If you were an American rail passenger 150 years ago – traveling from one part of the country to another by “iron horse” – the journey came with considerable complication. Communities still governed time by the sun, which meant that church bells and steeple clocks – and, increasingly, factory whistles – were set inconsistently from town to town and state to state. As late as 1883 there were still over 50 distinct time schedules governing different railroad lines. Knowing how to make your connection, or even how to set your watch, was difficult.
Different regions of the country also laid down different track gauges, creating a web of different systems that did not connect with each other. It was timely, complex, and costly for companies to move freight by rail, as one company’s engines and cars could not move seamlessly on another company’s tracks.
It’s a fitting metaphor for some of the problems that continue to hamper the internet. Though it fundamentally transformed every aspect of life, the early Industrial Revolution was by no means perfect. It was hampered by inefficiency, lack of standardization, concerns over consumer safety, tensions between the benefits of consolidation and the dangers of oligarchy, and controversy over economic transparency and fairness. Substitute Digital Revolution for Industrial Revolution, and today we face many of the same challenges.
When the first website went live just over 25 years ago, there was widespread expectation that the internet would change life for the better – that it would enhance knowledge, reward and enable creativity, unlock value for existing and new companies, foster democracy, and help people to engage with each other across borders and oceans.
But today, the internet is controlled by a small handful of companies that have established an oligopoly over content distribution and funding. It’s riddled with hate speech, fake news, and bad actors siphoning off dollars, thus making it unsafe for the brands that fund it through advertising. Its advertising technology is inefficient. Consumers are vexed by bad user experiences and feel besieged by very real violations of their personal privacy.
In short: We need to build a better internet. For companies involved in ad tech, there is a special imperative. We power the funding source for the open internet. We need to make our part of the system work better, which will enhance the internet for everyone.
What does that mean?
First, we need to embrace open platforms, open ecosystems, and open marketplaces. The new internet economy should encourage partnerships between friends and competitors, the adoption of open-source technology, and the lowering of artificial barriers. Closed technology that benefits only a handful of giant companies is hurting the internet for consumers, content creators, and marketers alike. Much like the debate over powerful industrial monopolies in the late nineteenth century, we need to foster a technology environment that restores competition and collaboration.
Second, we need to create a more efficient advertising ecosystem. It should return maximum value to marketers (as measured by performance), publishers (as measured by monetization), and consumers (as measured by user experience). It should find the optimal path between buyers and sellers and eliminate extraneous hops, auction inefficiencies, and intermediation. Again, the example of the Industrial Revolution is instructive. Early markets for raw materials and finished goods were highly inefficient and hobbled by patchwork transportation and distribution systems. That improved over time as people streamlined the supply chain and eliminated excess layers of intermediation. We can do the same for digital advertising.
We also need to make the internet safe again – safe for marketers, so that they enjoy a high degree of confidence that their campaigns will not appear beside objectionable content, and safe for consumers who worry about their privacy. One hundred years ago, Britain and the United States adopted some of the first laws governing health and safety in mines and factories, and consumer safety. Times have changed, and safety now means more than protection from physical danger. It means knowing that the central engine of global economic growth – the internet – is respectful of personal privacy and vigilant in wedding out deceptive practices in commerce (including “fake news, ”ad farms, and invalid nonhuman traffic). The same spirit of public-sector and private-sector collaboration that rendered the industrialized world safer should inform our approach to building a safer internet.
Finally, the time has come for digital advertising – the life system of the open internet – to become more transparent. Opaque technology fees that consume as much as half of each advertising dollar or pound should give way to visible and reasonable charges that return value to content creators and marketers. This, too, finds earlier precedent. In the late nineteenth century, American farmers recoiled at hidden price manipulation by railroads, packing houses, granaries, and other necessary partners in the supply and delivery chain. Over time, those prices became more visible and the services more commoditized. Digital advertising – which funds so much of the internet economy – should follow a similar pattern. The days of 20 percent and 30 percent take rates – obscured by excessive intermediation – should come to an end.
Doing all of this requires a collaborative approach. Our belief is that to truly make the internet better, we have work together, think big, and tackle problems creatively. The industry has to look beyond immediate symptoms to understand the root causes of those problems. No one company can solve complicated, systemic problems alone. Working together, partners and competitors can influence the whole ecosystem to create a complete solution that benefits everyone for the long term. Indeed, to standardize time, major American railroads joined together in 1883 and created the four time zones that still exist today. Three years later, over two frenetic days, tens of thousands of workers pulled up railroad spikes across the continent and moved all tracks to a standard gauge. That same ethos of cooperation should inform our efforts. Digital players that compete in the economic arena – particularly those involved in facilitating the flow of marketer dollars to creators of digital content – have every incentive over the long term to work together in the pursuit of a better internet. It means abandoning old habits and thinking of the internet economy from a different perspective.
Ad tech’s future direction is unmistakably tied to that of the open internet. If we learn from past eras of economic and technological change, we can build an internet that’s better for content producers, better for marketers who fund that content, and better for consumers who enjoy access to great journalism, music, film, games, and information – free of charge. That future is open, efficient, safe, transparent, and collaborative. It’s the future we can build together.
Nigel Gilbert, VP, Strategic Development, Europe, AppNexus