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Little Brother Is Watching

A lot more than money is at stake in internet-driven marketing.

Published on February 2, 2012

The Canadian writer Margaret Atwood once pondered the impact of two famous dystopian texts from the first half of the 20th century: George Orwell’s 1984 and Aldous Huxley’s Brave New World.1 These two novels, Atwood argued, were the perfect models for using fiction as allegory to predict, or at least to force some disciplined thought about what future societies might be like. As the century unfolded, however, technology outpaced what Orwell or Huxley could have imagined, and global politics, its ideologies in tow, changed in ways neither man could reasonably have predicted. As a result, what we understood these books to mean and to portend changed dramatically. Atwood tried to describe where that shift had taken us by 2007:

. . . Orwell’s 1949 novel Nineteen Eighty-Four, with its horrific vision of a brutal, mind-controlling totalitarian state . . . gave us Big Brother and thoughtcrime and newspeak and the memory hole and the torture palace called the Ministry of Love. . . . Brave New World (1932). . . proposed a different and softer form of totalitarianism—one of conformity achieved through . . . boundless consumption that keeps the wheels of production turning. . . . Which template would win, we wondered. During the cold war, Nineteen Eighty-Four seemed to have the edge. But when the Berlin Wall fell in 1989 . . . shopping reigned triumphant, and there was already lots of quasi-soma percolating through society. . . . Would it be possible for both of these futures—the hard and the soft—to exist at the same time, in the same place? And what would that be like?

If you want to take an educated whack at answering these questions, you could do a lot worse than The Daily You: How the New Advertising Industry Is Defining your Identity and Your Worth. Joseph Turow, the Robert Lewis Shayon Professor of Communications at the University of Pennsylvania, has crafted a lucid, well structured argument about the power of advertising and its successful attempts at guiding one of history’s biggest efforts in social profiling. Drawing on a large array of research and interviews with industry insiders, Turow shows us the power that advertisers and marketing companies have wielded on the internet over the past decade, drawing specific attention to privacy violations and a host of unethical practices as he goes.

Turow paints a frightening picture. The advertising industry is changing the way millions of Americans construct their own identities through the use of personalized ads and news filtered to them on a daily basis. The data used to compose these ads has often been collected with little or no awareness from their targets. Turow asks the essential first-order questions: Why is so little being done to curtail these infringements on privacy in a country born into liberty, and how has such lack of transparency become the uncontroversial status quo? Part of the reason, Turow convincingly argues, is stunningly simple: “[N]either citizens nor politicians recognize how deeply embedded in American life these privacy-breaching and social-profiling activities are.”

Turow’s argument starts with his title: The Daily You is a tongue-in-cheek swipe at what turns out to be the wildly naive idea that the tech-savvy 21st-century consumer is king in the new media environment, that each of us has absolute power and control over his or her information choices while online. This idea is most closely associated with MIT lab co-founder Nicholas Negroponte. In his bestselling book Being Digital (1994), Negroponte set out to illustrate this new level of control through a construct he called The Daily Me, a hypothetical online newspaper whose content would be customized to suit the interests and beliefs of individual readers.

The Daily Me news model that Negroponte once hypothesized has now come to life, only not at all in the way he supposed it would. A large and rapidly growing portion of the Daily Me’s content is not customized by consumers but by a largely invisible industry that is gleaning enormous quantities of information about customers daily as they go online. Everything from advertising to self-tailored news is then packaged to suit each individual based on the various data these companies have collected. The technology has still not been fully assimilated by advertisers and marketers, but the organizational logic and trajectory of the process points in that direction. Data collection is rampant and cross-platform, and the costs of using it for marketing purposes, while still expensive, is dropping. This technology will soon allow marketers to essentially harvest consumers.

The data harvesters have shared little about their activities with the public. The reason is obvious: People would find it creepy and object, and it’s just too lucrative to let that happen. “So what’s new?” a skeptic might say. “Haven’t advertisers always sold us stuff we really don’t need in ways we don’t fully understand?” Isn’t this just a high-tech version of the huckster spirit running through American history, a hucksterism as American as apple jack, revealing itself for the umpteenth time?

Yes, but also no. Turow contends that these new practices are far more sinister than even the subliminal deceits of the early television era. Marketing companies are secretly slicing and dicing the behaviors and backgrounds of huge populations on a virtually minute-by-minute basis. Their goal is to find out how to activate individuals’ buying impulses—no surprise there. But, as Turow explains,

. . . their work has broader social and cultural consequences as well. It is destroying traditional publishing ethics by forcing media outlets to adapt their editorial content to advertisers’ public relation needs and slice-and-dice demands. And it is performing a highly controversial form of social profiling and discrimination by customizing our media content on the basis of marketing reputations we don’t even know we have.

The very of existence of the “consumer power” the internet was supposed to bring about is being replaced, as Turow describes it, by a “rhetoric of esoteric technological and statistical knowledge that supports the practice of social discrimination through profiling.” This is surgical advertising based on increasingly sophisticated social science (including applications of neuroscience) and statistical models. This is an order of magnitude more powerful than the subliminal tricks of yesteryear.

What’s also surprising is how rapidly these techniques became standard practice. The early days of the internet were no easy ride for the higher-profile advertising agencies. As recently as 1994, many companies still felt that an online presence was far too marginal to be worth the investment of scarce advertising dollars. Web publishers in many cases could not convince ad buyers that their product met the bar for sound quantitative measurement. The invention of the “cookie” in that same year changed everything. Invented by Lou Montulli while working for Netscape Communications, this small text file saved on the web viewer’s own computer enabled marketing companies to trace consumers’ every click:

The cookie . . . would do more to shape advertising—and social attention on the Web than any other invention apart from the browser itself. . . . The file would have an identification code for the visitor and other codes detailing the person’s clicks during that visit. . . . By decoding the information the site would learn where the user of the computer had clicked previously, what had been purchased, and even what had been placed in the shopping cart even if the shopper had decided not to click thorough to give payment information and complete the purchase. 

Just as the advent of the cookie marked a new beginning in advertising history, so did Google’s revolutionary “paid search” model. Starting at zero in 2002, just two years later Google had made $2.08 billion dollars from the advertising it displayed next to its search engine results. Google’s innovations meant that, for the first time ever, advertisers could reach out to huge numbers of individuals as they embarked on a “consumer decision journey”, the entire purchase process from initial awareness of product choices to action on those choices. By 2010, search site advertising accounted for about half of all web revenue.

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ne of the first effects of this new advertising food chain was the collapse of the business model for print media. Traditional publishers of newspapers, magazines and books still spend enormous amounts to acquire, curate and market original content. That money came largely from advertising revenue and sales, the balance between the two varying depending on the type of product. The new cookie/paid search model quickly drove this traditional approach toward the bottom of the cultural food chain.

In 2010 the published CPM (cost per thousand page views) rate for one major newspaper’s online advertising was $50. The actual rate such a paper would end up charging advertisers due to discounting is about $25 to $40. However, most newspapers sell only about 20 percent of their web advertising through direct sales to publishers. The rest is sold through ad networks at CPM rates as low as $2 to $4. The ad network gets 50 percent of the amount earned, so the paper ends up with only $1 or $2 CPM for 80 percent of its online advertising.

To improve these dismal numbers, publishers hire firms like Audience Science, which analyses data from hundreds of millions of consumers worldwide. Some of the trends Audience Science studies include what site path consumers navigate, which search terms they use and what content they read. The firm claims that such profiling can boost CPM values by a factor of 15. The result is not necessarily that newspapers and magazines push themselves in an ideologicaly more narrow direction, at least not directly. But it does lead them to become what Turow calls “content farms”, sacrificing depth of coverage for a plethora of shallow offerings that are primed to elicit readers to click through.

The web-driven drop in advertising revenue has changed the roles that characterized advertisers and publishers for aeons. Advertisers no longer need the audiences that publishers cultivated, but publishers still need advertising dollars. (Publishers also face stiff competition from web aggregators, which parasitically feed off the content that publishers pay to produce.) In the new media environment, publishers must constantly pander to advertisers’ demands. Interpublic Magna Global reported that newspaper ad revenue in the United States totalled $46.6 billion in 2006. In 2009, that figure nearly halved to $24.8 billion. In 2010 the Los Angeles Times starting accepting ads for its front pages, a practice that has not been common in Anglo-American journalism for more than a century.

One does not have to adopt a Chomskyan conspiracy theory of media concentration to see the dire implications for democracy of corporate desiderata watering down the news. Big Brother isn’t the problem here, but a distracted, click-happy Little Brother. It is the role of a free press to tell us, in some depth, what is really going on in the world. If marketing considerations preclude all but a shallow or distorted picture of current events, then the media will have forfeited its duty of facilitating sensible public discourse. When Joseph Pulitzer said that “our Republic and its press will rise or fall together”, he knew what he was talking about.

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eyond its threat to the ideal of a well-informed public, new information technology in the hands of commercial marketers threatens privacy, in a sense the bedrock of all political liberty. This past November, the Federal Trade Commission reached an agreement with Facebook in which it pledged to respect the privacy wishes of its users for the next twenty years. Turow is not impressed. No matter how many Facebook users activate their privacy settings, advertisers will still be able to access each Facebook account’s data, albeit not the name associated with that account. In essence, Turow explains, “Facebook claims the right to use even aspects of profiles that members have chosen not to make public.”

What’s more, it doesn’t really matter all that much to Facebook advertisers that they can’t know your name. They’re still able to target your account based on age, sex, interests, and even your web browsing habits. In fact, anonymizing account information probably helps Facebook by keeping its users from getting spooked by how thoroughly their privacy has been invaded.

With increasing numbers of people using GPS-enabled smart phones and social-network publishers such as Foursquare, advertising companies can now not only tell you what to buy as they learn your individual tastes, they can even track you as you walk by a restaurant or store that sells one of their products. But again, so what? Isn’t this just a new form of an old game whereby customers reap benefits and companies make profits? Unless one hates marketing because one hates the market system itself, what is the problem with any of this? The problem is, as Turow shows, that something is going on here that reaches far deeper into society than simply the market at work.

In a 2010 Wall Street Journal interview, Google CEO Eric Schmidt got downright creepy as he discussed the customer information Google collects. The Stasi, East Germany’s once seemingly omnipotent and omniscient secret police, has nothing on the company whose corporate motto is supposedly “Don’t be evil.” Schmidt says his company knows “who you are, roughly what you care about . . . and, to a foot, where you are.” And not only does he think Google has a right to know where you are and what you are doing at all times, he implies that it should have a say in what you do next. “I actually think most people don’t want Google to answer their questions. . . . [T]hey want Google to tell them what they should be doing next.”

The Federal Trade Commission has accepted without serious scrutiny these tracking and targeting behaviors. With the exception of certain information involving health, finances and children, Turow says, “The United States does not have specific regulations requiring companies to explain themselves when they collect and use data about individuals.” This absence is abetted by the fact that very few Americans understand the industry best practices and laws relating to profiling and behavioral targeting. As Turow points out, “about half of the adult population does not realize that most online merchants are allowed to share information with ‘affiliates’ without the consumers’ permission.”

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f the Federal Trade Commission doesn’t see a problem with anonymous targeting, should the American public disagree? Turow’s answer is yes. As he sees it, advertisers are currently galloping through a Wild West where laws and rules are few and far between, which is exactly how the big advertising companies like it. They lobby hard and expensively to persuade the FTC and other Federal agencies to leave then essentially to their own devices. But the basic premise of Turow’s argument is what furnishes the energy behind his point of view: This new online advertising industry is based on social discrimination. The method is simple: Either the companies and the advertisers they employ want you because you’re a valuable target, or they don’t because you’re not. In advertising speak, they need to separate “targets” from “waste.”

Turow poses a question few others have: What are the moral and social costs of a world in which advertising and, far more importantly, news are customized to fit a company’s vision of what customer need it thinks it can profit from fulfilling? The major cost, he argues, is to upset the balance between “society-making media” and a “segment-making media.” Segment-making media encourage small slices of society to talk to themselves, while society-making media are those that have the potential to get disparate groups to talk to each other. The hallmark of 20th-century America was the side-by-side growth of both of these forms: The culture and technology of media helped to create a more unified American society even as it carved out various subsections or segments based on class, ethnicity, region and other characteristics. Now, however:

The emerging media-planning and media-buying system is predicated on neither society-making nor segment-making advertising media channels. Rather, it is organized by a belief in the primacy of the chosen person: a belief which has motivated them to sort audiences to find individuals within them whom they deem “valuable”, track those people, and serve them personalized ads and other content anywhere they show up.

Turow doesn’t speculate on the broader implication of this process for social trust, or social capital as some call it, but he does allow that niche advertising of so surgical a character has the potential to create a social atmosphere “characterized by resentment and distrust of both government and marketers.”

Turow’s reference to government here is not incidental. While The Daily You does not spend much ink on politics as such, it notes the mass migration of advertising techniques into political campaigning and image-rendering. Advertising methodologies have shaped American politics for many years now, and it is only a matter of time (if it has not happened already) before political consulting firms come completely up to speed with the techniques now being perfected by online marketers.

Between the distortion of media processes, social profiling and the injection of Eric Schmidt-like hubris directly into politics, Turow sees trouble ahead. He offers several remedies: better education; ground-level, mainly local government regulations; a Federal do-not-track regime; and corporate transparency about data collecting policies. But he admits that the legal basis, in the United States at least, to counter these trends at their source is weak. In this respect, it’s curious that he doesn’t mention the January 2010 Supreme Court Citizens United decision. That ruling would seem to have discovered a constitutional right for Google not only to tell you what to do next but also to tell you who to vote for.

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he contest between Orwell and Huxley for best prognosticator of a dystopic future is not yet settled, but in a way their visions no longer seem that radically different. We have mind control of a sort and we have conformity, the latter to some degree enabling the former. We have both, ironically enough, at a time when the “me generation” myth tells us that the average person qua “consumer” is freer and choice-richer than ever.

Perhaps the voice to heed, then, is neither Orwell nor Huxley, but Edmund Burke. Burke wrote that

men are qualified for civil liberty in exact proportion to their disposition to put moral chains upon their own appetites. . . . Society cannot exist unless a controlling power upon the will and appetite be placed somewhere, and the less of it there is within, the more there must be without. It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free. Their passions forge their fetters.

As our appetites are induced, teased forth, filtered and shaped in ways few ordinary citizens understand, can the fetters be far behind?

 

1Atwood, “Everybody is happy now”, The Guardian, November 16, 2007.

 

J.P. O’Malley is a writer based in London. His work has appeared in various publications, including the Economist, the Sunday Times, Newstatesman and the Daily Beast.