I wrote the first half of the following two years ago for a name-brand Web magazine that decided not to run it. You can guess why. I later turned it into a shorter piece for Wharton‘s Future of Advertising collection. For this post I took out some cruft and added a new second half. As usual, if I had more time, I could have made it shorter. But I’m in a hurry between meetings in London and want to get something up.

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For most of its history, we knew what advertising was. As a metonym, “Madison Avenue” covered the whole thing.

Madison Avenue’s specialty was brand advertising: big companies (Coca-Cola, Kodak, Shell Oil, Procter & Gamble) hiring big agencies to familiarize consumers by the millions with their brands. While most advertising didn’t come from Madison Avenue, or practice big-budget branding methods, it was still simple and straightforward: companies buying time and space to send messages across to target groups. As consumers we knew that too. Here’s the key thing to remember today: none of it was personal.

The personal stuff was called direct marketing. In The Economics of Online Advertising, Magid Abraham, Ph.D., the co-founder and CEO of comScore, respects the distinction this way: “while the Internet may have been a boon for direct response advertisers, it has been a mixed blessing for brand advertisers…” (The bold-face is mine.)

If the taxonomy of business were like that of biology, direct response and brand would not only be different species, but different classes under the marketing phylum. Yet Dr. Abraham, along with everybody else today, calls both advertising. Thus the original distinctions are lost.

To find them again, let’s start by giving respect to the elder species: advertising itself.

“The great thing about advertising is that no-one takes it personally,” Richard Stacy says. Direct response, on the other hand, wants to get personal. And, because it values response above all else, it has been data-driven ever since it started out as direct mail. (Or, in the vernacular, junk mail.)

The holy grail of direct response has always been perfect personalization: getting the right message to the right person at the right place at the right time. Back in the offline world that wasn’t possible. Online, at least conceivably, it is. Thanks to tracking and big data analytics, individuals can be understood to a high degree of specificity, in real time, and addressed accordingly. This is the boon Dr. Abraham is talking about.

Yet this boon comes with costs that are hard to see if your view is anchored on the supply side. If you look at it from the receiving end, all you know is that the ad is there, and that maybe it’s meant to be personal (or even too personal). How it gets there is a mystery for the recipient and often for the medium as well. For example, the ad for SmellRight deodorant placed next to a story on a newspaper’s website may not be placed by SmellRight, its ad agency or the newspaper. It may have arrived via some combination of ad networks, ad exchanges, demand side platforms (DSPs), dynamic auctions with real time bidding (RTB), supply side platforms (SSPs) and other arcane mechanisms of the new direct response advertising business. And, in many cases, none of those entities has the whole picture of how any given ad gets placed. Worse, you don’t know whether or not some algorithmic robot, or an ad hoc committee of them, thinks you have B.O.

In The Daily You: How the New Advertising Industry Is Defining Your Identity and Your Worth, Joseph Turow says direct response advertising today is “increasingly customized by a largely invisible industry on the basis of a vast amount of information that we likely didn’t realize it is collecting as a result of social profiles and reputations it assigns us and never discloses, and about which we are largely ignorant.”

And yet the ironic purpose of these mechanisms is to make the ad personal — just for you — even if all they know about you is some unique identifier, or a combination of them. Confusing? Of course. But then, it’s none of your business. Neither is brand advertising , but at least you’re not ignorant about the system, or why the brand thought it was important to advertise.

That’s because brands and brand advertising send what economists call signals. Each signal is a sign of substance that says much without saying anything at all. The feathers of a peacock send a signal. So do the songs of birds, the antlers of an elk, your haircut, your college degree, your jewelry and the clothing you wear. So think of brand advertising as clothing: something a company wears, just like it wears buildings.

Like clothing and buildings, advertising’s brand signal is impersonal and non-conversational, by design. It is pure statement. In “Advertising as a Signal” (Journal of Political Economy, 1984) Richard E. Kihlstrom and Michael H. Riordan explain, “When a firm signals by advertising, it demonstrates to consumers that its production costs and the demand for its product are such that advertising costs can be recovered.”

Direct response advertising does little if any of that. But, because we call it advertising, we need to look at the trade-offs. Don Marti has done a lot of that. He writes, “as targeting for online advertising gets more and more accurate, the signal is getting lost. On the Web, how do you tell a massive campaign from a well-targeted campaign? And if you can’t spot the ‘waste,’ how do you pick out the signal?”

In fact, the main signal sent by direct response advertising is personalization itself. By being different for everybody, all the time, there’s not much “there” there, besides the ad. There’s not even an obvious “platform” for the ad, since it could have come from anywhere.

Brand advertising doesn’t do that. Nor does Main Street or a shopping mall. When you go into a store, it doesn’t shape-shift to put hats in front of you because you glanced at hats in a store window you passed on the street a minute ago. Yet shape-shifting is now standard with online retailing, with search, and with every site and service that works to “deliver a personalized experience” in real time. The result is a virtual world that is made to look different all the time for everybody, based on surveillance and data-driven guesswork. It’s also creepy, because you don’t know what’s personal and what’s not, or what’s based on surveillance of your activities and what’s not. And opt-out “solutions” from the industry, such as AdChoices only serve as a paint job over the surveillance required to make ads personally relevant (which, nearly all the time, they are not).

The historic shift we’re experiencing here is one from the static Web to the live one — a development I visited in a 2005 essay in Linux Journal titled The World Live Web. It begins,

There’s a split in the Web. It’s been there from the beginning, like an elm grown from a seed that carried the promise of a trunk that forks twenty feet up toward the sky. The main trunk is the static Web. We understand and describe the static Web in terms of real estate. It has “sites” with “addresses” and “locations” in “domains” we “develop” with the help of “architects”, “designers” and “builders”. Like homes and office buildings, our sites have “visitors” unless, of course, they are “under construction”.

At the time (see here, here and here) I saw the Live Web as a branch off the static one, starting with RSS and real-time search of RSS feeds, which at the time was done only by Technorati and its competitors. (The only survivor in that category is Google blogsearch, which lets you isolate postings in the past ten minutes, the past hour, the past 24 hours and so on.) What I didn’t expect was for the Live Web to become pretty much the whole thing. But that’s where we’re headed today. Except for domain names, logos and other persistent, impersonal graphics and structures, the Static Web is becoming a lost signal as well.

And yet “brand” and “branding” are hot topics on the live Web, and have been ever since marketers began advancing on the Internet’s wild frontiers. (This Google Ngram graph traces the popularity of the word “branding” in books from 1900 to 2008. Note how the word starts to hockey-stick in 1995, when the commercial Web was born.)

Back in early 2000, when The Cluetrain Manifesto came out, among the first companies we heard from were Johnson & Johnson, Procter & Gamble and other established consumer goods companies that had actual “brand managers.” They bought the premise that “markets are conversations” (Cluetrain‘s first thesis, and the title of one of its chapters). But they were flummoxed by the oxymoronic challenge of making a brand talk. Why should it? They were also baffled by first-generation Net-native marketing types talking about “brands” and “branding” as if these concepts translated easily and instantly to the networked world. Real brand managers knew, in their bones, that the solid and durable substance of a brand wasn’t personal. It was pure signal.

I think this is one reason Dr. Abraham calls the Internet a “mixed blessing” for brands. The static and durable substance of a brand can still be communicated on the Web the same old-fashioned way it is in print and on radio and TV, but the temptation to get personal with advertising is irresistibly high, especially since there are now hundreds of companies and countless experts and technical means for doing that.

As a result it is impossible to tell, on the Live Web (or mobile apps, or on any glowing rectangle fed by today’s Direct marketing based advertising system) what’s personalized and what’s not. And, with old-school brand managers outnumbered a zillion to one by personalized marketing types yapping about brands and branding, the original, persistent and well proven virtues of real branding are all but lost.

So the new stuff is marginalizing the old stuff in a huge way. For a crash course on how this is going, read Bob Hoffman’s Ad Contrarian blog, watch this speech, and read this one. From the latter:

First, that an astounding amount of what the experts, the pundits, and the geniuses have told us about advertising and marketing and media in the past 10 years has turned out to be bullshit.

And second, that the advertising industry has become the web’s lapdog – irresponsibly exaggerating the effectiveness of online advertising and social media… glossing over the fraud and corruption, and becoming a de facto sales arm for the online ad industry.

The online advertising he’s talking about here isn’t traditional brand advertising, but the direct response stuff that wants to get personal with you.

But, because brand and direct response advertising are now fully conflated, the brand baby gets thrown out with the direct response bathwater. That’s why we have, for example, Ethan Zuckrman‘s The Internet’s Original Sin. Writes Ethan, “The internet spies at us at every twist and turn not because Zuckerberg, Brin, and Page are scheming, sinister masterminds, but due to good intentions gone awry.” The good intentions were around making advertising better — something Ethan himself worked on, back in the last Millennium.

But Ethan’s main issue is with the whole business model of advertising on the Web, which includes both the brand and the direct response stuff: “20 years into the ad-supported web, we can see that our current model is bad, broken, and corrosive. It’s time to start paying for privacy, to support services we love, and to abandon those that are free, but sell us—the users and our attention—as the product.”

But the ads won’t go away, because the Web will always be a wide open publishing space. So the question becomes, What’s best?

After Ethan’s piece came out, Don posed Ethan’s position against Bob’s and looked for a solution that respects what both bring to the table:

But Hoffman and Zuckerman are both right. Web advertising has failed. We’re throwing away most of the potential value of the web as an ad medium by failing to fix privacy bugs. Web ads today work more like email spam than like magazine ads. The quest for “relevance” not only makes targeted ads less valuable than untargeted ones, but also wastes most of what advertisers spend. Buy an ad on the web, and more of your money goes to intermediaries and fraud than to the content that helps your ad carry a signal.

From Zuckerman’s point of view, advertising is a problem, because advertising is full of creepy stuff. From Hoffman’s point of view, the web is a problem, because the web is full of creepy stuff. (Bonus link: Big Brother Has Arrived, and He’s Us )

So let’s re-introduce the web to advertising, only this time, let’s try it without the creepy stuff. Brand advertisers and web content people have a lot more in common than either one has with database marketing. There are a lot of great opportunities on the post-creepy web, but the first step is to get the right people talking.

Can we make that happen? Or do we just have to wait for the creepy bubble to burst? I predicted the burst in The Intention Economy, which came out in May 2012. It hasn’t happened yet. But it’s looking a lot closer since PageFair published 2104 Report: Adblocking Goes Mainstream last week. Summary findings:

• There are about 144 million active adblock users around the world.
• Adblock usage grew by nearly 70% between June 2013 – June
• Growth is driven by Google Chrome, on which adblock penetration nearly doubled between June 2013 – June 2014.
• Adblock usage varies by country. In some countries nearly one quarter of the online population has it installed.
• Adblock usage is driven by young internet users. 41% of 18-29 year olds polled said they use adblock.
• Adblock usage is higher with males, but female usage is still very significant.
• A majority of adblockers expressed some willingness to receive less intrusive ad formats (however they strongly rejected intrusive ad formats such as interstitials and popovers).

Often we hear it said that we have made a “deal” with online advertising, trading our privacy for advertising that pays for the content we consume. We didn’t. (As I said here, four years ago.) We just put up with it.

But we actually do make a deal with the brand advertising that supports the print and broadcast content we also consume. We give them time and space in our lives. Sometimes we skip over ads on our cable DVRs, or page past the ads in magazines. But we are conscious of the good those ads do, even if some of the ads annoy us. They support the paper, the magazine, the radio or television program, and the creative people behind them.

It should be the same on the Web. But it’s not, because an unknown but obviously high percentage of the ads we see are aimed by unwelcome spying on our personal lives. If Don’s right, and we subtract the creepy stuff out, and respect brand advertising for the good it does (while putting up with the annoying stuff, which will probably never go away), we might keep the free stuff we like, or at least reduce the price of it.