Does the Advertising Industry Give Any Value Back to the People?

The lead image for this article was generated by HackerNoon's AI Image Generator via the prompt "billboards in times square"

Let's talk about why advertising technology drives the modern web, and why a good product won't sell itself, no matter how much we'd like it to.

Some people think that Internet advertising is intrusive crap that everyone is sick of, but is this a hard thing to argue with?

Internet advertising contributes, on average, 1.5% or more (depending on the country) to the global economy, which amounts to hundreds of billions of dollars per year. Meanwhile, in 2020, in the US, 19.4% (or $7.1 trillion) of sales activity was driven by advertising, including both directly stimulated sales and stimulated sales activity. Advertising activity supported $3.9 trillion (or 18.5%) of the $20.9 trillion US GDP in 2020.

Considering that 1/5 of the country's GDP is attributable to advertising, do you think it is worth the cost of not advertising? For me, the answer is obvious.

Okay, advertising gives added value. But it's still annoying!

There are "natural selection" mechanisms in advertising technology. Annoying advertising is ineffective, and it is replaced by other, more effective tools.

Remember the web in the 2010s, full of banners? They were annoying, but over time they were replaced by contextual ads, native ads, and after that, push ads in apps (okay, sometimes they're annoying, as well).

Modern advertising is even more effective (and less annoying). For example, Yandex takes into account more than 1,000 factors when targeting ads, including quite exotic. For example, the weather or the proximity of holidays.

What's next?

It's a tricky question. On the one hand, targeting technology using AI is advancing by leaps and bounds. Ads are becoming more and more like a personalized recommendation feed (and you'll see fewer and fewer annoying and uninteresting ads).

On the other hand, the trend toward privacy and control of personal data is gaining speed. You've probably already heard about GDPR and its counterparts (and that's just the top of the iceberg). By contrast, the depersonalization of users online prevents personalization of advertising and makes it less effective. Which means it increases its quantity and makes it less interesting for the user.

What this will lead to in the end — we'll see. At the moment it is very difficult to make any predictions here.

Okay, but what about the loading?

Advertising is the most heavily loaded service on the Internet. Yandex alone shows billions of ads per day (and for each one, it evaluates hundreds of behavioral factors in a total of 200-300 milliseconds). This is huge computing power, for which the company builds and develops data centers. In short, advertising is not just banners.

In general, advertising is the DNA of Yandex, Google and dozens of other players in the market. It generates the main income (two-thirds of revenue for Google), is the driver of technological development and takes up a lot of resources.

And in general, advertising is like, growing?

Yes, and for several reasons at once.

• First of all, online advertising is taking away revenue from traditional channels, such as television, the press. Over the past few years, newspapers and magazines have lost a third of their readers. But those hundreds of millions have not disappeared or stopped buying.
• The number of Internet users is also growing. It has doubled in the past 10 years, and today half of the world's population has access to the Internet. At the same time, the time people spend online is growing: up to 20 hours per week (and up to 2.5 hours per day in social networks alone).
• And of course the world economy is growing along with the volume of goods produced. And this means that these products (including software, works of art, etc.) are looking for their consumers, including through advertising channels.

In short, expect new records of high load. And with it, new technologies that will optimize that workload.

And it's all for nothing if you turn on the adblocker!

It's a pity, because advertising is an excellent "projection of culture" into our digital space. You can use advertising to understand what is trendy right now.

It's not just about music or shopping. Job ads will tell you which industries or companies to focus on, and professional ads will tell you about the hype areas of study.

By the way, the further away, the worse the usual ad blockers will work, because they are only effective against traditional tools like banners and videos. And what if in the near future all the content on the web will be personalized at all? You can't escape from yourself!