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CONTACT: Amy Smorodin
October 30, 2009
(202) 289-8928
Online Advertising Event Transcript Available
Releases Transcript of Panel Discussion on Benefits of Online Advertising

WASHINGTON D.C. - "Smart advertising" allows more relevant advertising to be personalized for individual consumers, thus increasing funding for “free” content and services, and enhancing the effectiveness of all forms of speech.  So what would regulation cost consumers, and how would it impact journalism and other non-commercial content, which stands to gain the most from better targeting?  These and other questions were discussed at "Regulating Online Advertising: What Will it Mean for Consumers, Culture & Journalism?," a Congressional Seminar hosted by The Progress & Freedom Foundation.  PFF has just released a transcript of the event.

Berin Szoka, Senior Fellow and Director of PFF's Center for Internet Freedom, framed the discussion by describing the decline in total advertising spending, which threatens the economic viability of all media, especially online.  “It’s a moment in which we need to talk about online advertising and what online advertising can do to help fill that gap as media moves increasingly to digital distribution,” he explained.

Howard Beales, Associate Professor, Department of Strategic Management and Public Policy, George Washington University addressed how the advertising and content industries are attempting to adjust their business models as consumers shift to getting their news and entertainment online.  “What advertisers are trying to do and what advertising providers are busy trying to do is to figure out ways to make this advertising more valuable, so it can support the content that we are all accustomed to—that we are now getting because it is being produced for our offline world and just copied online with a few additions," he explained.  "But that’s a free ride.  That’s not something that will continue as viewers shift.”

Mark Adams, a PFF Visiting Fellow, emphasized the less obvious benefits of more relevant advertising to consumers: “The more… information users receive through advertising, the better informed they are when making purchasing decisions, the more competitive markets become, which pushes down prices.”  He also noted that ad personalization could increase the profitability of advertising for smaller and specialty sites: “What we have at the moment is this big disparity between the big sites, which are able to make a lot per viewer and the little niche sites, the minority sites out there that are able to make very little. It’s a form of democratization.” 

Thomas Lenard, President of the Technology Policy Institute, discussed the underlying economics of the issue:  “Really, the whole debate about privacy is a debate about the amount of information on the Internet because privacy, at least in the context of the current debate, suggests the withholding of information," he explained.  "If you look at this from an economist's point of view, that suggests some sort of market failure, whether there is too much being produced or the classic case of that is the negative externality. Markets tend to behave efficiently if all the benefits and costs of the transaction are internalized by the people doing the transaction.”

Jules Polonetsky, Co-Chair & Director, Future of Privacy Forum, gave a brief history of online advertising and discussed the technical aspects of targeted ads.  Polonetsky also suggested that there should be some limits to data collection and some degree of user control and transparency could be introduced.  "They could have a little bit more visibility and control in that without breaking the system," he said.

Both the event transcript and an audio recording can be found on the PFF website.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation