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Can you hear me?
Good. OK, so
my Ph.D.
is interdisciplinary, so that means I'm
based in between faculty
of business and law and computer science
department.
So this means I'm kind of a jack of
several trades, but I'm not a master of
any of them.
So the topic
I'm gonna to be talking about today is
digital advertising and
how it works, how it doesn't work, and
how we could change the
way that we match providers and goods
of goods and services with
customers who need to buy them.
So the Internet has been called the
nervous system of the 21st century,
um, its providers incredible value,
but the business model that a lot of the
services we use to access it and to
communicate with each other are free.
And they're subsidized by,
um, a business model that's based on,
um, surveillance of consumers,
and that is advertising.
This is a 512 billion dollar industry.
How does it work?
Well, it's a way of matching
the supply of goods and services with
customers who want to buy them.
But originally, the purpose of
advertising was
to to get brands
to be able to be trusted.
And by placing an ad in a newspaper
or billboard as a way of saying
that they're a trusted brand, that they
weren't cowboys, they weren't going to
rip people off.
It was also about cultural imprinting,
which is the idea that if you make an
association between a product and
a certain way of life or a certain
set of values, then consumers can express
themselves through buying the products.
But those don't have much to do with the
kind of advertising that funds the
Internet today that is
targeted advertising.
And the idea of targeted advertising is,
you know, something about an individual
and you use that knowledge to send them a
special message which is designed
to influence them to buy something.
So for those who don't
know, so this is 20 percent of
the ad industry, but it's the majority
of revenue of a lot of the the businesses
that provide free services online.
So for those who don't know, this is a
kind of a simplified version of how that
industry works.
On the one side, you've got sellers who
want to sell stuff.
On the other side, you've got consumers,
buyers.
In the middle, you've got a very complex
kind of web of intermediaries.
And so the sellers will have marketers
whose job it is to to to
try and sell stuff.
They'll go to advertisers who will create
the creative content to advertise the
products. They'll use something called
the demand side platform, which is an
intermediary service that allows them to
automatically pay for ad
space.
And they'll do that through either an ad
network or sometimes an ad exchange.
And the idea of an ad network is to
aggregate all of the available ad space
and allocate ads to the space ad
exchange, allowing this to happen through
a marketplace where there are auctions
and so a publisher.
So this could be any website that has
display advertising space will
engage with an ad network
or an ad exchange through what's called a
supply side platform.
The supply side platform on the demand
side platform have auctions with each
other through the ad exchange
and the amount that each
display opportunity goes for
depends on how much is known about the
user that's visiting that page.
So there's a whole load of personal data
that it gets collected in order to do
this targeting.
And sometimes they'll be third party data
brokers that will be involved as well.
And the and the idea is that the more
that's known about an individual, the
more that the ad space is worth paying
for.
So that's how it works in theory,
does it actually work in practice?
So just for a purely business
perspective,
it's not really clear whether it does or
not. We do know that about 44
percent of all the ads that are served
in this way, I never actually interview.
So that's classed as being on a page
that is visible to a user
for more than one second, the remainder
the remaining fifty six percent.
It's not clear whether they get seen
either, because they might be ignored by
consumers.
They might be blocked through ad
blocking software.
And there's other things like click
fraud. So this is where
fraudsters essentially cheat marketers
out of their outspend by generating fake
clicks and views of adverts
and they charge them per click or per
view.
Then there's the question of whether the
profiling is particularly accurate.
I think in some cases it is, but a lot
of cases it isn't.
I logged on to the ad preferences
manager of an ad network
and looked at my own profile and
they think that I am a father
with two kids and that I have a pet dog.
As far as I know, neither of those things
are true.
So any targeting that's
targeted at me on that basis is unlikely
to be correct.
But maybe there are some cases
where the the adverts that reach
people in this way are relevant to
them.
And the theory is that this is
good for consumers because it's more
relevant adverts and therefore things
that they might actually be interested
in.
But aside from that, there are
a whole bunch of problems with this
infrastructure for consumers.
The first one is surveillance.
The ad industry makes surveillance
very valuable. It encourages it invests
in it.
I'm not going to go into detail on this,
but I think there are lots of people
talking at the Congress who
will be able to articulate far better
than me the dangers of surveillance
for civil liberties, civil liberties.
The second problem is the use of
this infrastructure for distribution
of malware.
So why would you try and
hack in someone, someone's computer if
you could just simply buy access to it?
So if you if you can pose
as a marketer,
then you can use this infrastructure to
deliver a personalized
phishing attack through an advert.
So that advert will resolve if it's
clicked to a landing page, which serves
malicious software.
The other problem is that with all this
personal data sloshing around and being
bought and sold, it's very hard to
prevent it from getting into the wrong
hands.
Where, for instance, data broker
might sell information about
consumers.
There was a case where this happened
and a Vietnamese scanning outfit just
bought a whole load of personal data
from a data broker and then sold it onto
to others.
And there's the problems with personalization.
Generally, this whole system is set up to
personalize stuff.
But what seems to be
convenient personalization to
some engineers in Silicon Valley or
wherever might two
other groups seem more like
discrimination when one person's
personalization is another's
discrimination?
And when you can't tell how this is being
done, when there's no way to scrutinize
the algorithms that are driving this,
then I think we have a problem.
And there's a final interesting
psychological problem
with personalization, which is
that if you get too much of it, then
it's people tend to get freaked out.
And so this is there's a parallel here
with some research that's been done
in the field of robotics.
Back in the 70s, they
found that they were looking at how
people responded to robots
with human features and they found that a
little bit of human features makes people
respond better to robots they prefer to
to interact with them, but only up to a
point. After a certain point,
there's something called the uncanny
valley where the robot looks too much
like a human and people get freaked out
because it's not quite human, but it's
almost a human.
And so there are some marketing companies
that are seriously worrying about
a similar effect being the case
in in in personalization
that that's done with targeted marketing.
So what's the solution?
I think there are better ways that we
could devise of matching people
who have needs and wants
with the products and services that could
fulfill them.
So I'm going to go through a few
different ideas that I think could be
really useful.
So the first one is inspired by how
large organizations go about buying
stuff. What they don't do is they don't
sit around on their computers waiting for
ads to be targeted at them that are
relevant to the stuff they want to buy
because they have procurement teams
and the procurement teams have
a job, which is to send out requests
for proposals.
A request for proposal will say exactly
what it is that they want.
There are all sorts of criteria that they
have internal policies,
you know, maybe even environmental or
ethical policies that they have.
And then suppliers have to compete
for that tender and they do
it in a reverse auction.
So they compete against each other to
provide the service at a good price.
So this kind of infrastructure could work
for individuals as well.
There's a service called flu, which is
one example where you find something
online that you want to buy, but you
don't like the price.
You copy the URL, paste it into the
service. Within a few hours, you will get
back offers
from companies who want to provide you
with that same product, a cheaper price,
and they'll be competing against each
other in order to deliver
that that offer to you.
So there's a guy called Doc Searles from
Harvard University's Project
VRM, which stands for Vendor Relationship
Management, and he
calls this intent casting.
So rather than consumers responding
to the messages that put out
by marketers, it's actually
marketers or suppliers of products and
services that are responding to
the intentions of broadcast by
individuals.
But this still leaves the problem that
as an individual, I don't have a great
deal of power in the marketplace.
What gives me more power is is being
aggregated with lots of other people.
So this is where collective purchasing
comes in.
Essentially, the idea is that by
aggregating demand for
a particular good, that the
an intermediary can give consumers much
more bargaining power with suppliers.
And this works particularly well in areas
like energy.
You have switching schemes that have been
run where
intermediaries like charities or local
councils and in some cases even churches
will get people together
and help them switch to an
energy provider that can provide them
with a better service at a lower price
and so on. And the energy providers, even
the big four energy providers in the UK
were clamoring to try and offer
the lowest price to
to get the customer.
This isn't a new idea.
It's been around for a long time.
During the Industrial Revolution, workers
cooperatives pooled their labor to
increase the bargaining power that they
had with employers.
But they did the same thing with buying
household goods.
They had collective purchasing.
They called them cooperative wholesale
societies.
And the aim was not just to do bulk
purchases, but to actually organize
production and have an influence on how
the goods that they bought were
made and so on.
And so final, the final thing I think
is worth looking at is assurance
contracts.
This is the technical term economists use
to describe a Kickstarter style
pledge system.
The idea is that you get lots of people
to pledge that if enough other
people do so, they will put their money
into a project.
And then before you even go into
production, you have a proven
demand.
So it's a way of uncovering latent demand
that might not otherwise be revealed
through through people's
purchases.
And some people have advocated moving
towards this model for a lot of new
things, and they call this the preorder
economy.
So something I think is important to
notice with all these tools, these
mechanisms is that they're initiated
by the buyer.
They they get to set the criteria.
Um, and so only when
a sale actually goes through is there any
direct contact between the
provider and the buyer.
And they can also
be used to turn the tools of surveillance
that are being used right now by
marketers back on the
providers.
So there was a campaign called Move Your
Money in the UK, which was
looking at ethical banking, and it
gathered thousands of people together
who wanted to change their bank to a more
ethical bank, did a whole load of
research into which banks were most
ethical, and then
on a certain date, they all switched to
the one which should which had managed to
demonstrate enough that it was ethical.
So there are other criteria that can be
used
other than just a particular product, a
particular price.
So I think the missing piece here is
the ability to do all these things in a
decentralized way.
At the moment, all of the providers of
these services are individual
organizations.
They build their own software.
They have to aggregate demand.
And they they they have to work
in specific industries.
And it's not a model that scales
very well across the whole marketplace.
So I think what's
needed is a decentralized way of doing
this.
So the idea would be that your wants and
your needs would be broadcast anonymously
on a decentralized network.
So when I let's say I want to buy a
laptop and I want certain specifications,
I want certain operating system.
There are some companies I don't want to
deal with. I don't trust them, for
instance.
So this information can be broadcast to
a decentralized network.
From there, it can be aggregated into
a collective alliance of other people
with similar needs.
And then suppliers can
can then crawl that network and look at
all of the different demands that
are being made and bid to meet those
demands. And only then
does my purchase become linked to my
identity if I want to,
when I complete the purchase.
And so I think there are
this is kind of an example of how it
works. Very rough sketch of how it might
work.
There are people working on doing this in
a decentralized way.
One of them is Hayase.
His is Floriane cleared off.
I think he's over there.
So if you want to find out how his
project is achieving, this is called the
Web of needs, I'd recommend
getting in touch with them.
So the point of all
this is that I think it's a
better way of matching supply.
And demand avoids all of the problems
of the digital advertising
industry as it currently stands.
And I think it's,
uh.
A better way of organizing consumer
markets,
so conclude, I'd like to
put this in a broader context.
There's a narrative of consumer
empowerment that kind of stems from
the Enlightenment idea that we're all
individuals with autonomous
decision making power.
We interact with each other on the market
and we make
choices based on the options that are
available to us.
But I think this is is a myth.
It doesn't really work like that.
And when when the Web came along, we
thought that it was going to make it even
better for consumers because there'd be
even more information available at our
fingertips and we'd have even more
ability to decide.
But actually, it doesn't really work like
that. There's there's so much information
out there. But most of the time
when we're being targeted with
advertisements rather than than going out
and searching it.
And so I think what we need instead is a
system that is based on
on transparency from the providers,
that's not based on surveillance of
consumers.
I think it's important to have a
system that is not about grabbing the
attention of consumers and
trying to convince them to buy stuff, but
it actually is based on their needs
and their desires and their individual
criteria and.
That treats them as individuals
with their own values
rather than just manipulable,
kind of predictable consumers.
So I'm not sure if I've finished ahead of
time, but I'd be
pleased to take your questions.
First, the answer to your question, you
finished well ahead of time.
We've got 12 minutes for
a Q and A or A discussion,
and I see there
is only one person on microphone
one. So go ahead.
OK, thank you for your talk of first
question.
You talked about advertisements that
advertise a product, but what about
advertisements that advertise a brand
ad buy? A car manufacturer says, hey, we
will build great cars, please, like us.
Well, there's an interesting theory that
that kind of advertising should actually
be more valuable.
And the argument there is that targeting
allows you to pay a very small amount to
target a very specific person.
And so anyone can do that, right.
You don't need to be a big company with a
with a lot of money to invest and have
been going for a long time to do that.
So actually, rationally,
you might think that a targeted
advertisement signals that you're not
necessarily a very reputable brand,
whereas if you buy a double page spread
in a magazine and to
demonstrate that you that you have that
power to do that, then people might be
more interested in it and be more willing
to respect you as a company that
they can do that. So that's one that's
one theory.
I think generally branding
advertisements are a different
beast and they don't necessarily require
surveillance because they're
then normally higher profile.
They're on billboards or in magazines.
OK, um, and another thing,
if you actually
next question, it's OK with the
microphone, which would
be number two.
Uh, one question for me for me is
I see a lot of advertising in the Net
advertising something that is
next step for advertising.
So, for example, if you have a free game
on the iPad, it is
enticing for next free game
that maybe get some advertising
for real product.
This is getting meta levels.
Will this ever break down completely?
Because all these levels of advertisings,
I'm not sure I you saying that
you're in a game, you get an
advertisement for the next or next free
game, that perhaps monetizing
itself by selling another ad for another
free game and at
any time.
Well, I guess that wouldn't require, um,
that wouldn't require surveillance
because we all you need to know is that
the person is playing the game.
Right.
So there aren't as many negative effects,
I think.
And that you've already expressed an
interest in the game by playing.
So, no, for
now, I'm just more like a comment,
I think.
Um, so I basically
I don't watch ads because I have
an ad blocker and I haven't had
a peep for, like, I don't know, more
than ten years and things
like that. So I really am not, you know,
bear. And then what's really weird
is that sometimes people tell me that,
you know, I've seen this ad and, you
know, have a look. It's really weird.
And I'm like, well, you know, that's a
new product.
And it's actually useful, like, you know,
it's the ad.
But I'm trying to say that they're not
pushing ad on me.
It's like it's actually valuable
information, which I know sounds very
strange. But so what I'm trying to say
is that if we turn this around, which
is what you're trying to propose, I
think, is that there
will be a lot I mean, there will be an
information flow that will be missing.
I mean, I personally thought that that
information flow is completely useless
information, but it turns out that
I have to face the fact that it's not
completely useless.
And so what do you say to that?
So if the question is about,
you know, without ads, how do we
discover new products that we weren't
aware of? If it's completely based on our
own initiative to go and make the
requests, then we might miss out on
important opportunity. I think that's
right.
But I think there are other models to
discover, products that you might want
and need. Um, there are
obvious to write blogs about particular
things that are great.
And they look at all the new products
that are coming out and that's an
impartial source.
It's not coming from the seller.
And so I think you should there's always
more reason to trust an impartial source
than anything that comes from from the
seller.
But I think it's interesting to consider
that. Could you just
one question for the person, please.
And the next question's right
behind you on microphone for as well.
OK, thank you.
Um, I'm thinking of,
uh, some experiment, uh,
which was about Cuffy were to ask
some consumers what they want
and they all said they want some,
uh, which was black
and strong coffee.
And when they tasted or tested
different coverage, they all wanted some
milky soft coffee.
So when companies look
at that, do you think they will
trust the opinion
of the customers when they see.
Well, they don't really know
what they want.
Mm hmm.
I think yeah, I think it's true that,
as I said, we don't really know what we
really want. We usually make bad
decisions and we usually make suboptimal
decisions.
But part of that is about
tools that allow me to be aware of my own
inconsistencies, that allow me to
understand what I really want
and when that differs from what I think I
want.
It's another thing to say that that's a
justification for
leaving all this infrastructure in the
hands of of those who are trying to
convince me to buy stuff, especially if
they if I think that I like a certain
thing, but my actions reveal I like
something else and I might want to change
that. Let's say it's I think I
want to quit smoking.
Right. I know that I want to quit
smoking, but I keep on smoking.
That doesn't mean that I actually do like
cigarets. It's a conflict between my
higher decision making power and my my
my base decision making.
OK, um, next one is number three.
Thank you very much for the great talk.
If more and more collectives come around
and they'll become a big
player in the network that you showed
in the beginning.
And I'm pretty sure that industry will
come up with a smart business model and
try to involve them in all their you know
what they do have you
thoughts about what they'll
come up with and what we should be
afraid of and be prepared for.
Yeah, yeah. I think, um, I think that
they see that and there's a positive
opportunity for sellers,
at least I think that a lot of the ad
industry will, if this were to happen
with a lot of the industry, would die
off. But I think from the from the seller
perspective, there's a there's a huge
advantage. If you don't have to go and
acquire consumers, you don't have to
spend money on advertising anymore.
And that's great.
Um, if I mean, if the energy
switching program was was what
everyone used rather than just sort of 10
percent of people using it, then you
could have an energy company that had no
marketing budget but that exclusively.
So the the would be lower and they'd
always be winning the
customers, the collectives.
So I think there's a huge opportunity for
businesses to use
this model and therefore not have to go
in for the whole digital advertising
model.
Next, we have a question from the
Internet, so
what do you think about consumer
generated wish-List approaches?
Are those a good model?
Yeah, that's a that's a decent model.
Um, another Amazon has that.
Um, and yeah, I think
it's a good idea. The problem at the
moment is it's centralized.
So, um, if
I have a wishlist model with a particular
vendor, then I only get
offers from that vendor.
Um, and so another service
that could do that, um, and, you
know, that could match my wishes with
similar people and aggregating together
I think then getting.
Next one was on number one.
So you talked about collective
purchasing, which is now popular for
energy markets.
You're probably a bit too young for it.
But like when we hit the new economy in
1999 and 2000,
there was a lot of collective purchasing
for consumer goods like
cameras. So basically it worked.
Some broker was collecting the requests
and whenever they had an order for like
10 cameras, they would send it out.
But that magically vanished.
So did you do any comparison?
What went wrong there or why did it
vanish and will it vanish again?
Or what did they do wrong in those
years?
I'm not sure it's a good question.
Um, I think where it has been successful,
it's been in markets that are more
like utilities than one of purchases
because people have to pay their energy
bills or they have to use their bank
year in, year out.
And so if you if you
have to do that, it's kind of
you're confronted with that decision so
many times that at some point you think,
well, maybe I should do this in a more
efficient way, whereas if you buy a
camera, you might not
you might not have to consider
how you make the decision so many times
so people might not know about them.
I think it's hard for that kind of
service to get a foothold.
And also there's a problem of instant
gratification.
You can go and buy the camera straight
away rather than having to wait for
enough other people.
But I think, you know, people pledge
money on Kickstarter for stuff, you know,
90 percent of the stuff and maybe more
on Kickstarter doesn't get funded,
but people still put
their money down just in case.
So I think those could grow.
Next question is on microphone number
two, and I don't know whether
we'll have enough time to answer all
questions standing there, but go ahead.
OK, then I'll try to make it
quick. So I think a lot about
empowering consumers.
And you talked about more
about the
functional and qualitative set
of preference consumers may have
when purchasing a product.
But there's also the dimension of
ethical, moral and political values
and views that we also
may wish to to express by purchasing.
And of course, once you solve
the problem of
combining the purchasing power of
consumers, that's great.
But I wonder if you've thought about more
about creating transparency
on the supply side.
So as long as marketers or companies
can create an image that we
are making the world a better place by,
you know, that they have very human
rights saving
production process.
So how can you really
solve the the issue of
information asymmetry between
what the consumer knows and what maybe
a group of people believe
they know?
I absolutely agree, and I think there are
people working on that.
So there's things like open product data,
open supply chains, all that kind
of stuff.
And some companies are making efforts to
do that.
But I agree that there's there's a lot of
asymmetry and it's a very opaque at the
moment. Um, I think one model
you could have would be OK, um,
let's only deal with the ones that say
what they do, um, and provide
evidence for it.
Um, and so
the consumer might take a hit because
they might miss out on stuff, other stuff
that is being produced in an ethical
way, but it provides an incentive
for the suppliers to actually publish
that information.
Right now there's just not enough demand
for it. But I think in future it'd be
great if there was and this this campaign
I mentioned to move your money campaign,
they created a lot of that information
themselves by going out and doing their
own investigations into how the banks
were using their own money for
investments.
Next on microphone for
I'm going to be a bit provocative, so
I'm wondering whether you've seen
any of those business models you
described that were successful
on a large scale because
what you describe is intent, casting the
collective consumer demand.
It's been tried.
I mean, and the role has been taken
over by social networks.
Group buying was tried by Groupon and
became a total perversion to push
model and assurance contracts.
Kickstarter is successful.
It is because it's the destination site
in itself, because there's a strong
editorial control on what is allowed
on Kickstarter or not.
So, I mean, I'm just wondering, have
you answered the question already
yourself? Consumers are lazy,
so there needs to I mean,
the role for intermediaries
will we will still need
for intermediaries.
Yeah, I think that for now,
yes.
Intermediaries need to be recognized
brands in themselves.
There are some in the UK that have to do
a lot of spend a lot of money marketing
themselves and demonstrate to consumers
that that they exist and that what that
value they provide.
So I think for now they're
most likely to be centralized.
But I hope that in future they won't be.
And I think for this model to scale
more widely, I think that it does need to
be decentralized.
Well, unfortunately, when you ran
out of time, maybe
you find another room to continue
this discussion.
Thank you for your talk and for
the Kunie.