The Cons Of Targeted Advertising

I just read Derek's analysis of Google CEO Eric Schmidt's interview conducted by The Atlantic's James Fallows at the First Draft of History event. One topic that was touched on was keeping media profitable -- something Time Warner CEO Jeff Bewkes also addressed in the interview I blogged. Schmidt noted that targeted advertising, which will be dramatically enhanced through better technology, will help media like magazines enhance their advertising revenue substantially. That got me thinking about targeted advertising. I'm not sure it's completely positive.

Here's what Schmidt said:

Imagine a magazine online that knew everything about you, knew what you had read, allowed you to go deep into a subject and also showed you things that are serendipity. Such products are beginning to be popular. Those products are highly targetable. And highly targetable means highly advertisable.

Targeted advertising, for example, is that little advertisement at the top of your Gmail account suggesting you click on a link related to something you wrote an e-mail about. For example, I e-mailed myself a chart on unemployment to help with a blog post I wrote earlier on the topic. So my Gmail consequently requests I click on "A Map Of American Unemployment." It's information technology at its finest. It's also kind of creepy.

I see one problem with ultra-targeted ads for the advertisers themselves: there's no point. The more interest you have in a product, the less you probably care about advertising for it. For example, if I completely love Nike, I probably don't need to see any more advertisements for the shoes to convince me that they're great. I also am probably already savvy in finding the best deals without advertising, given my obsession with their shoes. This is a bigger problem for ultra-targeted advertising, because the more specific information it has, the less likely the advertising will be necessary.

This sort of leads into the next problem I see, which isn't so much for advertisers as it is for consumers. I kind of like being introduced to things that I wouldn't normally have liked, given my preferences. The best example of this I can think of was my old personalized Launchcast radio station. Tragically, Yahoo discontinued the service, but it was a radio station where you rated songs based on what you liked. The really great thing about that was they also used to throw in songs that you might completely hate from time to time (which you could choose never to hear again). Pandora, another personalized radio service, doesn't do play as much random stuff and generally sticks closer to your preferences. As a result, I don't like it as much, because I enjoy my preferences being challenged and learning about new music.

The same could be applied to advertising. If all the ads I see are based on my preferences, I won't be introduced to any new products that I might not have been exposed to through more arbitrary advertising. I worry that this could force everyone to live in their own little bubbles and be less aware of products that they might enjoy if they had seen them advertized.

Finally, I also believe such targeted advertising would be problematic in knowing about products that could make for good gifts. For example, I would never buy a Snuggie for myself, so targeted advertising would never bring this product to my attention. But if I know someone who enjoys sitting around with a blanket over them, but likes to drink coffee at the same time, then it would make a great gift. If I never saw an ad for it, based on my preferences, I could never know to purchase one for that friend.