Attribution rules the world (and it’ll rule Web3 too)

I consider it completely unimportant who in the party will vote, or how; but what is extraordinarily important is this — who will count the votes, and how.

-Joseph Stalin

Internet monetization is somewhat like a Soviet election: It doesn’t matter who clicks and where, it’s who counts those clicks that matters. The technology and business of that counting of clicks (and everything else you do online besides) goes by the dull-sounding name of attribution, and it determines the fate of trillion-dollar companies.

Attribution is kind of like running water and flush toilets in modern cities: Nobody but plumbers really think about it, but if it failed for you and everyone else, you would think about nothing else and civilization would teeter on the brink of the abyss.

Just what happens when attribution goes awry?

In February, the Company Formerly Known as Facebook lost a quarter (!) of its value after it admitted that Apple’s Ads Tracking and Transparency initiative (ATT) made it increasingly hard for them to actually serve ads. They projected a $10 billion-dollar hole in this year’s revenues as a result.

More recently, this week Snap lost about half its value in a massive market plunge thanks to a warning by CEO Evan Spiegel that the company would face revenue headwinds and slow hiring. The downturn was blamed on everything from supply chain issues to the war in Ukraine (!). I wasn’t aware that Snap memes came on ships from China, nor that the memes of production were located in the embattled Donbas region of Ukraine. More likely is what Eric Seufert speculates in his always-enlightening MobileDevMemo (and similar to what happened to Meta): Apple making proper attribution impossible via its privacy moves has hosed the company’s ability to drive results for its advertisers.

Let’s go even bigger picture:

Why is Twitter—our global public square where tastes are made, people canceled, and heads of state threaten each other with nuclear hellfire—worth so little a billionaire can scrape together the cash to outright buy it? How is it possible that the upstream media source to everything bought or voted on is worth a pittance compared to Google or Facebook? Attribution is why: they never take credit for all the valuable behavior they cause.

How does it work in practice?

Consider the timeline of your average internet user as they traverse the pixelated world of smartphones and desktop computers: An initial Tweet or TikTok video leads to a click, which leads to the user installing an app, which eventually leads to spending money inside an app, possibly days or weeks later. The central metaphor of marketing is the user ‘funnel’: the narrowing procession of users that get closer and closer to your cash register as they navigate the noisy internet world. I depict it here horizontally, as a cohort going down a slippery slope:

The green dollar sign is how you get paid; the red dollar sign is you paying (either directly for ads, or indirectly for organic media like tweets). The ratio of those numbers defines whether you live or die in the pixel jungle. It also determines how much (or how little) you spend on any given piece of media, cf. Facebook’s latest problems with performance.

Plumbing-wise, this works because everything you touch online—every app, every website—fires events back to companies like Facebook or Branch describing what happened when, and by whom (anonymized of course). This is the source of the perennial panic about apps (e.g., period tracking ones) sending data supposedly to Facebook and divulging your personal info. It’s really not as nefarious as it sounds, and not terribly different than the server logs littered with our information we leave everywhere we go online. I’ve simplified this severely here, but it looks something like this: