Just as I began framing this little essay I received an envelope in the mail with a fresh dollar bill. I thus felt obliged to read the short enclosure. It involved a survey of radio listening habits. I may respond.

I must begin this note by revealing my great scepticism on today’s advertising business models. I find it impossible to believe that most advertising is cost-effective, even ignoring the negative externalities of annoying people at whom the ads are directed. I have an abiding fear that it will be discovered that I belong to some category that responds to no ads and then the media will find a way to exclude me from their bounty. In light of such externalities it seems desirable to seek new forms.

In accordance with micropayment ideas I consider an alternative idea for advertising in today’s culture. Suppose that an advertiser could identify with some accuracy individuals who would, with a significant probability, want what they had to sell. Suppose that the advertiser could send a message with an amount of money attached—enough to buy the attention by the recipient to read the message. Suppose that the payment mechanism was cheap enough to be negligible. I conjecture that advertising would be strongly attracted to this mode and that the externalities would also largely disappear.

There are problems that immediately come to light that must be addressed from the outset. New incentives arise. There will be direct or indirect ways for an individual to signal that he is such a candidate; with these payments some will send false signals that they are qualified and interested potential customers with the plan on pocketing the payments and ignoring the messages. I can imagine partial solutions to this but they are not simple.

One avenue is a broker that tracks behavior of buyers and reports those behaviors possibly with personal information removed. Such a broker would have significant investment in his own reputation. There are many complex and difficult issues in this.

Suppose that I decide that I may want to buy a synthetic piano. I send a signal somewhere (‘where’ is a design issue) indicating such. Based on my reputation as a consumer and the nature of my request, several companies send ‘advertisements’ tailored, to a degree, to my request. Each comes with some amount they decide to include. I scan a list of pairs: {<Brand, included payment amount>}. For those brands of which I hold a high opinion, I will require a small amount. I will also consider those with a sufficient included amount. If I want to keep my reputation I will return those that I choose to ignore, returning the payment as well.

Universal?

Much advertising is towards establishing brand visibility. I personally recall noting some expensive advertisement in the NyTimes which had recurred several times with little variation. I thought to my self “They sound as if they will be around for a while.”. This reaction is, of course, exactly what the advertisers had paid for. I think this sort of advertising is not subsumed in the above scheme. The ability of unknown sellers to buy your attention partially compensates, however. There remains the issue of brand name reputation, (as distinct from recognition). I could, but will not, name several ex brands with good recognition and bad reputation. Reputation systems and brokers could also deal in this game but that is an even more complex game.

This is the direction in which Google is heading, but there are many branch points between where they are and what I suggest here.

Some kindred ideas
A really interesting article on advertising