subprime attention crisis by tim hwang

Subprime Attention Crisis - Tim Hwang

Rating: 9/10

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Marketing books often overlook talking about the online advertising side, not Tun Hwang in his book Subprime Attention Crisis. This might be the best book I have ever read on the topic, not only because it explains the workings of a complex reality such as that of programmatic advertising, but also because it draws parallels with the 2008 economic crisis which many can relate to.


In 2020 the business of the internet is, by and large, an advertising business. Advertising in digital media generated an estimated $273.3 billion in global revenue in 2018. And this amount is poised to increase: industry analysts estimate that the online advertising market will grow to $427.3 billion by the year 2022.

There is good reason to believe that the financial foundations of the web are perhaps shakier than we think, maybe even producing  the conditions for a "subprime" crisis in attention, similar to the dynamics that brought down the global economy in 2008.

The web that we experience when we roll out of our beds and unlock our phones is sustainable only because of the continued health of programmatic advertising. Change that, and the whole edifice of the economy built on top of it begins to change with it. Persistent lack of confidence in the online advertising markets would produce a web that would be more fragmented, less accessible, and stuck at a slower rate of growth quite distinct from the last few decades of rapid growth in the technology sector.

Financial markets have served as a major source of inspiration in the design of the online ad economy throughout its history, and many of the founding leaders who built these marketplaces hailed from previous careers as brokers and traders in finance.

The infrastructure of programmatic advertising is architected so that, theoretically, publishers are able to sell their inventory of attention to the highest bidder among a pool of buyers. This is generally done through an arrangement known as real-time bidding (RTB).

[According to IAB, Interactive Advertising Bureau] To achieve a viewable impression, more than 50 percent of the pixels in an advertisement must occupy the viewable space of a browser page for greater than or equal to one continuous second after the advertising renders.

Advertising markets involve bidding over the right to show something to someone. Advertising is consumed at the point it is acquired, and its value is based on whether it shapes behavior in some way. That might be as concrete as persuading someone to make a purchase, or as abstract as improving someone's opinion of the brand being promoted.

The vast number of transactions taking place can make it impossible for anyone to monitor precisely where an ad ends up and why. This is a problem even for the professional buyers and sellers of ad inventory themselves.

One large-scale experimental study of online search ads in 2014 concluded that "brand-keyword ads have no measurable shortterm benefits." Ironically, ads generated engagement mostly among “loyal customers or [consumers] otherwise already informed about the company's product."

The basic idea of ad fraud is simple: buyers think they are purchasing attention and delivering their message to promising consumers, but instead they are given something worthless. There are numerous ways that this can happen.

One of the reasons the programmatic advertising market is so overheated is that self-interested boosters dominate the ecosystem of information. Entities like the Interactive Advertising Bureau and the Association of National Advertisers are major outlets for research on the state of the marketplace, but they simultaneously serve as advocacy organizations on behalf of the industry. The space lacks a robust, independent institution to act as a counterweight