross-referencing it to off-web behavior, and the tracking became ever-creepier. For example, some smart TVs watch what the user is viewing and send the information back to the TV manufacturer who can use it for advertising. My wife watched a Tony Robbins documentary on Netflix. She’d never watched anything about him before or looked him up online. Not long, after ads for Tony Robbins became ubiquitous around the web.

Advertisers love being able to narrowly target consumers and, to be fair, many consumers prefer ads that are more contextually relevant. If ads are a necessity — and they are if content makers are going to be paid (if the revenue gets to content creators) — the ads may as well make sense. It’s probably better to advertise high-quality reading glasses to me, a middle-aged man than, say, feminine hygiene products. Not that anything is wrong with the latter or the market is small: it’s actually much larger than reading glasses. It’s just that I’m less likely to actually purchase or influence the purchase of feminine hygiene products than the women in my family.

Still, like an alcoholic at an open-bar, the data collectors and advertisers didn’t know when to stop. Data collection and advertising became increasingly creepier and more intrusive. Thanks to essentially no privacy protections in many countries, and weak protections even in countries that claim otherwise, potential advertisers were collecting information about us by the truckload. And they weren’t advertising ordinary consumer products: they were influencing elections, medical decisions, and even enabling discrimination in housing and hiring. The system was out of control.

The less-used Firefox browser was the first to pull the plug, restricting cookies only to those from the website a person was browsing. Microsoft did the same. That solution isn’t perfect — there are workarounds — but it was a vast improvement. Apple upped the ante doing the same thing in not only their own browser but throughout iOS, the operating system that runs iPhones and iPad. Facebook freaked out faced with the potential loss of revenue but there wasn’t much they could do.

However, the most widely used browser is Google’s Chrome and Google is an advertising powerhouse. The vast majority of Google’s revenue comes from advertising and restricting targeted advertising could have financially painful repercussions. Of course, having users drop their browser en masse for a competitor one that better-preserved privacy could have the same repercussions where Google would go from having less than full visibility into none at all.

Now, they’ve come up with a solution; the browser itself will use artificial intelligence to group users into a “cohort” or “flock” of demographically similar people that can then be used to target ads. That is, they’re replicating the system used for years where advertisers paid for ads in various sections of a newspaper or magazine based on who they thought was reading it. Ads for the morning edition of the business section would be different than, say, ads for the evening edition of the Home & Garden section.

What’s ironic is advertisers were perfectly happy with this arrangement for ages and it supported all manner of various media and also an eclectic mix of content inside the media offerings. Some of the strongest days for both retailers and media companies predate the emergence of hyper-targeted advertising.

Who knows if Google’s cohort scheme will work or, even if so, if they'll be tempted to revert to micro-targeting. There’s always the possibility that this scheme becomes abused to the point where an individual becomes a cohort so targeted there’s no real difference from the cookie scheme. For example, a cohort of people who watched a Tony Robbins documentary the night before or searched for a specific pair of shoes isn’t meaningfully different than the system we have now. But, if Google follows through in good faith and keeps the cohorts wide enough, the system may help protect privacy while simultaneously enabling relevant targeted advertisements.

There are people who prefer no advertisements at all. But, as the saying goes, if you don’t know what the product is it’s you. That is, if you’re not paying for Google services then somebody else is and that somebody is paying Google to deliver you to that business’s products and services.

There is nothing new about ad-supported media. Even at the height of newspapers, subscriptions barely covered the cost of printing and distribution whereas ads provided the bulk of the revenue. We never paid for broadcast radio or, until cable, broadcast television. People paid for their entertainment by showing up. But the pinpoint accuracy takes it to a new level. One day we collectively decided we were unwilling to have our lives sold to business in real-time anymore and there are plenty of technological solutions to prevent that from happening.

When the web was invented there was an almost utopian feel to it. Information will be free. Anybody could make a website, cheap, and go into publishing without the cost of printing and distribution. And those early web ad sales groups were promising too: they’d put gentle advertisements on your website allowing small site owners to earn a living on their own. Financial and work independence was within sight.

But the dream quickly soured as consolidation happened. Ad brokers and websites bought smaller ones, often under the threat of “burying” them if they refused to sell. The government did nothing about the ever-shrinking number of media outlets and those who might sell ads to keep them running. Until, one day, there was virtually nothing left in the ad broker space. Small websites were either purchased or shuttered. Newsrooms around the world, and especially in the US, were shuttered. All in a pointless quest for ever more targeted ads. Now it sounds like the field is finally beginning to change. It’ll be interesting to see if the reality ever shakes out.

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