That’s what Steven Brill at Reuters is thinking:
The Times article describes the rise of “programmatic advertising,” in which new online tracking technologies allow an advertiser to follow a consumer whose profile fits the advertiser’s targeted demographics wherever the consumer goes online rather than just make an educated guess about the websites that consumer is most likely to visit.
Before programmatic advertising, if an upscale restaurant chain decided that its best prospects were well-to-do men who live in major metropolitan areas and travel a lot, it might buy ads in the business sections of high-end newspapers or on business travel sites. Now the restaurant chain can follow those targeted people to any website they visit. It doesn’t have to buy ads on the sites where the target is most likely to be found but can instead simply bid on an electronic ad exchange to buy the cheapest ad that will reach someone with those demographics no matter where he or she goes (a gossip site, for example).
This erodes the premium upscale newspaper sites can charge. The individual consumer is what’s important and now identifiable, not the place where he sees the ad.
Thus, the Times reports in this article, “The shift is punishing traditional online publishers,” and that online advertising revenue at its own newspaper actually fell 2.2 percent in the last quarter as a result of a decline in the rates the Times is able to charge for Web advertising. That’s a trend reflected lately in the results of most other major newspapers.
In other words, on the heels of the Internet having destroyed the readership and advertising revenue of printed newspapers, further advances in digital technology now threaten the papers’ digital ad business.