Last week, David Cohen, ceo of the IAB (Interactive Advertising Bureau) the trade organization that represents the online ad industry, gave a talk at the IAB’s annual leadership conference. It was so wretched and deceitful that even the IAB’s traditional lapdogs at the ANA (Association of National Advertisers) and 4As had to denounce it.
The essence of his talk was an assertion that those who criticize the dreadful privacy abusing policies of the online advertising industry are “extremists” who are out to “eliminate [the ad industry] from the American economy and culture.”
These assertions are at best ignorant and at worst totally fucking ignorant. As a longtime critic of the online ad industry, the ad tech industry, and the IAB, I would like to take the opportunity to correct the record, and to make the case that, in fact, Mr. Cohen and the IAB are the extremists.
First some background. Advertising is essential to the free web as we know it. The average person spends over six hours a day online. We get free entertainment, free information, and free communication from the web. And advertising funds virtually all of it. Without advertising, the web as we know it could not exist.
But the online ad industry has a galaxy of problems. It is shockingly corrupt and seriously dangerous. And most of the problems are related to the online ad industry’s original sin: tracking. Here are some of the problems that the current version of the online advertising ecosystem have created.
– Tracking, and the unrelenting collection, sharing, and selling of personal information about us is a danger to individuals. The worst governments in history have been the ones that abused the privacy of its citizens by following them, listening to their private conversations, and compiling secret files on them. Today it is the marketing industry that is engaged in these practices. The KGB, the Gestapo, and the Stasi could only dream of having the depth of information about us that Google, Facebook, and other adtech companies have. A report to the British Parliament asserted that by the time an average child in Europe is 13-years-old, the adtech industry has 72,000,000 data points on that child.
– Tracking is a danger to the integrity of democratic institutions. In recent years we have seen a serious wedge driven into the political life of the United States and several European countries. There is a direct link between tracking by the online ad industry and the polarization of democratic societies. A study by a group of Facebook executives in 2018 reported that almost 2/3 of people who joined extremist groups on Facebook were led there by recommendations from Facebook’s algorithms. Professor Hany Farid, an expert at University of California, Berkeley, has said, “They didn’t set out to fuel misinformation and hate and divisiveness, but that’s what the algorithms learned.” And where do these systems collect the data that informs their algorithms? From tracking.
– Online ad fraud is costing marketers tens of billions annually. Nobody knows the exact extent of ad fraud, but several credible organizations estimate worldwide ad fraud in the range of $60 to $80 billion. Juniper Research has estimated it at $68 billion. Ad Age magazine estimated it at 20% of online ad spending – about $80 billion today. The ANA (Association of National Advertisers) in the U.S. estimated it variously at $80 billion and $120 billion. The WFA (World Federation of Advertisers) said that by 2025 ad fraud could become the second largest source of criminal income in the world, after drug trafficking. According to experts the bulk of online ad fraud occurs in programmatic advertising where tracking provides the data that fuels most activity.
– No one knows where all this stolen money is going. It is not unthinkable that it may be funding the activities of organized crime around the world. It may also be falling into the hands of governments hostile to democratic principles and governments.
– It is a national security threat. The Congress of the United States has asked U.S. intelligence agencies to study how information gleaned from online advertising data collection may be used by hostile foreign governments to spy on individuals and the activities of our security apparatus. In April of 2021, a bipartisan group of U.S. Senators wrote, “This information (from adtech data) would be a goldmine for foreign intelligence services that could exploit it to inform and supercharge hacking, blackmail, and influence campaigns.” They went on to say, “Few Americans realize that (adtech companies) are siphoning off and storing…data to compile exhaustive dossiers about them…we must understand the serious national security risks posed by the unrestricted sale of Americans’ data to foreign companies and governments.”
– The whole thing may be illegal. Real-time bidding (RTB), the engine that drives the bulk of online advertising activity may itself be illegal under the terms of GDPR and several state regulations in the U.S. RTB tracks and broadcasts peoples’ online behavior and location 294 billion times a day in the U.S. and 197 billion times a day in Europe (‘broadcast’ is the term used when an RTB entity transmits information.) Both U.S. citizens and European citizens have their private activities shared with thousands of organizations across the globe including organizations in Russia and China. There is absolutely no control over what happens to this information once it is broadcast to these organizations.
The advertising industry was successful for many decades finding appropriate targets for advertisers without spying on the public. But the online ad industry claims that tracking is an essential part of their business model. This is the equivalent of saying that online advertising is such a weak force that the only way the industry can survive is if it is allowed to spy on the public.
As I said at the beginning of this piece, advertising is necessary for the continued operation of the free web as we know it. But tracking is not. The problem is not advertising. The problem is tracking.
The IAB and other trade groups have been complicit in opposing every serious attempt to reign in the excesses of the adtech industry. Instead they have put forward frivolous proposals like the laughable and cynically named “Privacy for America” program that protects the industry’s interests but undermines serious attempts to protect consumer privacy.
Mr. Cohen’s remarks were ignorant and irresponsible. His assertion that people opposed to the dangerous practices of the online ad industry are “extremists” and want to “eliminate” the advertising industry are absurd. Sadly, this is not surprising coming from the IAB. The IAB has the disgraceful ceo it deserves.
