what if auction-based advertising is just bad?

Bob Hoffman says we should ban tracking.

So maybe tracking-based advertising is what’s bad?

Tracking has a bunch of negative externalities, but the tracking is there in order to enable personalization, and the reasons we have personalization are

• to enable intermediaries to run higher-paying ads in lower-cost contexts

• to run a higher percentage of fraudulent ads without some enforcer (such as a regulator or the owner of a real brand being copied) finding out

• to enable platforms to deniably serve advertisers who want to discriminate illegally

So maybe personalized advertising is the problem?

But why do platforms choose to run so many fraudulent ads in the first place?

Because, in an auction market, adding bidders tends to drive up the price. And the operator of an auction market can capture all of the increased price, but pays none of the losses from fraud. That could be a Section 230 thing. In a legal environment where some liability is passed through to companies that touch an ad, the more fraud/less fraud decision would get harder. But in today’s environment, all the incentives are there to run more fraud.

What if the underlying problem is the auction? And auction-based advertising is the problem?

If platforms didn’t run the real-time auction, and set rates in advance, then they could still raise rates over time. So there would be a kind of slow-motion version of the effect where a higher number of fraudulent buyers act to drive up the ad rates.

But without the auction, in any given time interval, the legit advertiser’s rate doesn’t automatically go up the instant a fraudulent advertiser gets on.

We do have a market design problem here. Fraud is on the way up and the best-informed players in the market have an incentive to increase it. Just getting rid of real-time auctions doesn’t solve the whole thing. Somehow the expected value to a platform for delivering a fraudulent ad needs to go negative. This is why we need more diverse approaches to state privacy laws. Laws that protect legitimate advertisers would tend to produce better outcomes for customers, too—including improvements in the kinds of problems that get lumped together as “privacy violations.” More: a privacy law shortcut

Bonus links

Stories That Matter: Advertising has reached peak self-delusion by Omar Oakes. (IMHO still a mistake to count all “Amazon advertising business” as advertising. What Amazon calls advertising is really slotting fees on sellers. Misclassifying it as “advertising” helps Meta and Google claim they’re not a duopoly, and helps Amazon claim they have lower fees on sellers.)

Tech Policy Is on the Front Line of Fascism vs. Democracy. Pick a Side. by Nathalie Maréchal. I’ll resist the temptation to speculate why so many experts and institutions act like they’re still living in a functional liberal democracy: the point is that positions that would be defensible in a different political context simply aren’t at this time. (The attribution cartel, an attempt by large companies to shift ad revenue from legit sites to disinformation and slop, has to be understood in context.)

Meta Has Made Child Exploitation a Cost of Doing Business by Mark Ritson. (read the whole thing) Related: The question nobody asked Zuckerberg by Ana Maria Constantin.

Criminals impersonate doctor with deepfake ads, sell supplements. Could you tell? by Bob Sullivan. His likeness was used to create a deepfake video hawking supplements — specifically targeting Black consumers. Try as he might, he still hasn’t been able to remove all the various videos that have landed on places like TikTok and Twitter. (Meta’s ad system is designed to facilitate this kind of thing: some ways that Facebook ads are optimized for deceptive advertising)

A list of the publisher lawsuits targeting Google’s ad tech practices By Sara Guaglione. We will continue to update this tracker, if and when new lawsuits are filed. All of these publishers are represented by the same law firm – Kellogg, Hansen, Todd, Figel & Frederick – and the complaints were filed in the U.S. District Court for the Southern District of New York.

Publish And Be Damned by Brian Jacobs. Bob, like me is not on these guys’ Christmas card lists. But he is right (as usual) in pointing out that META is over 95% funded by advertising, and yet those who pay for this stuff never seem to get any of the blame when these examples of antisocial behaviour surface.