Thread by @davekarpf

It's time for another throughline in the #wiredarchive. Today's topic: advertising and the economics of the web.

(Buckle up. This is a big one.)

The first big @WIRED story on the future of advertising appears in February 1994, with Michael Schrage's "Is Advertising Dead?" wired.com/1994/02/advert…

It's... REALLY good.
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Schrage writes, "The economics of advertising, promotion, and sponsorship - more than the technologies of teraflops, bandwidth, and GUI - will shape the virtual realities we may soon inhabit. Wherever there are audiences, there will be advertisers."
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This is 1994. Pre-Netscape. Schrage goes on to lay out several scenarios of what digital advertising might look like. Some look a bit like the present, others notsomuch. But set that aside. The future looks foggy because it's still a million miles away. (4/x)

Schrage is laying out a central, defining truth that will too often be overlooked in the decades to come. As the public goes online, the Net becomes big business. And that means that economic imperatives will shape the future of the Web at least as much as tech breakthroughs. 5/x

Jump ahead to February 1996 and Evan Schwartz writes a @WIRED piece titled "Advertising Webonomics 101." wired.com/1996/02/webono… The banner ad has just barely been invented at this point. The early economics of digital advertising was... volatile at best. (6/x)

Here's the highlight of Schwartz's piece. He argues that digital advertising is the future because marketers can move beyond measurement data (who clicked) to include demographic and psychographic data on individual consumers.

Gathering that consumer data is the frontier. 7/x

Notice what this means, by the way: Marketers have been pitching psychographics for 20 years! Cambridge Analytica didn't make that concept up. It's been a staple of marketing pitchdecks since we were non-ironically doing the Macarena! (8/x)

To see the volatility of early digital advertising, let's look at @chipbayers's April '96 piece, "The Great Web Wipeout." wired.com/1996/04/wipeou…

Bayers is imagining a near-future dystopia where the World Wide Web becomes a ghost town. What causes the wipeout? (...) (9/x)

two factors: (1) "inability to add digital bandwidth," and (2) advertisers "Challenging how many people actually reached their ad 'banners' - and questioning the effectiveness of online advertising itself.

There was a constant fear in the 90s that ad economics would collapse.

Pieces like The Great Web Wipeout help explain a surprising absence in the #wiredarchive. When I began this project, I expected to see basically the same story repeated every few years, about how digital media was "disrupting" social and economic institutions. (11/x)

But with a few exceptions (covered in the futurism throughline), those stories rarely appear until the mid-00s. While the economics of web advertising were still shaky, there were far fewer pronouncements about how digital would soon transform every social sector. (12/x)

It's easy to picture the dotcom bubble as a straight-line of burgeoning enthusiasm. But mid-90s and late-90s WIRED has plenty of concerned columns like this Bayers piece. (13/x)

Now let's jump past the dotcom bust. Charles Platt writes in May 2001, "The Future Will Be Fast But Not Free." wired.com/2001/05/broadb…

He is, in essence, offering a solution to the bandwidth problem that Bayers raised in 96. (14/x)

Platt writes, "It is time for a reality check. The landscape of the Net has changed; that cyberfrontier of the past has become a teeming city of people, transactions, and businesses. And many of the tenets of early Net thinking now seem like a shared hallucination." (15/x)

Platt is referring to early Net theorists (and frequent 90s-WIRED contributor) George Gilder, who held that the cost of bandwidth would mirror the cost of transistors, falling to the point where it would be "virtually free."
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By 2001, it becomes clear that high-speed access requires fiber, and fiber requires cable companies, and cable companies require every penny they can take from you.

"You want broadband. You'll get it. You'll pay for it. You'll like it."
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Now let's jump ahead to 2004, and the "Complete Guide to Googlemania." Josh McHugh writes "It's an Ad, Ad, Ad, Ad World: Forget the search business. Today Google's all about advertising." wired.com/2004/03/google…
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McHugh lays bare that the secret to Google's profitability isn't the PageRank algorithm. It's AdWords.

AdWords finally fulfilled some of those early "Webonomics" promises. It provided great consumer data and a platform to efficiently reach micro-audiences. (19/x)

Adwords still reigns today. (It's Google's and Facebook's world, we just live here.) But as Adwords comes to dominate, new problems arise. Charles Mann documents the emerging issues in 2006's "How Click Fraud Could Swallow the Internet." wired.com/2006/01/fraud/ (20/x)

Once digital industries configure themselves around the economics of online advertising, spammers and scammers try to figure out how to exploit the new system.

The old fear that the economics of digital advertising will collapse is still present in 06. (and today as well.) 21/x

And that brings me to a couple of articles I previously posted to the journalism throughline:

Daniel Roth on Demand Media in 2009, wired.com/2009/10/ff_dem…

and Samanth Subramanian on the Macedonian Fake News Complex in 2017.
wired.com/2017/02/veles-…
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Both of those articles are equal parts future-of-news and future-of-advertising.

As Schrage argued in 1994, the economics of advertising shape the virtual realities we inhabit.
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What does this tell us about the current debate about surveillance capitalism and the economics of online advertising?

As with the journalism throughline, I think the first lesson is that, while these are real problems, the are not new problems. They have a long pedigree. (24)

It also demonstrates that the promise of microtargeted advertisements has been a driving force in the online ad economy. We are forever chasing the next breakthrough in ad tech. And we are forever fearful that advertisers will wise up to the limitations of current ad tech. (25/x)

We can see this trend in Facebook's 2016/2017 advertising controversy, and in the lead-up to Twitter finally quashing fake accounts last week.

We are forever working through tensions that date back to the early Web. "The future of media is the future of advertising."-Schrage

The economics of digital advertising has shaped the modern Internet. Not because of a radical scientific breakthrough in targeting and persuasion, but simply because *that's where the money is.*

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(One final note: if you found this thread interesting, you should really read @JoeProf's books. Particularly "The Daily You." amazon.com/Daily-You-Adve… )

(fin)