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Google Should Give You Some of Its Ad Revenue—A Commentary by Ian Ayres ’86

The following commentary was published in The New York Times on July 23, 2008.

Google Should Give You Some of Its Ad Revenue
By Ian Ayres ’86

Here’s a link to a Marketplace radio commentary that aired yesterday in which I argue that search engines should give you a cut of their ad revenue when you click through on an ad. Microsoft’s cashback system pays you if you click through and buy. But just the act of consuming the ad should have some value even if you don’t buy.

We’re used to thinking of Paypal and Google checkout as micro-payment services, but they can also become micro-compensation services. If you watch a commercial on Google TV, Google could credit your account.

I’ve written a (long) academic article showing how compensated calling could be easily incorporated into the current “do not call” regs — so that you could even set whatever price you wanted to listen to telemarketing calls. (I’ve also published OpEds on the idea here and here.) Instead of making an all-or-nothing choice about whether to block all telemarketing calls, a lot of consumers would prefer to set an intermediate price and just block those calls that aren’t willing to pay their price.

Compensated advertising fits perfectly with Google’s revolutionary model. It gives advertisers even better incentives to make ads relevant for specific consumers. Compensated ads are literally valuable.

Of course you have to worry about moral hazard. Some consumers will insincerely click through just to get the compensation. But advertisers have simple counter strategies to limit these shenanigans — such as limiting the total compensation or blocking consumers who click but never buy.

A bunch of other firms besides Microsoft have started down this path. After my commentary aired, I got an email from the president of Mindshare will compensate you if you click through on their ads (but it seems you have to accumulate $100 before you can actually retrieve your compensation).

The big question is whether larger services — like Yahoo or Microsoft — will push Google toward a system where consumers can trade their attentions for dollars.

Microsoft’s cashback service is an important step in the right direction.