It has been said, for the big tech companies, “you are the product.” Or more specifically, if you are not paying for the service, you are the product.
You’ve heard the saying, “there’s no free lunch?” I think most of us can agree with that statement. Generally, when a friend or family member offers us a gift or asks us for a favor, there is some implicit agreement that they will ultimately receive something in return. Even if the offer is altruistic, our psyche generally defaults to, “now I owe them something in return.” That is true in the online world as well.
There are several reasons why as the internet grew and evolved, we, as users of digital media and tools, came to expect those things for free. Those reasons can be explored in another post, but for now let’s accept that we expect Instagram, TikTok, Google search (and their suite of office tools), Waze, Alexa, etc to be free. How much would you be willing to pay, if at all, for access to any of those tools. How many apps on your phone have you been willing to pay for? If you did have to pay, would you?
All of these websites, apps and tools that we rely on both online and on our phones are built, created and maintained by companies. Companies that need to invest in development, storage, customer service and content creation. These activities come at a cost. There are two main paths to revenue generation: subscriptions or ad revenue.
What I find interesting about the narrative around “you are the product.” Is that it has been true since media and advertising have been around (approximately dating back to the early 19th century). You were the product when you were paying a penny for Benjamin Day’s New York Sun. Benjamin Day helped revolutionize the media business model by selling his newspaper at the deeply discounted cost of a penny which allowed his newspaper to reach a mass audience. He made up the difference by selling advertising to brands who wanted to reach that audience. You were the product when you were reading Ladies Home Journal (LHJ) for only one dollar a year (LHJ was the longest running magazine in the United States until 2016). You were the product when you were listening to Amos & Andy on the radio or watching the last episode of MASH on CBS in 1983. As broadcast was growing as a medium, networks were eager to create more content to put on air. To pay to produce the content they turned to newly emerging brands to sponsor the production of that content in exchange for recognition of their sponsorship. This was the beginning of sponsored content. As the networks and audiences grew, it became too costly for many brands to pay for the entire program so networks began to break the advertising down into smaller units, first 60-second and then 30- and 15-second ad breaks (some social media now offer 6-second units).
Media and entertainment have long been accessible because advertisers paid publishers to insert their messages within the content. As audiences, we accepted these ads in return for access to the content. The main difference was that advertisers had limited knowledge about the audiences. For broadcast media, it was feasible to know where viewers were watching, and research could estimate the age and gender of the audience. Advertisers used this data to target mass audiences who were presumed to be most interested in their brand. They aimed to reach these viewers by placing ads in content likely to attract their target audience. This method, known as contextual targeting, helped advertisers find large audiences within relevant content.
What digital media offered was the ability to understand who was viewing a particular article or content based on what they had done online previously. As an advertiser, being able to identify someone based on activities they had engaged in online rather than just their age and gender was much more valuable. That value translated into being willing to pay more based on audience targeting than contextual targeting. That means that publishers can earn more ad revenue by being able to identify someone based on their prior browsing activity. This resulted in the growth of online behavioral advertising. The ability to reach people based on their online behavioral activity versus simply their age and gender. While some of this does feel creepy, the alternative is being forced to see ads for things you are not interested in. If you are going to be exposed to advertising, the experience should be mutually beneficial.
If you are willing to flip the narrative, you will see the benefits of having access to content via an ad supported internet:
- Having access to more content without having to pay for it
- Contributing to giving access to content to those who can’t afford it
- Seeing more personalized ads (and potentially fewer of them)
Next time “Accept All Cookies” pops up or Apple asks you if you would like to “Ask App Not to Track,” realize that you are not “the product.” The reality is if you are not paying for a product, it is not because you are the product. It’s because you are the partner. Your partnership allows creators to create, you to discover and advertisers to connect. Next time you see an ad, remember that it is helping to keep your favorite content free and accessible to all