Esther Dyson’s commentary on “The Coming Ad Revolution” manages to be both wrongly optimistic and wrongly pessimistic. Common ground is that there is a coming ad revolution. According to the article, online will become increasingly effective through the use of behavioral targeting, viral marketing on social networking sites, and sophisticated methods that are being dreamed up by countless entrepreneurs who are looking at this business. Moreover, users are taking more control over their personal online data and using it to establish their web “presence” as individuals.

The false optimism is two-fold. For one, I have failed to see this groundswell of consumers taking charge of their private online data. Everyday we seem to have a new story about an Internet property hoarding data pertaining to our most private actions. Google and DoubleClick have detailed data now on virtually everyone who has an Internet connection, all stored away in servers. An article in today’s New York Times pointed out that FaceBook maintains data even for people that have decided to exit the site. For another, advertising on social networking sites is an interesting but unproven proposition. Advertisers pay for search and contextual ads because they often generate leads with high ROI. Maybe someone will figure out how to do advertising effectively—and profitably—on social networking sites, but no one has just yet.

The proposition that ads are going to become less effective reflects serious false pessimism. Untold billions are now spent on off-line media where the buyers have little clue who their viewers are or what happens as a result of viewers seeing an ad. It is true that online ads may tend to crowd each other out at some point. But for now, the prospect of engaging in targeted advertising so that companies are presenting ads to consumers who might actually buy their product—because they’ve been looking for something the company sells—is a marketer’s Nirvana. Online advertising is becoming increasing effective, advertisers are paying more for it and shifting more of their budgets over to online.

The revolution is, indeed, coming and it will result in more effective ads. The jury is out on whether a significant portion of online ad revenue will come from social networking sites though.