The advertising-financed world

Large parts of the internet, almost all television channels, some newspapers, radio stations, and computer games have one thing in common: They're free for us, the customers. Your Facebook account, every single Google search you perform, your casual mobile game—all of these are ultimately paid for by the advertising companies. The advantage—no costs for you—is obvious. The disadvantages are often harder to identify.

Firstly, there is the often criticized lack of data protection. The logic behind this is clear: If I sell advertising space, e.g. a TV commercial, the more precisely I can say who will see this space, I get more money for it. This is because advertising companies try to keep their wastage to a minimum, and so, for example, the manufacturer of an expensive women's shoe is willing to pay more for an ad if it is clear that the ad will be seen by a wealthy woman. On the Internet, this works very well (thanks to the patchy data protection), because a) a lot is often known about the respective user and b) each visitor to a website can be shown a different ad. The increasing digitalisation of television, newspapers on the iPad, internet-connected navigation devices and other developments will certainly ensure that in the future, everyone can be shown the right advertising in other media too. This will also expand the debate about data protection from the Internet to other media. The advertising industry is already discussing changing ads on digital billboards based on the profiles of nearby mobile phone users. I don't want to get upset about this, because I see it this way: Ultimately, we use free services like Facebook and "pay" for them with our personal data.

This brings me straight to the second and real disadvantage of the advertising-financed world: the missing connection between payment (e.g. with our data or our attention) and consumption. If every Google search cost 0.3 cents , people might search less. If a Facebook account cost €3 a month, it would probably have fewer members and I am sure that RTL2 would have fewer viewers if it were pay TV. Conversely, other products would be considerably cheaper. Global advertising expenditure in 2011 was 500 billion US dollars (for comparison, the German federal budget in 2012 was considerably lower at the equivalent of 372 billion ). On average, companies spend 5% of their turnover on advertising. If you also factor in the personnel costs of marketing people, I assume that all consumer goods could be around 8% cheaper if companies did not advertise. Based on the consumer spending of an average German household, this would mean that they could save €120 a month, or spend it on the items currently financed by advertising. A lot of money for over 40 million households .

Personally, I would prefer it if I could decide for myself exactly what I spend my money on and which media I want to support, rather than my money going through consumer goods manufacturers who ultimately use it to advertise on Facebook or in the Bild newspaper. It also makes more economic sense, because a direct connection between expenditure and consumption increases market transparency and thus improves the market.

However, there's a problem: How should companies draw attention to new products or services? Without attention, there are no customers; without customers, there's no money; and without money, there are no new products and therefore no progress. How could we have drawn attention to DieStadtgärtner, for example? We've already spent €142 on advertising (€55 on Google Adwords, €71 on Facebook ads, and $22 on StumbleUpon).

Well, unfortunately, this is exactly where my thought process always ends...if you have an idea for a better system or a completely different opinion in general, I look forward to your comment.

Thanks & regards,
Goal