Logic magazine interviews behavioral economist Shengwu Li about the opaque, creepy world of online advertising. Li explains how platforms like Google and Facebook, which depend on advertising for the bulk of their revenue, have created special markets to sell ads to companies. He also explains how websites such as the New York Times use your browser cookies to profile you for advertisers. Here’s an excerpt:
Thinking more broadly about this new kind of advertising, what do you think is most distinctive about it? How does it differ from what came before?
One difference that springs to mind is the sheer individualization of it. There are some auctions where you can even bid for an individual human impression. For example, there’s a startup that will let you target a particular person with an ad campaign.
How does that work?
Maybe you want your partner to stop smoking. This startup will generate a special link for you that looks like it’s an e-commerce site. You send it to your partner and when they click it, they get a cookie secretly loaded into their browser. This cookie enables the company to track your partner across the web. You write up an anti-smoking ad, and the company will ensure that your partner sees that ad everywhere. Now your partner’s entire internet experience is permeated with pressures to stop smoking.
You can design a similar campaign for a coworker you don’t like. You can show them ads for job-hunting websites, to encourage them to get another job.
Image via markgrowth.com.