Advertising drives the modern digital economy. Whether it's reading news sites like this one or perusing social media feeds, advertising is the most important industry to emerge from the development of the web. Still, for all the tens of billions of dollars poured into online advertising in the US alone, how much does that money actually do its job of changing consumers' minds?
Tim Hwang has a contrarian position: it isn't. In his new book published in collaboration between Logic Magazine and the famous publisher Farrar, Straus and Giroux, he claims in "Subprime Attention Crisis" that the entire web is staring at an abyss of its own making. Advertising is overrated due to the opacity of the market, and few actors are willing to point out that the advertising emperor has no clothes. Just like the subprime mortgage crisis, once people understand the true value of digital ads, the market could collapse. I found the book provocative and wanted to talk to Hwang further about his thoughts on the market.
Hwang previously worked for Google on politics and has developed many, many projects on a whole range of technology-oriented political issues. He is currently a researcher at the Georgetown Center for Security and Emerging Technology.
This interview has been condensed and edited for clarity. ProWellTech: let's dive right into the book. How did you start dealing with this topic of the "subprime attention economy"?Tim Hwang: There were two episodes where I said to myself, something is going on here. I was chatting with a couple of friends who are Facebook product managers, and I remember arguing that there is a lot of evidence to suggest that this whole adtech thing is perhaps mostly rubbish. The most interesting thing they said was, "Oh, like, advertising works but we can't really tell you how." It's like talking to someone from the national security establishment and they say, "Oh yeah, we can stop the terrorists but, like, we can't tell you exactly how things are."
I think one thing that really interested me was how opaque a lot of these things are. Companies claim that programmatic data-driven advertising is really as effective as it is, but then they're strangely reluctant to show evidence of this.
Secondly, I was doing research with a lot of people who I think you would rightly call some kind of tech critics - strong critics of the power these platforms have. I think one of the coolest things is that even among the strongest critics of technology, I think many of them just bought this claim that advertising and especially data-driven advertising is as powerful as the industry says.
It's kind of a weird situation. Tech optimists and tech pessimists disagree very much, but they seem to agree that this type of advertising works. This was what I wanted to explore in the book.
Why don't we talk a little about the thesis?The thesis of the book is really very simple, that is to look around and basically our modern experience of the web is almost entirely shaped by advertising. The way social media is built, for example, is largely a platform for serving ads. Engagement with content is really great for building profiles and it's really great for running ads. It really was what powered the current generation of companies in space.
If you take a closer look though, it really starts to look like the market bubbles we know and have seen in other places. So explicitly, the metaphor of the book is the subprime mortgage crisis. I think the idea is that you have this market which is highly opaque, there is a lot of evidence to suggest that the ad value is misidentified, and you have a lot of people interested in promoting it despite all of that.
For the book, I wanted to look at that market and then what the internet might look like after all of this. Are there any other alternative business models that we want to adopt for the web in the future?
