The Coming Ad Revolution
While the big news in the online world focuses on Google, Yahoo and Microsoft, a more profound revolution is taking place on the online social networks: The discussion about privacy is changing as users take control over their own online data.
Context & Ripple Effects
On February 11, 2008, the loudest stories in tech are consolidation and devices: Microsoft is publicly pressing its "full and fair" Yahoo combination proposal, and Google is showing Android prototypes at Mobile World Congress in Barcelona. Against that backdrop, the Wall Street Journal argues the more consequential story sits elsewhere — on social networks, where the privacy conversation is changing because users are starting to take control of their own online data.
First-order effects
- Social networks must now treat member-controlled data as a design constraint: ad products built on silent profiling confront users who increasingly expect to set the terms of what is shared.
- With Microsoft publicly restating its Yahoo offer and Google demoing Android hardware, the data-ownership debate competes for attention against deal-and-device news that dominates the day's coverage.
Second-order effects
- Advertisers allocating budget face a fork between portal-scale reach at Google, Yahoo and Microsoft and social-network inventory whose value depends on member consent — shifting pricing power toward whichever platform can prove users opted in.
Third-order effects
- If user-held data hardens into the norm, privacy migrates from a compliance line-item to a competitive feature, pushing the large ad platforms to differentiate on trust rather than reach alone.
The trend: Control over personal data, not auction scale or M&A, is emerging as the decisive variable in online advertising.