Will Rogers once said, "Advertising is the art of convincing people to spend money they don't have for something they don't need." According to Will, advertising is inherently deceptive, most profitable when it hoodwinks people into paying more for something than they should.
Another view is that consumers lack information and advertising can provide information. In this view, the opportunity for deception only exists because of missing information about reputations and alternatives. If advertisements are relevant enough to inform consumers, then opportunities for deception fade.
Ultimately, whether deception or relevance is more profitable to advertisements may depend on margins versus conversion rates. Deceptive advertising tends to have high profit on each sale, but usually very low conversions. Useful advertisements will yield much tighter margins, but have a much higher volume of conversions.
One extreme example is e-mail spam, horribly deceptive advertisements with awful conversions. And the data there may give us some hope. One of the worst forms of deceptive advertising, e-mail spam, appears to be a barely profitable enterprise despite its ubiquity. This may suggest that deception does not inherently maximize profits.
Another example is search advertising. By targeting advertising closely to search keywords and intent, companies like Google have not only made search advertising very lucrative, but also relevant and useful to searchers. In search, ads are highly targeted, rarely deceptive, only occasionally annoying, and often helpful.
But most other forms of advertising remain irrelevant and annoying. The most common technique we see still is broadly blasting ads across all eyeballs. It would be good to make advertising more helpful, relevant, and useful to people. Is it possible?
For a few years now, I have worked on personalized advertising. Personalized advertising tries to make advertising more useful and relevant to people by targeting ads to individual interests and needs.
Especially recently, I have been struggling with a moral question. Let's say we build more personalization techniques and tools that allow advertisers and publishers to understand people's interests and individually target ads. How will our tools be used? Will they be used to provide better information to people about useful products and services? Or will they be used for deeper and trickier forms of deception?
For me, it is an ethical issue that cuts deep. If personalized advertising will not be used to benefit people, to improve the usefulness of advertising, then I want no part of it. It seems clear that personalization can make ads more relevant, but I fear it also could be possible to use deep knowledge of individual interests to target deceptions. Which will advertisers do? Which will be more profitable?
I am hopeful that we can improve advertising, that advertising will be most profitable for most advertisers when it is useful and relevant. I am hopeful that any deceptions will be marginalized by a flood of more useful alternatives. I remain hopeful that advertising can move toward a helpful information stream and away from the art that Will Rogers deplored.
But, to be quite honest, I sometimes have doubts about the answer, which is why I bring it up for discussion here. What do you think? Is advertising an industry fundamentally fueled by deception? Or is advertising better understood as a stream of information that, if well directed, can help people?
Greg, I feel like we covered this last October when you wrote a post last year entitled "Google describes perfect advertising", leading me and Jeremy to engage in a heated discussion in a comments, as well as inciting me to write my own rant entitled "Search is Not Advertising".
Links to both:
My argument in a nutshell (excerpted from my post):
Advertising is about selling the user’s attention to the highest bidder. Google has done more than anyone to make that bidding process economically efficient. But any utility that advertising proves to users is a means to an end. Advertising is all about the advertisers, and the advertisers only care about providing value to users in so far as their interests are aligned. Absent alignment, advertisers naturally look out for themselves.
I think in the perfect case of a recommender system, advertisement as such become irrelevant. You'd have a direct mapping between customer desire and product awareness. The onus of sales would be on producing products people wanted rather than the ability to generate awareness for them.
Naturally, that's not how reality actually works, but I think it might be useful seen as one of the extremes of a continuum. The other end of the spectrum is creating a market for things people don't actually want.
The latter sounds like something that's probably not good and the current state of affairs is somewhere between the two. It would seem that if you can admit the way that things currently work isn't evil then the case of targeted advertisement is increasingly less so.
The problem, of course, is that the function isn't entirely continuous. Targeting can, potentially, be used to trick people. It's not so much that tricking people is novel in advertising, but as you learn more about how a person ticks your trickery could be that much more potent.
Very few ads are intended to deceive. Most mass-media ads are designed to appeal to people's subconscious desires -- to be attractive, accepted, secure, etc. -- and to link a product to that desire. Online ads will dominate advertising only if they are effective at making that linkage. Personalized ads ought to be effective at selecting audiences for their subconscious desires by analyzing their conscious choices. See the BBC documentary "The Century of the Self" (on google video), especially segment 3 on the rise of lifestyle marketing, for an example of using conscious answers to infer subconscious desires.
If there is a continuum, it may be from informational ads with conscious appeal, to influential ads with subconscious appeal. Personalized targeting ought to improve the effectiveness of both kinds.
(Note that we may still be squeamish about improving "influential" advertising. It doesn't make subconscious desires conscious, rather it adds a subconscious link to a product -- and thereby makes us willing to buy more of it and spend more on it than if we had not seen the ad.)
About a month later, in the October 12 issue of the New Yorker, Ken Auletta has an article, "Searching for Trouble", that describes a conflict between the COO of Viacom and the founders of Google on exactly this issue, deception in advertising.
"[You want] salesmanship, emotion, and mystery. [Viacom COO Karmazin said], 'You don't want to have people know what works. When you know what works or not, you tend to charge less money than when you have this aura and you're selling this mystique.' The Google executives thought Karmazin's method manipulated emotions and cheated advertisers."
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