The Digital Shock — Search, Programmatic, and Platforms

At the close of the twentieth century, the world’s advertising had been bundled into a handful of giant holding companies, and their empires looked unshakable. Filling living rooms with television commercials, locking up the pages of newspapers and magazines, moving brands the world over — the equation of advertising, polished over a hundred years, seemed to have reached the realm of perfection.

Yet beneath that surface, one question had long troubled the industry. ‘Half the money I spend on advertising is wasted; the trouble is I don’t know which half.’ There are various accounts of who said it, but this maxim struck at a fundamental weakness of advertising. Who was reached, whether it worked or not — mass-media advertising could not measure this with any precision. The internet thrust an entirely new answer at this century-old question.

The revolution of ‘measurable advertising’

The greatest difference between print and television advertising and web advertising lay in a single point: it could be measured. Who saw it, how many times they clicked, what they bought afterward. Behavior on the web remained as numbers, and the effect of advertising came to be made visible with unprecedented precision.

The change was symbolized above all by ‘search advertising.’ The words a user typed into the search box — the very interest revealed in that instant — were linked to advertising. Show someone who searched for ‘running shoes’ an advertisement for running shoes. By offering the very thing wanted to the very person who wanted it, this mechanism overwhelmed conventional forms with how few of its shots were wasted.

It was not Google that created the prototype. In 1998, GoTo.com (later Overture), launched by the entrepreneur Bill Gross, put forward a ‘pay-per-click’ mechanism in which the display order of search results was bid for, and charges were taken only for the clicks received. Google launched AdWords (later Google Ads) in 2000, and in 2002 introduced an improved version that adopted a bidding format, beginning to open up this market in earnest. It is reported that there was a dispute between the two over intellectual property, which was settled in 2004.

A machine wins the space in an instant

Following search advertising, another major technology changed the very nature of advertising: ‘programmatic advertising,’ and in particular the mechanism called ‘real-time bidding (RTB).’

Conventionally, advertising space on a website was bought and sold in bulk through negotiation between people. Yet in the late 2000s, a technology spread that let machines take over this trading. In the very instant a page is displayed — within a fraction of a second — countless advertisers automatically compete, ‘if I can show this person this space, here is what I will pay,’ and the advertisement that values it most highly is displayed instantly. This mechanism, in which a system rather than people processes an enormous volume of bids, is said to have spread rapidly from the late 2000s into around 2010.

What was decisive here was the precision of ‘targeting,’ which determines whom to show ads to. Based on browsing history, attributes, and records of behavior, advertising came to be delivered, finely aimed, at individuals holding particular interests. In 2007, Google acquired DoubleClick, a company with display-advertising technology, gaining hold of advertising technology on both the search and display sides. Meanwhile, social media — which could grasp users’ interests and friendships in fine detail — also grew into a giant of advertising, wielding precise targeting as its weapon.

A machine wins the space, and data decides where it is delivered. Advertising thus changed its form, from a world ruled by human intuition and experience into a world turned by algorithms and data. It was both a dramatic gain in efficiency and the foundation of a mechanism that would later come to be called ‘surveillance.‘

Two giants, and the wavering of the conventional agency

Search and social. The two companies that secured these two domains — Google and Meta (formerly Facebook) — grew into the overwhelming bearers of digital advertising. From the combined size of the market the two held, they are often called a ‘duopoly.’ Various recent estimates hold that these two account for around half of the world’s digital advertising spending; assessments and figures vary by research body, but the magnitude of their presence is a widely shared view.

This change was no easy matter for the giant holding companies seen in the previous episode.

At the same time, there is also the observation that agencies did not lose their role. In an environment where countless media and data are tangled together, organizing the complexity, drawing up strategy, and continually measuring effect — the value of such expertise, on this view, in fact increased. Indeed, the major holding companies took in one data-analytics and digital-specialist company after another, trying to remake themselves. Advertising firms were pressed to transform their very definition, from ‘those who hold media’ to ‘those who master data.‘

What was gained, and what was lost

The arrival of digital advertising was one of the greatest turning points in the history of advertising. Its light is clear. Even a small shop, with a modest budget, could deliver advertising to a chosen audience around the world. Effect could be measured in numbers, waste was cut, and advertising became a tool open to anyone — a change worthy of being called democratization.

On the other hand, the shadow also deepened. What supported the precision of advertising was an enormous volume of data on the behavior and interests of each individual user. In exchange for convenience, were we not handing over our own footprints? The rights and wrongs of advertising’s power having concentrated in a very few giant platforms is also a debate that continues. How to assess these things divides sharply by where one stands.

‘Measurable advertising’ gave an answer to a century-old question. Yet that answer brings new questions in tow. Advertising that has become able to grasp the individual this precisely — just how far may it know a person? Was what we handed over in exchange for convenience really something of no consequence? Advertising that goes on growing more precise will, before long, begin to be called by another name: ‘surveillance.’