Has the Targeted Advertising Model Had Its Day?

Critics of targeted advertising and the advertising business model – the basis of internet platforms like Google and Facebook – have ramped up their attacks recently, in part due to the January 6 riot at the capital. For example, the American Economic Liberties Project, an anti-monopoly group, recommends banning targeted advertising by communications platforms, arguing that the January 6 attack was to a large extent caused by the business models of Facebook, Twitter, and other social media platforms. In Europe, the CEO of the German media conglomerate Axel Springer has proposed prohibiting the commercial use of data. And, even aside from the events of January 6, it is frequently asserted that the internet, and particularly social media, are major causes of polarization in the U.S. and elsewhere. The fundamental problem, according to many of these critics, is that these platforms make billions from promoting misinformation, conspiracy theories, and violence.

On the other hand, the advertising-based model has many benefits. It makes it simple for billions of users to access digital platforms. The advertising revenues pay for content that consumers would otherwise have to pay for directly or would not exist. This is especially beneficial for lower-income consumers.

Panelists included:

  • Robert FrankHenrietta Johnson Louis Professor of Management and Professor of Economics Emeritus, Samuel Curtis Johnson Graduate School of Management, Cornell University, and Contributor, Economic View column, NY Times
  • Jesse ShapiroEastman Professor of Political Economy, Brown University
  • Catherine TuckerSloan Distinguished Professor of Management Science, MIT Sloan
  • Hal VarianChief Economist, Google and Emeritus Professor, UC Berkeley
  • Thomas Lenard (moderator), Senior Fellow and President Emeritus, Technology Policy Institute

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