Welcome to Platformocracy’s first annual Summer Field Trip! For the next three weeks, I’m getting away from this newsletter’s usual focus on social media and democracy. Inspired by Ari Paparo’s new book Yield, I will be telling an adventure tale of business incentives and strategy in a complex, multi-player space where I spent fifteen years: the sell side of online advertising.
Consider this a palate-cleanser before I get back to the heavy stuff in September. And if you’re on vacation, then you aren’t reading this anyway, so no harm done.
Previews
Today is an overview that sets up the plot and the four protagonists I will be covering between now and US Labor Day. I’ll be back to the core topics of Platformocracy on September 5, when you can expect discussions of how platforms punish policy violators, the critical statistic that most transparency reports are missing, and my first attempt to touch the third rail of online identity and anonymity.
And now, on with the show!
Opening crawl: content, attention, targeting
In a world where people expect the Internet to be free, an intrepid band of heroes fight to convince online advertisers to give them money. The thing they sell is called ad inventory, but it is actually attention.
Human beings spend a lot of time looking at things on the Internet – mobile apps, videos, web pages, etc. Because it’s hard to list all of that every time, we have settled on the catch-all term content. I hate this word. It takes the fun out of everything. If you have a better idea, please share it with the world. I beg you.
Advertising is an opportunity to get someone to look away from their content and pay attention to something else, at least for a moment. Each individual moment of attention is not that valuable, but billions of moments per day adds up to a lot of money.
If you are smart, you can also figure out which human beings are the most valuable to the highest-paying advertisers, because they are more likely to buy something or to spend more money if they do buy it. Charge advertisers a higher price for those people, and you can make even more money. This is targeting.
Protagonists: publishers, middlemen, consumer platforms, people
Striding confidently into the frame, we meet our four main characters.
Publishers. They create the content that captures people’s attention. I could have said “creators,” but I’m going to focus mostly on magazine and newspaper companies and their fellow travelers. They have no doubt that they are the heroes of this movie.
Middlemen. You don’t have to create your own content to sell attention. You can convince publishers to let you sell on their behalf, in exchange for a cut of revenues. This is an ad network. You can also do this more indirectly by setting up an auction system for buyers and sellers to connect, as an exchange or SSP (sell-side platform). These are the morally grey characters who show up mid-movie to give the heroes vital assistance in a dark moment. Or possibly betray them for cash.
Consumer platforms. If you bring enough content creators together in one place, you can become a destination that attracts a ton of attention in its own right. Think YouTube, TikTok, or Instagram. You keep creators happy with a cut of the ad revenues. All that attention and content together gives you data to deliver better targeting and make even more money. It’s a feedback loop for endless growth. Some people would say they are eating the planet like Galactus.
People. Also called consumers or users, these are the actual humans looking at content and having their attention sold to advertisers. Like a horror movie, there are billions of them lurking about. There could even be one in the room with you right now. Don’t make eye contact. [JUMP SCARE!]
Cutting room floor: advertisers and agencies
I am skipping over the advertisers who are actually buying all this attention. I just don’t find them that exciting to write about, because they are pretty much all the same to me, like Tolstoy’s famous opening of Anna Karenina: "Happy families are all alike; every unhappy family is unhappy in its own way.”
Advertising is a fact of life. As long as people are buying stuff, the sellers of said stuff will try to get buyers’ attention. It doesn’t really matter where that attention is. Magazines, newspapers, TV shows, the side of highways, the jerseys of professional soccer players, whatever. Dickens’ serialized novels often had more advertising than text. Will there be advertising in chatbots some day? Almost certainly. Wherever people pay attention, advertising follows.
I don’t mean to dismiss the considerable skill and art involved in crafting a message, choosing targeting, managing a budget, etc. That’s why there are whole classes of players on the buy side to help, such as ad agencies and demand-side platforms. From my sell-side point of view, however, this is just extra backstory, like the contractors who built the Death Star. At the end of the day, for me, it all ends up as the same thing: an advertiser spending money, trying to get people to buy their stuff.
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And, scene. Stay tuned for deep dives on each protagonist.
I also want to take a moment to recognize Chaos_Theory, an artist on 99 Designs who has created several great pieces for Platformocracy, including this week’s summer blockbuster superhero epic.
Ideas? Feedback? Criticism? I want to hear it, because I am sure that I am going to get a lot of things wrong along the way. I will share what I learn with the community as we go. Reach out any time at [email protected].
