Golden Fleecing

San Francisco and Marin counties are bastions of “progressive” political ideology, especially when proposals involve other people’s money… but when SF and Marin residents are footing the bill they become downright conservative in nature. This is exactly the case with the Golden Gate Bridge and a replacement span for the Doyle Drive approach, which apparently is not seismically safe.

The Bush Administration, referred to in Marin and SF as the McChimpyBushHaliburton administration, offered $158 million in Federal money – otherwise known as your taxpayer dollars – to the Golden Gate Bridge (which seceded from state bureaucracy eons ago) to replace Doyle Drive but there was one really big string attached, the bridge district had to implement a congestion pricing toll plan in order to get the money.

Now if this were any where else in the country the residents of Marin and SF would have howled in approval at such a “progressive” solution even if it came from McChimpyBushHaliburton, but because this plan would have hit Marin commuters who come across the GG Bridge to SF, well the howls were that of protest and not support. Dubbed the “Marin commuter tax” by opponents… even though it’s kinda hard to get around the fact that the bridge does connect Marin to SF, as opposed to SF to Marin… from a purely functional standpoint it would make sense that the drivers who are getting the greatest economic benefit from the bridge should in fact bear the brunt of the tolls.

Long story short, the congestion-based toll has been shot down by the bridge district and they are proposing a compromise to pay for the approach to the bridge by increasing parking tolls… so to get this straight, the people who are now paying for the bridge approach retrofit aren’t even using it, in fact they aren’t even technically driving. Brilliant.

Commuters no longer face the threat of a congestion-based toll on the Golden Gate Bridge, which could have pushed the cost of crossing the span to at least $7.

But in its place, drivers parking at meters along the route to the bridge – including on Lombard Street and Van Ness Avenue – will face varying rates that rise during the busiest hours and are designed to increase turnover and push long-term parkers to lots and garages.

[From Golden Gate Bridge congestion toll plan dies]

All snarkiness aside, I’m a proponent of market-based pricing mechanisms but before we get all frothy about this, the people in charge should be compiling compelling data that suggests it works. I hear all the time about London’s congestion pricing plan and from what research I have done it appears London is perhaps a cautionary tale rather than a model.

With well over $1b in fees – taxes – collected from motorists since the introduction of the system in 2003, only a portion of those proceeds have gone back into the transportation projects that were originally promised. Meanwhile, the cost of operating the system has been rising at a rate far greater than inflation. The proposed quintupling of the fees was one factor in the defeat of London mayor Livingstone this year, indicating voters distaste of the taxes. More significantly it is reported that retail sales fell immediately following the introduction of the fees and delivery fees for goods surely rose as businesses passed on the costs to consumers.

Congestion pricing may in fact be a good tradeoff of a market based solution to urban gridlock in exchange for economic impacts that are targeted to a segment of the population that is otherwise benefiting. I really don’t know but it does seem logical, which makes it somewhat disheartening that “progressive” residents of SF and Marin are unwilling to implement this simply because it’s there money and not someone else’s.

Ad Networks Race to the Bottom

The Interactive Advertising Bureau (IAB) and Bain & Company today announced the release of a benchmark study which suggests that online publishers are increasingly turning to sales intermediaries known as ad networks to sell off excess inventories. The use of “ad networks” surged from 5% of total ad impressions sold in 2006 to 30% in 2007, according to the newly released “Digital Pricing Benchmarking Study” from Bain, the global business consulting firm, conducted in coordination with the Interactive Advertising Bureau.

[From Use of “Ad Networks” Surges Six-Fold as Media Companies Step Up Monetization of Unsold Online Advertising Inventory]

Keep in mind that the above study is being promoted by the IAB… for a more sanguine look at online ad networks you should read this piece in MediaWeek:

“While ad networks and their cousins, ad exchanges, offer an efficient way to unload inventory that would otherwise go unsold, common complaints are that networks amount to paltry ad rates, low-rent ads and, ultimately, the threat of undermining a brand’s value. “

Why is this a race to the bottom? For starters, the only real differentiator that the 300+ ad networks can control is price and even there the unit metric is entirely direct response based, as opposed to brand metrics that advertisers care about equally if not more so than how many people are clicking on the ad unit.

I’m still learning my way around the online advertising space but I do know enough to suggest with some certainty that simply commoditizing a fungible product leaves you with little maneuvering room in a very crowded and noisy marketplace.

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