Tuesday, January 12, 2010

A Contrarian Thought On The Government's Potential Online Ad Regulations

There's a lot of chatter in the online community about potental government regulation of the online advertising industry: specifically, limits on uses of cookie-based tracking and targeting as it relates to the privacy of individuals. For the most part, the online community is up in arms about any potential regulation, rallying around the line that proposed regs would hurt targeting and hurt online businesses in general etc.

As I pondered this, it occurred to me that there might be a contrarian way for the online community to look at this -- speaking as someone who has made his living online for the past 16 years. And before I write this, I'll also caveat that I'm not advocating this idea; it's just a thought that I'm pondering, largely considering our own business alternatives if strong legislation is passed. The last thing I want is a congressman who doesn't know how to check his own email writing legislation about the internet.

So imagine strong legislation that curbs, restricts and eliminates cookie-based targeting for a second....

Will that change audience consumption habits and make people spend less time online? Absolutely not; the regs have nothing to do with media consumption. Thus, media shift from traditional media will continue to online no matter what.

What will change is the usage of cookie-based and other similar tracking technologies -- audience targeting, behavioral targeting etc -- to target that online audience as they surf around hundreds of web sites each month. So what does that mean?

Remember, the audience habits aren't changing, and media shift will happen anyway to follow those habits so the dollars are following online anyway. The spend won't change, but how it's spent will change. Instead of being able to track a user who visited a ecommerce site and/or searched for products across dozens of sites all the while displaying ads for whatever they looked at the ecommerce site or searched for, advertisers will have to find sites that have contextually or vertically relevant content or with obvious demographically attractive audience characteristics.

In other words, advertisers would have to target ads the way ads have been targeted succesfully for 150 years! What really happens is all those ad dollars will simply shift away from technology companies to content companies. In other words, the balance of power shifts back to content creators. Given there's a lot more content creators than there are ad technology companies, would this be a bad thing?

Once again, I'm not advocating this; it's something to consider because this scenario -- or some degree of it -- is possible.

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