We tax things that are bad for society, like tobacco, alcohol, and gambling. Unfettered, undifferentiated internet advertising and marketing impressions are bad for our souls. Let’s tax them, too.
Spam. Clutter. Noise.
There is just too much of it. Raise your hand if your inbox is full of stupid, pointless, and undifferentiated offers. Say “aye” if you your media sites and Facebook feeds and mobile apps are endlessly flashing irrelevant and annoying ads.
This problem exists, simply, because the infrastructure for ads is so cheap. More impressions make more money, even if they annoy the hell out of us.
Email service providers like Marketo charge by the number of contacts. So if you send 200,000 emails instead of 100,000 emails, the cost is nearly the same. Why not send 200,000? Or a million?
If you run a site, the more ads you can put on it, the more money you can make. So why not fill the page with advertising?
More clutter demands more volume to get noticed. More volume creates more clutter. Every new medium is overrun. Have you even tried to look at an ad-supported app on your phone lately?
The ads aren’t well personalized. They’re irrelevant. If they get one click through per thousand, that’s fine — the other 999 of us can just suffer.
It’s bad, and it’s getting worse.
Tax it to fix it
Here’s a simple solution. Tax impressions. Not ads. Not revenues. Impressions.
Charge 0.1 cent (that’s one-tenth of a cent) per impression to any system that generates more than a million marketing impressions.
Make every email service provider pay $0.001 per email sent. SendGrid, for example, sends 40 billion emails per month. This proposal would cost them 40 million per month. It would be the most significant expense on their balance sheet.
Multiply this by every email marketing provider and this would reduce email marketing volume significantly. Their volume would go down; their pricing would shift. They’d charge by the email instead of by the number of contacts, as many do now. Marketers would send emails only if they could demonstrate a return on each one. Such a move would prompt marketers to invest in personalizing their emails, so that each one was most likely to pay off. It would vastly reduce the level of spam in our inboxes.
Similarly, a per-impression tax would change the dynamics of the online ad market. There would be fewer avails, since each ad displayed would cost a little more. Spammy advertisers who succeed only based on clickbait would exit the market. Advertisers who could actually generate action with useful suggestions would still be able to pay. The ads would get better.
The sites that collect the largest chunks of ad revenue — Facebook and Google — would pay the most tax. With their insane levels of profitability, they can handle it.
They would react by reducing avails and raising rates — generating more dollars from fewer impressions. (Remember, we are taxing impressions, not revenue.) This would generate more targeted spending from advertisers. And we’d see fewer irrelevant ads.
The service providers would pay this tax. (That way there are tens of thousands of payers, rather than tens of millions of buyers; that makes the system easier to manage.) The providers would pass it on to their customers, the marketers, but the total cost would be marginal.
The small business — one that generates less than a million impressions with an in-house email list, for example — would pay nothing. Service providers serving those businesses (such as Google search ads or Silverpop) would keep the per impressions cost minimal for those small customers, to keep them as customers who will eventually get bigger. And let’s be serious. Even if they charge them, if your mailing list has 10,000 people on it and you send them 10 emails per year, the tax passed along to you by the service provider would be $100 per year. You can afford that.
Europe is already considering a proposal like this. Imagine, for a moment, that an impressions tax takes place in Europe but not in the US.
Ad and email volumes in Europe would drop. Europe’s digital experience would be less cluttered.
Would anyone else (other than European email service providers and ad agencies) suffer?
Could marketers in Europe generate better results with less volume? I think they could. This would be the nudge to push them to do so.
The world would divide into two sets of geographies: spammy regions and those that offer a better, less cluttered experience because of the impressions tax. I’d rather live in the less spammy regions.
What to do with the money?
A tax like this would generate a decent amount of revenue. I am not an expert in ad and email volumes, but we can make some back-of-the-envelope estimates.
Cisco says there are 53 billion emails sent every day; even if only 20% of that is marketing email, that’s almost 4 trillion emails per year, generating $4 billion year. Each country would get its share of that.
Regarding ads, there were 5 trillion digital impressions generated in 2012. I’m sure that’s at least doubled. That’s 10 trillion impressions for an annual revenue of $10 billion.
(If you have better numbers, please share them in the comments.)
I’d like to see that money go towards subsidizing high speed internet access and mobile connections. Maybe you’d like to see it go towards reducing the deficit, building a border wall, or more humane treatment of refugees.
Frankly, it doesn’t matter. The key is to tax impressions, not marketing spending, to reduce the amount of clutter.
Taxes on things like liquor and gambling change people’s behavior. I’d like see the impressions tax change the behavior of advertisers. We’d all benefit, regardless of what we use the money for.