The pop-up blocker. This seemingly simple invention speaks volumes about the internet. Basically, you need a tool to prevent your browser from being bombarded with advertisements. So it shouldn't be too hard to see how firms view the internet: as a way to convince you to buy something.
Internet advertising is fast becoming a huge source of revenue for website owners. A total of $15.7 billion was spent on online ads last year. Companies everywhere see it as an easy way to target consumers of every possible category. And as software technology becomes increasingly advanced, so do these seemingly annoying but innocent online ads. Using high tech data-collection, tracking, and analysis methods, internet ad designers are able to track individual web users, the sites they view, and the things they buy online. Using this wealth of information and running it through computer models, firms are able to target consumers based on their behavior and design ads that are specific to each internet user, down to the smallest detail. Firms like Ogilvy specialize in marketing and advertising techniques that fine-tune internet ads to maximize their effectiveness. Anything including the color of the ads, their placement on different sites, and the time of day they are run can be tweaked so that it is specific to an individual.
Needless to say, firms are catching on. Yahoo, MSN, and AOL, among others, are jumping on the bandwagon of using “behavioral targeting” to target ads to consumers. But this brings up a number of issues. While tracking consumers on the web may be legal, is it moral? The internet giant, Google, has refrained from such tracking techniques because it doesn’t want to “snoop” on its users. According to Gokul Rajaram the director of Google AdSense, Google’s advertising division, “it’s murky in terms of privacy.” Another issue that arises with internet advertising is the promotion of false information. If firms can track consumer’s online behavior, they can use this information to target ads that will be effective regardless of their credibility. This kind of false advertising can lead to huge inefficiencies in the market.
While internet advertising techniques are surely effective, firms must be able to use them responsibly. As our society becomes more and more dependent on the web, internet advertising will no doubt take over as the dominant method for advertising information to consumers. We need to be sure that firms are being responsible in their advertising techniques, as well as truthful in the information that they are advertising.
~Chuck Thomas, Brian Rock, Lian Ye, Zoey Wang
2 comments:
Bad Apple?
Yesterday the EU announced it had begun an investigation into the legality of restrictions in the sale of mp3s through iTunes Music Store in EU countries.
http://www.russellwolff.com/images/ipodpurple.gif
The issue at hand is the territorial sales restrictions imposed by iTunes on customers. In order to buy a song from the Belgian iTunes store, the European Commission says, one must be able to produce a credit card issued by a bank with a Belgian address. As a result, customers in the UK, for example, can be forced to pay a higher price for their music simply because of where they live.
According to the article, Apple passes the buck and says that it would prefer one all-encompassing store, but record companies require that Apple limit the sales of its music in this way.
This news is good for outlining some of the differences between European and American antitrust enforcement. Territorial sales restrictions are not per se illegal in the U.S., and in general the FTC and DoJ are more lenient in allowing nonprice restraints, but will crack down and dole out treble damages if the line is crossed. By contrast, Europe seems in general to be much less tolerant of potential restraints of trade but is more willing to step in and regulate business themselves.
http://www.gutenberg.org/files/16915/16915-h/images/fp318-fr.jpg
In light of the immediate reaction to this announcement, the European Commission has made it clear that they are primarily targeting the record companies in a vertical restraint case, not just Apple. Making a ruling on these cases is sometimes complicated by copyright issues, similar to the history of early antitrust law in the US. But unhappy UK music users will be anxiously awaiting the verdict in this matter.
- Jake, Jessica, Michael & Drew
Post a Comment