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Stupid Academia Watch: Dumbest. Article. Ever.

2/26/13

By Ken Magill

And the award for the most alarmist piece of fantastical idiocy on marketing goes to Erik K. Clemons for a piece he had published on the Huffington Post.

Headlined “Online Profiling and Invasion of Privacy: The Myth of Anonymization,” the article is a classic case of academic theory completely divorced from reality.

It’s also another reminder of why I am terrified of sending my son to college. I’m afraid he’s going to spend four—more likely five—years getting his head pumped full of crap by guys like Clemons and I’m going to spend the rest of my years trying to dig it out.

First Clemons, a professor of operations and information management at the Wharton School, attempts to debunk the “myth” that targeted ads are better for us.

“Suppose you desperately need to get to Chicago for a family emergency. Just before you book you send a couple of texts and you receive a couple of emails, all describing the urgent need for the trip. In contrast, I'm bored and my best friend is bored as well. I send him a couple of texts and I receive a couple of emails, and we think we might go out to dinner tomorrow near his home in Chicago. You and I both start getting ads for flights to Chicago and hotels in Chicago, you for your emergency, and me for my whim. Which of us is going to get better prices?

“Better ads are better for the sender, not the consumer. This is why Google earns tens of billions of dollars a year serving targeted ads, and newspapers and magazines are going bankrupt selling traditional ads.”

Apparently Clemonsville is a small town of hapless losers who have no idea how the Internet works and think they can only buy directly from ads served to them. There are no price-comparison engines in Clemonsville and no multiple providers competing for marketshare on, among other things, price.

After the pricing argument, Clemons veers from Clemonsville straight into Crazyville. Bear with me here. It’s a long excerpt, but worth it.

“No! Anonymous and Harmless Ads are Neither Anonymous nor Harmless for Us,” he writes.

“Now let's use a less benign, scarier example. Let's assume that a consumer has come back from a wild bachelor party in New York, with no clear memories of how he spent Saturday night. He suspects he has engaged in unprotected sex with one or more individuals, whom he suspects of being paid sex professionals. He is frightened. He Googles the incidence of HIV/AIDS among professional sex workers in New York, and becomes more frightened.

“He checks on the latency between unprotected sex and the onset of antibodies that can be detected in HIV testing. He realizes that he will test clean even if his insurance company does have compulsory HIV testing. There will be no antibodies for the tests to detect so soon after exposure. He does a few more searches to determine he is not guilty of insurance fraud if he denies having had exposure to the HIV virus; after all, he is not certain he has been exposed.

“Soon after, he gets an ad for insurance policies for guys who sound like him, with the same life style, in the right age group, single, and non-smokers. The policy seems to offer a great rate. Should he click on the ad?

“You know how anonymous targeted ads work, right?

“Before he clicks, only the search engine vendor that served up the ad knows who he is.

“Initially the insurance company only knows that their specific ad has been sent to a bucket of men worried about their exposure to HIV / AIDS and eager to purchase insurance before they can possibly test positive for HIV exposure. However, after he clicks on that specific ad, and is taken to the insurance company's website, they know everything about him that they need to know. The insurance company has purchased the right to target ads to a bucket of individuals, anonymously of course. But the insurance company purchased the right to send the ad to a bucket of single males who have searched for the incidence of HIV in sex workers in New York City, the exact timing of HIV latency before testing positive for HIV/AIDs, and what an applicant is legally required to disclose to insurance companies about possible exposure to HIV/ AIDS when applying for insurance. They have the information needed for very accurate price discrimination!

“Should he want the insurance company to know his full profile before they quote him a price? What price do you think they will offer him, based on his search history? Indeed, will they request his identifying real world information, and then simply black list him?

“You may argue that his behavior is unethical and that he is attempting to scam the insurance company, and you may be right. But you cannot argue that clicking on the ad is safe because he is" just" clicking on an ad, or that he is safe because ads are served up anonymously.

First, you’re damned right I would argue he is attempting to scam the insurance company, and you’re damned right I’m right.

Second I guess the scenario Clemons lays out is theoretically possible, but is it realistic? And how is a health-insurance company willing to knowingly provide coverage to someone who has shown behavior indicating he thinks he may be HIV positive a bad thing?

And advertisers aren’t targeting people. They’re targeting machines. As such, the process is far from as perfect as Clemons apparently thinks it is.

For example, multiple people in my household access the same computer.

As a result, our advertising profile would be a something along the lines of firearm-owning beer drinker who watches the Fairly Odd Parents on the Cartoon Network and has read Fifty Shades of Grey—four times.

Let’s hear it for the bullets-beer-Remy-Buxaplenty-and-bondage advertising profile.

Then Clemons marches off into the truly ridiculous by comparing marketing budgets to fixed production costs.

“No! Ads are Not Free for Us,” he writes

“Of course ads are not free for us. Google charges tens of billions of dollars for ads and for providing companies with access to their consumers. Companies' costs increase as a result of these ads. The price of air travel goes up by billions of dollars when the price of oil goes up. The price of cars goes up when the cost of steel or aluminum goes up. Companies pay the costs of Google ads and these higher costs lead to higher prices for consumers.”

Message to Clemons: Marketers have budgets. Unlike oil or steel, advertising costs are not fixed-cost commodities necessary to produce and deliver the product or service.

When the economy goes sour, guess what department’s budget gets hit first: marketing.

Marketing managers are under constant pressure to demonstrably get the most out of their budgets. The possibilities for spending those budgets are practically endless. The reason Google makes so much money is because media buyers have decided it’s a profitable place to spend their clients’ and employers’ ad dollars.

If Google’s pricing gets abusive, those media buyers won’t simply pass along the costs to customers. They will go elsewhere. Media buyers are not hostages. Trust me on this. My wife’s a media buyer. There are a ton of elsewheres in the world of online advertising.

Apparently, America’s third-ranked business school no longer requires its professors to know anything about business.

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Terms: Feel free to be as big a jerk as you want, but don't attack anyone other than me personally. And don't criticize people or companies other than me anonymously. Got something crappy to say? Say it under your real name. Anonymous potshots and personal attacks aimed at me, however, are fine.

Posted by: Dave R
Date: 2013-02-26 18:28:00
Subject: U of P

I hope this school isn't your son's first choice!

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