For some reason, many proponents of Web3, including those who have made careers in marketing, have a problem with targeted or personalised advertising. This is because for targeted advertising to work, it needs personal data.
The data for services trade-off has been begrudgingly accepted by most consumers. It’s not just ‘Big-Tech’ that does it.
Remember those in-store competitions to win a bike or a year’s worth of soda? There was an entry form that you filled out and stuck it in the post-box style slot. Then there were premium rate SMS competitions that you actually paid real money to give your data to a brand. Or think about a local cafe that makes you enter your email address to get 10 minutes of free WiFi!
Customers understand that their activity is tracked and that they give away information in return for whatever value their chosen platform delivers them.
This is a ‘problem’ for the proponents of Web3. There is an assumption and an assertion that consumers are getting a bad deal because their information allows a company like Facebook or Google to monetise that data by ‘selling’ it to advertisers. In fact, they don’t sell your data, they sell the ability to target you, based on your data.
In the current system, as I use a platform like Facebook for free, my location, likes and dislikes are captured through my behaviour. Most of it is public domain information. Some other data, like my relationship status can be given to the platform at my discretion. I don’t have to tell Facebook where I work or what school I went to, but it helps me to discover people I might know which provides a better experience. Facebook charges advertisers for the ability to target me based on my data. This is a good deal for the advertiser because they don’t have to spend money promoting to people who aren’t interested in their services.
From a user point of view, this has nothing to do with centralisation but the perceived inequality of the value chain. If the platform is making money from me that is over and above the value of the service they are providing for free, then I should be compensated.
So called ‘content-creators’ have different complaints which I will discuss later.
In a blockchain world, I might be able to provide data to an organisation in a way that codifies a compensation mechanic through an algorithm or smart contract. For example, if I watch an ad, I get a small percentage of what the advertiser is paying for that ad. I could also provide data in pieces for specific purposes. An example might be letting my location be known to local businesses when I am on holiday so they can send me ads, but they stop getting the information when my holiday ends.
From a brand point of view, centralisation is a good and bad thing – advertising to a large number of people is more efficient, but since there are limited platforms, they charge inflated prices. Think of the platform like a mall – I need to have my shop there because that’s were all the shoppers are, but if there are only two malls in town, then they can charge high rent. Note that in this example, the customer does not ask the mall owner for a percentage of their profits!
So a platform like Facebook is the intermediary – just like a bank in the Defi example. But would ‘decentralisation’ make any difference? It’s hard to see how the network effect would work in a decentralised model of a social network. I am on Facebook because that’s where my friends and family are. I am on Linkedin because that’s where my colleagues and clients are. I am on Amazon because that’s where the products I want to buy are.
It’s hard to imagine a version of the internet without advertising. Most of the Web3 fans don’t remember how soap operas came into being or why newspapers have been disrupted so much by Google and Facebook. The Metaverse is already shaping up to look like the dystopian franchise based ‘loglo’ described by Neal Stephenson in ‘Snow Crash’.
Restricting data from advertising platforms doesn’t stop ads, it just makes them less relevant and more expensive and the impact could be higher prices for customers.
Up next in the Web3 deep dive – the case for content creators!
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