MAdtech Point: If advertising will no longer run the Internet, then what will run the Internet?

Impact of responsible use of consumer data and consent management is resetting the balance that runs the Internet

5 min read

Published: Sep 12, 2023 11:43:29 AM IST

Updated: Sep 12, 2023 03:57:06 PM IST

The World Wide Web Consortium (W3C), which leads development of the technical standards and guidelines to ensure that the web remains open, accessible, and interoperable, officially launched as a public interest non-profit ogranisation as of January 1, 2023. Image: Shutterstock

Who owns the Internet?

It is a globally distributed network comprising many voluntarily interconnected autonomous networks. It operates without a central governing body with each constituent network setting and enforcing its own policies. On last count there are nearly 10 different organisations that govern the internet across naming, technical, engineering, identifiers, domains, standards, policies, research, registries, and improvements. Amongst all this Worldwide Web Consortium is the most active one that creates standards that enable the open web platform. The World Wide Web Consortium (W3C), which leads development of the technical standards and guidelines to ensure that the web remains open, accessible, and interoperable, officially launched as a public interest non-profit ogranisation as of January 1, 2023. After 28 years of being hosted collectively at MIT and three other international host organizations, W3C as it is called, have become their own entity. Technically, still, no one entity or country owns the internet.

Business model of internet

It is advertising that runs the internet. From the first banner ad that AT&T ran on Hotwired in 1994, the business model is for the web domains to offer personalized services including advertisements, in return for using the consumer’s data. In this case AT&T funded Hotwired with advertising monies that in turn helped Hotwired to generate content that is most relevant to AT&T. The Internet has always been made for advertising. When we moved on from banners to rich media to content to search to social, it has always been a “bespoke engagement” built for consumers; and this engagement in turn is monetized through advertising monies. Over a period of time, multiple domains emerged putting the cart (advertising) before the horse (engagement) and we all remember the dotcom burst. Some of the platforms learnt this the hard way and succeeded when two things fell in place – strong insights on the consumer need (e.g., connections, content etc.,) and superior analytics on consumer want (e.g., recommendations) – and when this became proprietary, we called them walled gardens. Essentially, it is advertising that funds the internet, today.

Also read: MAdtech Point: Break down and rebuild the legacy digital advertising system

How did the cookies come by?

Cookies are free trackers dropped on the browsers that help domains “made for advertising” to better serve the advertisers. Walled gardens never needed a cookie. All those domains who neither have a strong insight on the consumer need nor have superior analytics on consumer want, use the lazy route of relying on cookies to garner advertising revenues. In return, cookies helped fund the browsers. Remember Altavista. Remember Lycos. Remember Internet Explorer. However, browsers that built a strong “aggregation service” out of consumer insight survived as they could throw some light on what consumers want. It is then left for the domains to build solutions to address that need. Some well-established walled gardens sometimes erred on the wrong side by triggering this want through click baits, consumer surveys etc., It resulted in many online scandals that we all know about. Cookies essentially helped put the cart before the horse.

The trigger for privacy regulation

When things go out of hand, regulations kick in. In the case of the internet, the value exchange between consumer engagement and advertising lost its balance. For the domains, there is an insatiable need to continue to build better and better consumer insight to stay ahead, often to sustain. Insights invade privacy, often when the consumers are unaware. Remember, it is advertising that funds the internet. Well, there is a price that consumers were willing to trade their privacy for advertising; in turn to avail the services of the internet. When consumer privacy crossed the line beyond advertising into their daily lives it is the sovereign responsibility of the government to protect its citizens. Remember, no one entity or country owns the internet. And here we are with the General Data Protection Bill in the EU, followed by CCPA in the US, Digital Data Protection Act in India, and various other data protection bills across the world. It is estimated that by 2024, nearly 75% of the world’s population will be protected for data privacy by the respective governments.

Also hear: If an AI tool makes an ad, who is responsible for it?

Need for consent

Across the world, there are three common themes that emerge from the data protection regulations. First things first. All the countries now recognize that every citizen is a data principal, and he/she must have complete control and ownership of their data. Secondly, all the domains that are generating consumer insights out of this data to provide better services are called the data fiduciaries. These data fiduciaries need to seek explicit consent from the consumer (data principal) to offer their services. These services may include advertising and if that is the case, it needs to be explicitly stated as well. And if these insights are being traded outside their business with other fiduciaries, it needs to be explicitly recorded as well, including made for ONLY advertising domains. Essentially, regulations are resetting the equation. To put the horse before the cart.

An all-new digital society is emerging. The new internet will now be monitored and governed by the sovereign regulator in each market. There is no going away from it. Responsible use of consumer data will reset the balance and advertising will no longer run the internet. A strong consumer need will need to be met in a privacy compliant manner; and this idea will run the internet. Digital Public Good. Civic Services. Real Estate and Properties. Education. Employment. Financial Inclusion. These will run the internet. Not just advertising. Unified Payment Interface is a fantastic example of financial inclusion. Businesses will need to properly justify the need to use the consumer data and for what purpose. And if two businesses need to exchange consumer data and/or insights between them for mutual benefit, that purpose is to be recorded and made explicitly clear to the consumer. Essentially consent and purpose will reset the internet; and put the horse before the cart.

Gowthaman Ragothaman is a 30-year media, advertising and marketing professional and CEO of Aqilliz, a blockchain solutions company for the marketing industry.