View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Illinois Digital Environment for Access to Learning and Scholarship Repository THE REVOLUTION WILL BE COMMERCIALIZED: FINANCE, PUBLIC POLICY, AND THE CONSTRUCTION OF INTERNET ADVERTISING BY MATTHEW CRAIN DISSERTATION Submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Communications in the Graduate College of the University of Illinois at Urbana-Champaign, 2013 Urbana, Illinois Doctoral Committee: Professor John Nerone, Chair Professor Dan Schiller, Director of Research Professor Robert W. McChesney Professor Christian Sandvig, University of Michigan Associate Professor Inger L. Stole ii Abstract This dissertation traces the internet’s assimilation into the marketing system during the 1990s. It analyzes the construction of the online advertising industry and clarifies its role in the reconfiguration of commercial media. The conceptual framework is that of critical political economy. Archival sources, government documents, and trade press accounts provide a foundation for an assessment of how online advertising evolved in relation to a changing capitalist political economy. The “dotcom” period was characterized by broad market liberalization, a technology investment bubble, and accelerating disruption of established media business models. In this context advertising and media firms, major marketers, and a group of newly formed online advertising companies sought to fashion the world wide web into a marketing platform and secure their own position at the heart of the internet’s nascent media economy. Deeply integrated into speculative financial markets, these actors appropriated key digital technologies and influenced public policy in order to steer the development of the web toward a model of advertising based on pervasive and surreptitious consumer surveillance. This confluence of factors rapidly broadened the scale and scope of online advertising, altered the technical character and everyday experience of the web, and established a framework for the continued transformation of advertising and media in the 21st century. This research situates online advertising’s development as an ongoing and contested process rooted in historical social relations. It emphasizes the interconnected roles of finance, technology, and politics in shaping the internet’s evolution and delimiting the boundaries of its acceptable use. At the same time, it sheds light on the dynamic nature of capitalism by charting iii its interaction with a powerful new interactive medium that was and remains simultaneously disruptive and catalytic. iv Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported 2013 Matthew Crain v Table of Contents Acknowledgments ………………………………………………………………………….. vi Introduction Advertising, Media, and Political Economy ……………………………………………….. 1 Chapter 1 Advertising at the Dawn of a New Medium: Networks, Cookies, and DARTs ……………. 24 Chapter 2 The Marketing/Finance Feedback Loop: Advertising Demand and the Dotcom Bubble ….. 71 Chapter 3 The Dotcom Bubble and Online Advertising Infrastructure ……………………………….. 111 Chapter 4 Surveillance Infrastructure and Marketing Convergence …………………………………... 151 Chapter 5 Internet Data Collection, Privacy Policy, and Industry Self-Regulation …………………... 195 Conclusion The Legacy of the Dotcom Era …………………………………………………………….. 246 Bibliography [Books and Peer-Reviewed Journals] ……………………………………….. 256 vi Acknowledgments Attending graduate school and undertaking a dissertation project is challenging work, but much more than that, it is an immense privilege. I have been extremely fortunate to be able to conduct this research and to have had such wonderful support along the way. I am grateful to my stellar doctoral committee. Assembling the group was an exciting moment. I remember thinking, “How lucky am I? I get to work not only with some of my biggest intellectual influences, but with some of the leading scholars in the discipline.” This was followed immediately by, “What have I gotten myself into? I am working with some of the leading scholars in the discipline!” I’m happy to report that the experience was a good one and, needless to say, I have learned much. Dan Schiller, my director of research, stewarded the project from start to finish. Dan’s assistance at the ground level was immensely helpful in clarifying the issues at stake and his overall vision of critical scholarship – what might be described as relentless contextualization – was and remains a guiding light. Dan also provided periodic reminders that intellectual labor is more than words on the page, balanced by encouragement to keep pressing “onward” when momentum seemed to stall. Reading Bob McChesney’s work in 1999 politicized my thinking about media and prompted me to study communications. Since taking his seminar in my first semester at Illinois, Bob has encouraged me to be my own toughest critic, pushed me to tackle big questions, and treated me like a colleague from day one. John Nerone, my committee chair and the sage of the ICR, helped me to take my work seriously without taking myself too seriously. Quick with a metaphor, conference story, and a pitcher if need be, John has been a wonderful mentor and friend. Christian Sandvig challenged me to question my assumptions, provided invaluable insight into how academia really works, and always generously supported his students. The scholarly community and camaraderie of Christian’s research group has been vii invaluable. Inger Stole helped frame my thinking about public policy and public relations and counseled that it is not always those with the most power that move history in particular directions. I am grateful for the support and assistance of a long list of colleagues, friends, and mentors: Cheol Gi Bae, Kevin Barnhurst, Ergin Bulut, Cliff Christians, T.C. Corrigan, Chris D’Arpa, Denise Davis, Ian Davis, Vernita Fort, Ivy Glennon, Koeli Goel, Stephen Hocker, Jennifer Ihm, Kamilla Kovacs, Jungmin Kwon, Ed Lamoureux, Cameron McCarthy, John McMurria, Robert Mejia, Anthony Nadler, Carissa Phillips, Victor Pickard, Rich Potter, Andrea Ray, Colin Rhinesmith, Aimee Rickman, Emily Shaw, Roger Smitter, John Stanislawski, Shayla Thiel Stern, Darren Stevenson, Sonny Stubble, TREE & Associates, Mandy Tröger, the scholarly community of the Union for Democratic Communication, Anghy Valdivia, Pete Vandenberg, and Jud Wellington. Special thanks to Lisa Nakamura, a great mentor, ShinJoung Yeo, my companion reading Capital and one the best critical scholars I know, Steven Doran, collaborator regarding all things teaching, and Brian Dolber, Caroline Nappo, and Molly Niesen – your friendship and support were crucial in many ways. I thank my interviewees Jeff Chester, David Kristol, and Ira Magaziner for taking the time to speak with me. I had institutional and fellowship support from the Center for People & Infrastructures, Institute of Communications Research, Illinois Program for Research in the Humanities, Graduate College, and the tenacious Graduate Employees Organization. Finally, I would like to thank my wonderful family, without whom I would be lost. My mother graciously read through drafts of every chapter and now knows more than she perhaps cares to about online advertising. And, saving the best for last, thank you Cor, Cam, and of course, Bev. You make this project, and everything else, worthwhile. 1 Introduction Advertising, Media, and Political Economy This dissertation chronicles the construction of advertising on the internet and the world wide web in particular. The title alludes to Gil Scott-Heron’s famous poem, “The Revolution Will Not Be Televised,” which became associated with the United States protest movements of the 1960s and 70s. Full of references to popular advertising campaigns of the period, the poem carries the message that social change of a genuine character will not be embraced or advanced by a commercial media system; marketers do not generally sponsor revolutions. This project seeks to explain how the “digital revolution” of the 1990s came in fact to be heavily sponsored in its nascent stages and analyzes the implications of this transformation for the character of the internet and the arrangement of media in society more broadly. The conceptual framework is that of critical political economy, which situates the development of online advertising in relation to the commercial media system and capitalist economy at large. Today, marketers spend more money on internet advertising than any other medium outside of television, but in the early years of the web’s emergence there was no certainty that it would function as a marketing platform.1 Although some recognized it more quickly than others, the web presented an existential challenge for marketers dependent upon commercial media to “connect consumer goods and services with potential markets, and indeed to bring those markets into being.”2 Annexing the web into the marketing system became an overriding shared imperative among advertising and media firms, the major marketers that employ their services, and a group of newly formed online advertising companies that sought to secure their own position at the heart of the internet’s growing media economy. 1 Interactive Advertising Bureau, 2011 IAB Internet Advertising Revenue Report (April 2012), 19. 2 John Sinclair, Advertising, the Media and Globalisation (New York: Routledge, 2012), 2. 2 The internet was the first new communications medium