Michael Wolff’s link bait grabber line today for Technology Review at MIT that “Facebook is not only on course to go bust, but will take the rest of the ad-supported Web with it” begs, no demands, a significant qualification. He bases this argument on a simple and very real premise:
At the heart of the Internet business is one of the great business fallacies of our time: that the Web, with all its targeting abilities, can be a more efficient, and hence more profitable, advertising medium than traditional media. Facebook, with its 800 million users, valuation of around $100 billion, and the bulk of its business in traditional display advertising, is now at the heart of the heart of the fallacy.
I don’t necessarily disagree with Michael, but he’s missing a very key perspective that renders his argument a bit naive. Here’s the problem: The industry that’s about to collapse isn’t the “ad-supported Web;” it’s the wacky world of Madison Avenue, which has tried to take advantage of the Web’s targeting efficiency only to press its tired, old methods in the name of protecting its place in the status quo.