When you are drinking at a bar or eating in a restaurant, what’s great service? What makes you loyal to a particular place? Is it not when they know who you are, what you like, and can therefore provide a level of service and intimacy that other places can’t match?
Why then is online, targeted advertising so different? Why do people get up-in-arms about companies getting to know you better, so they can show you ads you might actually like more?
That is probably what Mark Zuckerberg is thinking when he reacted to a comment Tim Cook once made:
When an online service is free, you’re not the customer. You’re the product.
And then Mark Zuckerberg in a recent Time Magazine article:
“A frustration I have,” Zuckerberg says, before a PR handler can change the subject, “is that a lot of people increasingly seem to equate an advertising business model with somehow being out of alignment with your customers. I think it’s the most ridiculous concept. What, you think because you’re paying Apple that you’re somehow in alignment with them? If you were in alignment with them, then they’d make their products a lot cheaper!”
I have to side with Zuckerberg here.
While many enthusiastically pay premium for Apple products, it’s true that Apple makes hand-over-fist profits. Apple can easily increase customer happiness by lowering prices (and still make a ton of money). Like any other company, Apple makes decisions not based on customer happiness, but on a combination of things — customer happiness, product quality and price — that maximize profits.
You can even argue that advertising aligns companies’ interests better with customers. Apple makes money when you purchase an iPod, whether you use it or not. Facebook, on the other hand, only makes money when you continue to use its products. So you could argue Facebook has a greater incentive to keep improving their products while Apple has a greater incentive to merely market them well.
I’m not actually arguing that advertising is a better way of making money than charging upfront prices. But it is a valid way of making money, and it’s not necessarily anti-consumer.