It is significant that the stock exchange was the model adopted by entrepreneurs who were designing the platforms that became today’s programmatic advertising infrastructure. This mode of thinking was “an engine, not a camera,” in the sense that it acted as “an active force transforming its environment, not a camera passively recording it.”28 The rise of programmatic advertising was not just a continuation of the commercialization of the web that was underway in the 1990s but also a process that actively shaped the rules and practices of how attention would be traded online.
There are two intertwined developments that make the modern online advertising ecosystem possible. The first is a set of technological developments. It is indisputable that certain technological advances were needed to allow AdWords to enable the buying and selling of advertising at huge scale and split-second speed without human intermediaries. But this first set of developments does not tell the whole story about how the programmatic advertising system came to be. Technology enables the game to be played, but it does not dictate the rules of that game.
The second, equally important development that gave birth to the programmatic advertising marketplace was ideological: the adoption of the mental frames of finance. Capital markets like the New York Stock Exchange served as a crucial inspiration, providing a template that early advertising technology entrepreneurs drew from in setting the rules of these novel markets in search and display advertising.Market Commodification
How do we characterize the influence of the finance industry on the development of the business model of the internet?
One simplistic approach is to think of the entrepreneurs who constructed the modern edifice of programmatic advertising as, essentially, commercializers. The nascent open internet—the child of academic and government funding—needed to become financially sustainable as a business. The efforts of companies like GoTo and AOL served to bundle user attention online and extract money from this attention through advertising. As a result, what was formerly a sphere of nonprofit and public research was transformed into a sphere of for-profit and private enterprise.
But this version of events denies the internet its historical place as a communications platform and broadcast medium, very much the successor to the telegraph, radio, and television.29 The transformation of attention into something monetizable is, of course, not a new phenomenon. Predigital advertising was engaged in the buying and selling of attention through billboards, newspaper ads, and television spots just as modern-day advertisers pay to grab attention online. The infrastructure of online advertising did not invent the commercialization of attention.
Thinking of the internet’s transition as a simple shift from noncommercial to commercial misses an important nuance. We should distinguish mere commercialization from the specific kind of commercialization wrought by the ad technology entrepreneurs of the 1990s and 2000s. Earlier generations of advertisers bought and sold attention, but never at the speed, scale, and level of granularity characteristic of today’s programmatic advertising marketplaces. What is different about the present-day online advertising system is the extent to which it has enabled the bundling of a multitude of tiny moments of attention into discrete, liquid assets that can then be bought and sold frictionlessly in a global marketplace.
Attention is commodified to an extent that it has not been in the past. There are many different ways of making money, and the internet could have commercialized—even through advertising—without developing the extreme level of commodification that has occurred.
Commodification may seem somewhat mystical, but it represents a fairly straightforward process of evolution that appears in many marketplaces. To get an intuition for why this might be the case, consider a hypothetical market for chickens on a small island. For an economist, the dynamics of this market are simple. The chicken farmer raises chickens and then sells them to a number of local customers, from the butcher to the sandwich shop to someone who wants to keep a chicken as a pet. This system works pretty well: the farmer can travel physically from place to place hawking a small number of chickens and haggling with potential buyers. The price at which a given chicken is sold is based on the specific characteristics of that chicken and the needs of the farmer and her buyer.
This type of market arrangement works at a small scale, but it quickly becomes awkward as the marketplace grows. Now imagine that our small island is connected to the mainland by a highway that leads to a massive city. Our farmer, who previously had to meet and haggle with only a handful of potential buyers, is now confronted with a marketplace many times greater than what she had to contend with before. The farmer suddenly has a vast number of people she might be able to sell to. Those potential buyers are likely people the farmer has never met. If that big city is connected by roads, railways, and airports to parts farther afield, the potential number of buyers could be overwhelming. Personally identifying a buyer and negotiating the price for each individual sale becomes challenging to manage effectively.
Buyers run into their own problems. Buyers might never have met our hypothetical chicken farmer. They may be far away from our island and unable to get there to evaluate the quality of the chickens. Unlike the local butcher or sandwich shop or chicken fancier, whose proximity to the farmer lets them purchase chickens as needed, the new buyers may want to buy a large number of chickens at once from
