Tech Innovations Paper

Holly Stephens

Advertising is an age old practice with a simple objective: to maximize the

number of consumers that choose a particular product or brand over another. The

specific product and consumer each serve as a variable that is subject to change in this

equation, be it a restaurant chain competing to be the first option that comes to mind for

the hungry customer, or a politician trying to sell their leadership and ideals in such a

way that appeals to voters outside of their party's base. Until recently, perhaps the most

common strategy for solving this equation was finding a way to make a product or brand

as appealing as possible to the most number of potential consumers. Unfortunately, the

success of this strategy has proven time and time again to be bounded by consumer

needs and ideals differing on a case to case basis. At one point, the idea of targeting

consumers individually was thought of as an impossible task, or at least one that could

not be effectively scaled. However, this obstacle encountered in advertising is becoming

more and more permeable due to recent applications of artificial intelligence. The fusion

of these two fields is also known as programmatic advertising. This paper will discuss

what this technology is and how it is used today, its history and origin, and lastly explore

its future trajectory, along with the ethical concerns it elicits.

The founder of the digital marketing corporation, RadiumOne, described

programmatic advertising as "…the automation of the buying and selling of desktop

display, video, FBX, and mobile ads using real-time-bidding" (Olenski, 2013, para. 14).

As one might assume, in essence, real time bidding is the idea of multiple corporations
vying to have their advertisement be the one that a consumer sees when they visit a

website. However, there is an additional layer of complexity to this process, which is

perhaps not discernable nominally. In the time between a consumer visiting a website

and that site page loading along with an advertisement rendered in a designated slot, a

transaction behind the scene occurs: a bid request containing some of the

aforementioned consumer's data is sent to an ad exchange. There, any number of

advertisers can compete in real time to have their ad be the one that is shown to the

consumer. The duration of this process all occurs in just fractions of a second.

A recent innovation to the aforementioned process, which extends further

emphasis to the programmatic aspect of programmatic advertising, is how consumer

data is used by the highest bidder in selecting which of their ads to have shown. For

instance, information like browsing history may be used determine consumer shopping

preferences. To take this a step further, browser history may also divulge an assortment

of individual biases, fears, or other sensitive information, which could be used by

advertisers in an exploitative manner. Another innovation of programmatic advertising is

how it has helped corporations in discerning which sites their ads will be the most

successful on, allowing more selective spending, which has thus dramatically improved

the return of investment a given corporation might spend on advertising. In short,

programmatic advertising reinvents both the producer and consumer sides of marketing

in ways that could be mutually beneficial or exploitative.

While programmatic advertising is relatively new, the components it is comprised

of are not. Contrary to what is often assumed, artificial intelligence is no new concept.

The idea of replicating human behavior or automating tasks has been dated back as far
as the 13th century in Jewish folklore (Cooper, 2017, para. 4). Additionally, advertising

can be traced back to the ancient civilizations from Greece, Egypt, and Rome (Fox,

2011, para. 4). The reason that these two fields are only just now beginning to intersect

is largely due the limitations in computing beforehand. The digitalization of data over the

last decade has also made programmatic advertising a reality- online advertising was

not far behind the introduction of the public internet we know today, with the first online

advertisement displayed in 1994, the same year that full text search engines were

introduced (Rajeck, 2015, para. 7). It follows that the birth of programmatic advertising

thereafter is possibly no more than the result from the inevitable progression of

technology. This idea is further supported by the ever growing network of internet users,

as well as the increasing duration that each averages on the internet. One irrefutable

contributor to this lateral progression into the digital age was the introduction of the very

first smartphone by Apple in 2007. With the ingress of this technology into society, the

way in which media was consumed was altered drastically. It allowed the flow of

information to remain omnipresent in the lives of consumers in a way it never was

before, giving digital and social media an unprecedented edge. This drastic alteration to

consumer life paved new and very broad avenues for advertising and additionally,

provided an abundance of opportunity for data collection.

With the evolution of social and digital media, change to advertising in the

physical world would follow soon thereafter; it became unnecessary for corporations to

go through third party advertisement agencies in the same way as before. Ad networks

have since been replaced by online ad exchanges, such as Google's AdX, which

connects advertisers to the slots that publishers like YouTube make available on their
sites (Sweeny, 2017, para. 3). This form of advertising has become so pervasive that

eMarketer estimates that programmatic ad spending will reach 4.7 billion dollars by the

year 2020 (Broussard, 2018, para. 3). Even more impressively, the Interactive

Advertising Bureau reports that the revenue generated from online advertising reached

88 billion dollars in 2017 (Bashir & Wilson, 2018, para. 2). Currently, online banner ads

get a .06 percent click rate, which is over a 99 percent decrease since the first online

advertisement (Rajeck, 2015, para. 7). Ad blocking applications are commonly found on

consumer devices and a general distaste for advertising is not hard to find. However, as

technology continues to improve and advertisers become better at catering to

individuals, we may see this number begin to rise again. This optimistic outlook is often

touted by corporations rather than consumers, promulgating a win-win type scenario,

where less money is wasted on irrelevant and impersonal ads targeted at the wrong

audience, and the needs and preferences of the individuals being advertised to are

considered and valued, thereby eradicating the disenchantment many consumers feel

towards advertising. Additionally, with the increasing popularity of stories and videos on

platforms such as Facebook and Instagram, video advertising is expected to gain

further traction in the coming years. Yet another frontier programmatic advertising is

projected to capitalize upon is the use of " …storytelling through successive impressions

using dynamic creative optimization" (Davis, 2017, para. 16). What this means is that

corporations could use information about which of their ads an individual has already

seen to eliminate redundancies, tell stories, and maintain interest.

Despite its growing popularity and promising future projections, however,

programmatic advertising has not been without its ethical controversy; the more
saturnine outlook brings about a number potential societal impacts that are quite

concerning. The first, as was it previously eluded to, has to do with the ever growing

consumer-based concern of data privacy and the ways in which this data might be

used. The growing scope of digital data collected from individuals by corporations along

with how those corporations share that data amongst themselves – all with a complete

lack of transparency around this activity, has come under both ethical and legal scrutiny.

The high profile executive, Mark Zuckerberg, was called before congress earlier this

year to answer for how Facebook had grossly mishandled its use and protection of

consumer data. There is also surmounting evidence that this mishap had a direct impact

on the American 2016 presidential elections, demonstrating that programmatic

advertisement, when applied to politics, can have an impact on a national scale. This

prompts a number of ethical questions: where does line get drawn as to what

information a corporation should be allowed to access about an individual?

Furthermore, what ethical boundaries ought to be laid out in regards how that

information is used, so that this new technology isn't used to exploit the vulnerable?

Ethical controversy around programmatic advertising exists amongst corporations as

well, this is in part because while there is an abundance of data provided to

corporations about their audience, information about what content their advertisement is

being associated with is surprisingly limited. One example of how this limitation can be

problematic was made clear when a number of corporations discovered that their

advertisements were being displayed on YouTube channels which were promoting

highly controversial and extremist content. Angry that this association would jeopardize

the integrity of their brands, and because of the lack of screening YouTube was able to
provide for the content its ad slots were associated with, some corporations went as far

as pulling their advertisements from YouTube's platform entirely, a drastic measure

considering that YouTube is the gatekeeper of a highly valued audience of monumental

proportion (Murphy, Yurieff & Mezzofiore, 2018, para. 4). YouTube has since cracked

down on filtering out some of this offensive content, however, given its platform model

and the increasing number of internet users, the level of monitoring needed to

effectively eradicate extremist content to appease advertisers sufficiently has proven to

be no easy task.

Even with its controversy, programmatic advertising doesn't appear to be going

anywhere; given the current trends, it has proven to be effective and lucrative enough

that it will likely to become the primary impetus behind capitalism in the not so distant

future. With great power, comes great responsibility, and with the ever expanding reach

of the internet, compounded by continuous technological advancements in computing

overtime, programmatic advertising is proving to indeed be a great power. The question

of who ought to be responsible for this power is still an open one, which is clear

indicator that currently technology is growing faster that our capability to set ethical

boundaries for it. The interesting conundrum here is that this technology can be seen

not as a product of capitalism, but rather the evolution or further extension of capitalism

itself, and capitalism by its very nature seeks to defy the regulation that ethical concerns

might impose. Whether this will contribute to its growth or degeneration remains

unknown. Regardless of what the disparity between ethical boundaries and

technological advancements might mean for the future, it is quite certain that
programmatic advertising is leaving its distinct mark on the world both socially, ethically,

and economically.

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