Privacy – just like inflation

Privacy is a massive business issue. I’ve commented on the lack of interest in privacy from entrepreneurs in the web space; I’ve tried to define privacy; and I joined the APML workgroup for this reason

Need to know why I think it matters? Well here are three facts:

1) Targeted advertising is the future of advertising. Why? Because it’s most effective type of advertising.

2) Web services, and arguably the entire attention economy, rely on advertising as a revenue model.

3) There is a natural friction between targeted advertising and privacy. You can’t target without knowing who you are targeting – which implies some type of implicit collection of data.

Google, on the strength of its brand, has been able to manage the privacy issue. But no longer. Privacy International has ranked Google at the worst privacy offended on the internet. As 99% of Google’s revenue relies on advertising, with open acknowledgment that they are trying to find ways of better targeting advertising, we can expect to hear more and more how Google’s evil is in the data they collect and the way they control it.

Economic growth is one of the key concepts to how our world works – it’s what companies and countries for example, constantly aim for. But as we have seen repeatedly, if an economy grows too quickly, problems can appear – inflation, infrastructure issues, and fatigue. Greed has a price. In the context of an economy, inflation is the speed-hump – the faster you drive over it, the bigger the hit.

So would it be too far to extend the metaphor, to say that privacy is the advertising equivalent to inflation? If you are relying on advertising as a revenue model, remember that privacy will matter more and more with an interconnected world.

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