New Digital Companies, Old Ad Habits
Why are DoorDash and Instacart letting businesses buy their way to the top of search results?,
the on tech newsletter
New Digital Companies, Old Ad Habits
Why are DoorDash and Instacart letting businesses buy their way to the top of search results?
This article is part of the On Tech newsletter. Here is a collection of past columns.
I don’t have anything against ads. They make it more affordable for us to watch “Monday Night Football” and read The New York Times. I love a well-made weepy TV commercial.
What I don’t love are young companies that are becoming addicted to ads — to our detriment and maybe theirs.
DoorDash this week started giving more prominent placement to restaurants that pay for their listings to appear when people search for pizza or tacos. Its competitors Uber Eats and Grubhub offer similar ads. Instacart, a grocery delivery start-up, is further expanding its paid product placements. Even Amazon keeps turning over more shopping real estate to merchants that pay to blare their dog beds at us.
At their best, ads can help us find something that we didn’t know we wanted, and save us money. (Coupons are advertising, too.) The trick is striking the right balance between serving the companies that are footing the bill for advertising and the interests of those of us on the receiving end.
I fear that more companies have tipped over from an advertising fair trade to a devil’s bargain. Companies like DoorDash, Instacart and Amazon risk making our experience browsing and buying online miserable by cramming in more, and often irrelevant, ads. And let’s be straight: It’s not helpful to see a burger restaurant in a prime spot on Uber Eats not because the food is good, but because it’s paying for the privilege to appear there.
Companies that have crept into advertising as a side hustle are leaning on ads for two reasons: peer pressure and to spackle over the financial flaws of app-based delivery services.
I’m sympathetic. It is a tough business to send couriers to restaurants or grocery stores and then to your door. I get why Instacart takes money from Altoids to be the first product listed in the app’s snacks section. I understand why Altoids is willing to pay to stand out.
And conventional supermarkets have done this for a long time. Those chips at the end of the aisle might have paid the store to be there.
We still don’t have to be happy about enshrining some unhelpful marketing in a new generation of shopping that promised to be better. And whether it’s a physical store or an app, there is something perverse about browsing the aisles while the company makes money by steering us to one brand of toothpaste over another.
Jason Goldberg, the chief commerce strategy officer at the advertising firm Publicis Communications, told me that digital advertising had become a race to the bottom.
Three companies that are essential portals to online information — Google, Facebook and Amazon — all have been slowly turning up the dial on ads. They’re turning over more screen space to links, posts or products from companies that pay to put them in front of our eyeballs, and less to the information that the companies determine might be most relevant for us.
This steady shift of more ads online and in conventional media such as TV has forced everyone else to consider doing the same, Goldberg said.
The best defense of what companies like DoorDash, Instacart and Amazon are doing is that ads can make convenience services more affordable. Instacart’s boss has said that advertising helps lower the prices for grocery delivery. DoorDash can charge lower commissions to most restaurants and offer paid promotions for those willing to pay for it.
Now I will be my usual grumbling crank: If delivery apps or other convenience services that we love need to be subsidized by ads that we hate, maybe those convenience services make no financial sense?
Sridhar Ramaswamy, a former Google executive in charge of its advertising arm, described advertising as a “stress release valve” for companies that are feeling financial pressures. “It feels like free money,” he told me.
Ramaswamy quit Google and started an ad-free digital search company called Neeva that makes money on subscriptions from people paying for the service. I don’t know if Neeva will succeed. But we should feel glad that more companies are trying to break bad advertising habits.
Before we go …
Is Instagram bad for kids? It’s complicated. My colleague Jessica Grose digs into some of the research into whether use of social media makes teen girls feel worse about themselves, and suggests tips for parents. Farhad Manjoo of New York Times Opinion takes us on a short history of moral panics about video games, “sexting” and urban gangs, and says that exaggerated fears risk distracting us from underlying problems.
OK, *who* is making a living online? Axios asks an important question: Is the creator economy of people doing what they love on YouTube, Twitch or Substack more democratic than old entertainment and media industries? Or are only 1 percent of stars making a good living, and everyone else is hustling for peanuts?
How Slack is changing office work: The Atlantic has a long read about ways that Slack and similar chat apps for office workers are blurring the lines between work and life, and giving workers the ability to challenge their bosses. We’re still figuring out how technologies like this are influencing the ways humans interact.
Hugs to this
Alyssa Barry makes engaging TikTok videos about life at her animal sanctuary in Florida. This is Wilbur the pig “helping” Barry do the morning rounds. (I first read about this TikTok account from my colleague Julia Jacobs.)
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