> How can it be that having intimate knowledge of someone would not allow you to sell them more stuff? John has a 10th wedding anniversary coming up. Mary is single and goes to the gym every day. Steve just got a promotion and likes the BMW 3 series. Michael is overweight but has just gone on a diet. Are such details of no significance determining what ads to show these people?
It's possible that some combination of efficient markets, semi-inaccurate/incomplete tracking data and chaos theory combines to make it mostly irrelevant.
So Steve just got a promotion and likes the BMW 3 series, but advertising to him is useless because he has already decided to buy a BMW 3 series. Whereas Larry has had the same job for ten years, and the same Ford for ten years, but if you put a luxury car ad in front of him it may get him to take a test drive and actually create a new customer.
The data says Mary is single and goes to the gym every day, but it only thinks she's "single" because she's in a committed long-distance relationship and isn't interested in dating anyone else. And she's a fitness expert who is willing to spend her time researching fitness products, so she already knows everything there is to know about those products, already buys the ones she wants, and advertising them to her isn't going to create any new exposure. Whereas Jane never goes to the gym, so you might actually sell her a gym membership or a piece of fitness equipment because she doesn't already have one or know anything about it yet.
John has a 10th wedding anniversary coming up, but he has also known exactly what he's going to do for years. Whereas he has a third cousin whose wedding is coming up and has no idea what to get, so you should be showing him ads for toasters and flatware rather than jewelry and chocolate.
In general, you may do better to advertise your stuff to the people who aren't already interested in and knowledgeable about it. Which actually looks kind of a lot like random scattershot rather than targeting.
I don’t want to buy beef jerky when I’m reading about a military strike in the Middle East, no matter how much my profile indicates I like beef jerky — but I might be open to a book on politics.
Because reading about content is self-selected disclosure of interest, the NYT already has all the information they need to target me — they know I read politics, and when I’m in that context.
The only thing Google can provide is slight refinements on which political book to suggest — which isn’t far enough above the noise floor to matter. Anything else is just them giving the NYT statistical fuzz to pretend carrying their ads on beef jerky isn’t an all-around negative so they can fleece advertisers.
Targeted advertising isn’t about efficiency, it’s about raising the number of places they can (uselessly) place beef jerky ads so as to increase their cash flow.
>Because reading about content is self-selected disclosure of interest, the NYT already has all the information they need to target me — they know I read politics, and when I’m in that context.
This seems to me what "targeted advertising" should mean - NYT says "for all routes of nytimes.com/politics, show political ads. If it's local news, open it up to classifieds for local business." Etc.
If someone's on the page, is that not enough information?
To show the ad to the consumer? I'd say yes. To sell the ad, when google is selling hyper informative profiles down the road. Maybe not. Not that people who buy ads or keywords or whatever have the best idea of who they should sell it to
But also, if it's general interest that makes sense as well. Say an ad for BestBuy while browsing the NYT. That's one of the benefits of well trafficked sites - you can reach a pretty wide swath of the population.
In this sense I would like it if site took advertisement more seriously. Asking feedback, allowing personalization, selecting a few "endorsed" ads (as a quick and cheap Boolean review).
For Google and Facebook it doesn't make sense, but for a newspaper i would expect some selection on the ads they show.
In other words: targeted advertising is about making ads cheeper for advertisers, whereas the traditional assumption is that the real estate is valuable and desirable. e.g. companies want their ads in the New York Times or the Superbowl. Targeted advertising is a way of spreading ad dollars out more, which ultimately is detrimental to large publishers as well as being unethical on the data harvesting side. (I choose to adhere to the ACM's guideline that collecting personal information without informed consent is unethical.)
It’s actually about raising the price for advertisers:
Instead of only political books being able to advertise on that page, they’re bidding against beef jerky and cars and so on. This raises the price for the ad slot by creating (false) demand.
Without those out-of-place, targeted ads there would be less demand for every ad slot, and people could bid less for them.
In theory it can go either way. If you can target ads better to get more return per money spent, then it is worthwhile to spend more on advertising. In the end more on advertising is going to result in more money to publishers.
In other words, you're better off with affiliate links and content marketing than you are with algorithmic banner ads.
Heck, even Google AdSense scans your site to match ads with the content (source: I've tried using AdSense). They just don't rely exclusively on the content for ad targetting.
For sure, the type of person who reads the NYT politics section in English is _already_ a fairly niche audience compared to everyone who uses the internet.
I think you came really close to the salient point, but then missed it: Targeted advertising is, as you said, really not that much more effective as context-based advertising, unless you're an ad-tracking behemoth trying to convince companies they need your product.
The whole surveillance capitalism nonsense we live under is a way for ad networks to justify their existence. If you're a company that has data on everyone, you need to convince people they need that data to accurately sell ads, and targeted advertising exists solely for that purpose. The amount of cross-site tracking that these companies are able to do outscales what any company could manage to accomplish themselves, or even for a smaller competitor to step in, so as long as targeting users across the entire Internet is believed to be a must-have, these ad behemoths stay on top.
> Dear Amazon, I bought a toilet seat because I needed one. Necessity, not desire. I do not collect them. I am not a toilet seat addict. No matter how temptingly you email me, I'm not going to think, oh go on then, just one more toilet seat, I'll treat myself.
I've wondered about this, if it is kinda like coke commercials or car commercials. These ads aren't actually trying to sell you anything, at least directly.
It is easiest to understand it with coke. It is so prolific that people say "coke" instead of "soda". That we have "is Pepsi okay?" as a joke. Instead what these ads to is make you feel good for your choice in coke. Not to convince you to buy it, per say, but so that when you do buy it you get an extra kick from those sweet endorphins.
So is Amazon trying something similar? Perhaps the opposite? As in "Hummm... maybe I could have gotten a better one", causing you to return and replace (or just flat out replace). But that might be a weird strategy.
Show of hands. How many people have clicked on an ad and bought something directly related to the ad?
I was researching cameras. I saw very little camera ads in my research. After I bought a camera? Ads for the camera I just bought everywhere, for months afterwards. I have not once clicked on a ad and bought something. I maybe clicked on 10 ads in my lifetime and they were 75% stuff I THOUGHT I had no intrest in. I think targeted ads is the biggest con no of our age.
I wonder how much of the purported "success" of retargeting is just mis-assigned credit? You research a camera, but it takes you some time to make a decision. In the meantime, you get blasted with camera ads, which you ignore. Then you actually make your purchase. Even though the ads had no effect on you, there's a fairly high chance you still purchased an advertised model at a vendor that targeted you with an ad for the camera you bought (there are only so many of each). The advertisers may claim credit for that sale, even though in reality they deserve done.
Even more egregiously, maybe sometimes the advertiser's metrics have some reverse-causality: you buy the camera, then they show you the ads for it; but something in their metrics isn't properly modeling the sequence of events (e.g. they correlate retargeted camera ads shown per week with camera sales per week). Then they mistakenly take credit for a sale that happened before the ad was shown.
That's not to say such mistakes always happen, but I wouldn't be surprised they didn't happen fairly frequently. Given that measurement is hard and both adtech and advertisers are motivated to present success stories, and may not be too motivated to second-guess positive-sounding numbers.
I have literally never done so. I have, however, mentally blacklisted brands that had obnoxious ads, and I have always had a really low threshold for that determination.
I hate ads (particularly the ones interrupting TV programming) and try to avoid products/services that are heavily advertised. Imo it is the hygienic thing to do but also with a spin it is also smart business if one is price sensitive, why pay the for the obscene marketing budget factored in?
Amazon affiliate links for books are the sole times I've ever clicked on an ad with the intention to buy the product behind it. And I can count the number of times I've done that on one hand.
Incidentally, those weren't targeted ads. Those were ads hand-picked by the person producing the content about those books. From that very small sample I conclude that ads relevant to the context in which they're placed are more effective than targeted ads.
Whenever I get hyper-repetitive ads (usually GM, Dodge, or financial products - seriously, is that all of the ad inventory in the network on some days?), it usually has the opposite effect; I just assume those companies' products and processes are as inefficient and wasteful as their advertising.
I will say that I'm thankful that Squarespace, Audible, and Skillshare support independent video and podcast creators. I click their referral links sometimes to check out new features etc, but would only ever sign up if I needed that particular service. Still, I think that form of repetition helps their mindshare in a positive way.
I did buy the Glif directly from an ad on Daring Fireball, albeit months later, and in combination with brand awareness from their free time-lapse / speed ramping app.
Haha, similar. I was shopping around for a Sony mirrorless camera a year ago. Ended up with the model I actually had in mind in the first place (A7S2 for its supreme low light capability), but shit am I hounded on the Internet either for Sony cameras or accessories. And there's no way I know of to get rid of it! And for what its worth even Facebook and Instagram (at least the latter, I only use on my tablet in the app!) showed me camera ads.
This is annoying and, when one thinks about the implication that everyone and their dog knows who you are, scary.
I have purchased products/services off of ads, but only because I was directly searching to buy those things and they came up as sponsored results. I'm not sure if that counts.
I have never bought off of ads otherwise and find that most of the time they are not relevant to my interests. I also started using an adblocker because of other reasons (mal-ads/autoplay) even though I previously did not do so because I felt text/banner ads were quite acceptable in order to help keep the lights on.
Even though Steve has already decided to buy a BMW 3 series, he most probably hasn't decided which dealership to buy it from. So a dealership advertising has a good chance of a look in.Same case for Mary, she knows she wants to buy a fitbit , but where to buy from can still be influenced by an ad.
Then you're sniping existing customers from other retailers, which is zero-sum when everybody does it, and it's possible for your competitors to tell when you're doing it and retaliate by doing the same. At which point you're both paying for advertising that only cancels out the competitor's advertising. A smart retailer is not going to be the first one to take a turn down that road. It's essentially iterated prisoner's dilemma.
And it may even be profitable to be the first to turn away from it when everybody else is on it, and instead use more of your ad spend for non-zero-sum customer generation. Then you get all the new customers to yourself while everyone else burns their margins fighting over the existing ones.
> That may be the genius of targeted ads. Once one vendor starts doing it, the other vendors have no choice but to bid on the same target.
Except that they do have a choice.
Suppose there are five competitors. Everybody knows Steve is going to buy a BMW 3 Series. The margin is $5000. Assuming everyone else is going to do what you're going to do, how much does it make sense to bid to advertise to Steve? If you bid $1000, you have a one in five chance of making a $5000 margin. If you bid $5000, you have a one in five chance of making $5000.
So the optimal amount to bid is $0, because you have the same one in five chance at $5000 if everyone bids $0 than if everyone bids $1000 or $5000, but then you have a $1000 expected value rather than a $0 or $-4000 one.
Now suppose the others aren't using the same utility function as you and so may bid a different amount and you get a bidding war. So the first thing that happens is somebody bids $100 expecting to make $5000 -- bully for them, until the second one bids $200. Everyone raises their bid to $1000 because that's what a 20% chance at $5000 is worth. If one of the competitors drops out, the others will raise their bid to $1250 because now it's a 25% chance.
Which means there's never any profit in it for the advertiser. If anybody plays then at least one competitor will retaliate and everybody loses a total of $5000 to the ad platform. If nobody plays, everybody gets an expected value of $1000. Being the first to quit costs you nothing, but being the first to play costs you and each of your competitors $1000. Who is going to play this game?
You are assuming the ads don't have any impact on where Steve goes to buy.
In reality what happens is marketing runs an ad for $3000 offering a $1000 incentive, Steve makes the purchase, and making gets to (possibly correctly) claim they netted $1000 in sales.
Those marketing people want to keep their jobs, so they are going to work hard to justify their existence!
> You are assuming the ads don't have any impact on where Steve goes to buy.
No, I am assuming that advertising works the same for everyone. If there are five dealers and fifty customers and with no advertising each dealer gets ten customers, then with each dealer spending $50,000 on targeted advertising, each dealer still gets ten customers. When each dealer spends the same amount they each get the same benefit, so they still split the existing customers five ways.
What you are describing sounds a whole lot like the Prisoner's Dilemma. For the highest personal success we need to think about maximizing group benefit, rather than being completely self-interested. However, this is rarely the case when competition is involved.
I don't know if this effect has a name, but this sort of thing happens in every industry. I noticed in on a popular tourist trap boardwalk where every restaurant had a "barker" out front trying to tell you to come in. It's basically added costs for all businesses with more or less a 0 increase in net demand for the set of businesses as a whole, it merely redistributes demand amongst them.
As he already said, it's called The Prisoner's Dilemma. The situation where everybody defects (everybody has a barker) is worse than the situation where nobody defects (barkers are unheard of). But the nobody-defects situation is unstable, because if Store A has a barker and Store B does not, then Store A will be swimming in money and Store B will go out of business (or, in reality, be forced to hire a barker themselves).
Probably the clearest example I can think of is doing a no-adblock Google Search for "Coca-Cola." The first result is an ad, put out by the Coca-Cola Company. This might not seem to make any sense, since the first non-ad result is an identical link to the same website, but imagine what Cott Corporation or PepsiCo would do if they could by the first result for their competitor...
And then there is me going into the only restaurant without a barker, because it was the only one I could check out the menu of without being hassled :)
Yeah, can get to a situation where an ad platform would be making more out of a market segment than the retailers in that segment.
If I have a $20 margin, I am better off giving Google $15 and getting an incremental $5 profit than not advertising. Even worse if my customers have a lifetime value of $50 it may make sense to give Google $45 and not see a return from my spend until years down the road while Google gets the $45 right now.
This is the main argument for a tax on advertising. Much of it is zero-sum. It adds real costs and runs up prices while providing no real benefit to anyone.
You've basically described the wireless carrier scene for the past decade. It is indeed zero sum, and the arms race in advertising resulted in increased costs for the end consumer.
He's probably going to buy the BMW from the only BMW dealership in his vicinity. They tend to try to keep from stepping on each other's sales territory.
I have been running my online business for 5 years now. I learn (and keep learning) all I need to know from the same, high quality source.
I get targeted all the time by adds on landing pages, email funnels, Facebook ads, etc. Some of these are legit, but thanks to my experience I can see that most of them are of poor quality.
They will never sell me anything, while they might sell something to someone that hates his job and is looking for another way to make money.
The issue is that this "target group" is typically "people that visited your website and stayed there for some time".
Unless you have a promo, you really don't want to advertise to them... But that is exactly what you end up doing, because you can't target "people that visited my website 6+ months ago".
The real issue imho is that there is no shared sales information. So you advertise BMWs to people who may have already purchased a car. I think that is a bigger issue.
This happened to me both times I've purchased a Jeep. I did a bunch of research on models and packages, price shopped a few dealers in my area, and then purchased a vehicle all over the course of a Saturday. For the next 3 months I get jeep ads following me all around the internet. I wonder how much revenue those completely irrelevant ads generated for google.
Serious question: is a person always the same on every site? Can they be reached with the same message in different contexts? The argument for targeting says yes, but then why is porn ignored? Real people, doing, ahem, real things for significant time, but no advertiser (as a rounding error on total advertising spend worldwide) wants to advertise on porn sites.
I think a message's context matters - and this is almost self evident from examples like ads for airline tickets being shown on plane crash articles. I think targeting is great, I really do, but I think the value of trusted brands is likely just as, if not more, strong.
If context matters, and I think that argument was the entrenched idea pre-internet and has not been disproven, then where is the positioning of targeting? My hypothesis would be that targeting is likely best utilised when people stray from self selecting brands, e.g. NYTimes needs no targeting, but a smaller publication likely does, as people aren't there for the brand's known positioning, but because of their targetable interests, e.g. they ended up on a site about coding, or computer games, or knitting or whatever.
> In general, you may do better to advertise your stuff to the people who aren't already interested.
If true, that would be easy for an ad network to detect. If the click through rate for ads on a topic not matching the users interests (as determined be browsing history) are higher, then your theory is correct.
It's basic stuff, and I'm sure they already do that.
The ads in NYT can still be targeted to the article content. Surely it may be less efficient then personalized ads but then the newspaper does not pay ad broker.
this is fantastic analogy. but, Steve just got a promotion and likes the BMW 3 series. But, advertising a Tesla 3 can be another worthy option you are trying to advertise. I think behavioral and randomness should go hand in hand.
It's possible that some combination of efficient markets, semi-inaccurate/incomplete tracking data and chaos theory combines to make it mostly irrelevant.
So Steve just got a promotion and likes the BMW 3 series, but advertising to him is useless because he has already decided to buy a BMW 3 series. Whereas Larry has had the same job for ten years, and the same Ford for ten years, but if you put a luxury car ad in front of him it may get him to take a test drive and actually create a new customer.
The data says Mary is single and goes to the gym every day, but it only thinks she's "single" because she's in a committed long-distance relationship and isn't interested in dating anyone else. And she's a fitness expert who is willing to spend her time researching fitness products, so she already knows everything there is to know about those products, already buys the ones she wants, and advertising them to her isn't going to create any new exposure. Whereas Jane never goes to the gym, so you might actually sell her a gym membership or a piece of fitness equipment because she doesn't already have one or know anything about it yet.
John has a 10th wedding anniversary coming up, but he has also known exactly what he's going to do for years. Whereas he has a third cousin whose wedding is coming up and has no idea what to get, so you should be showing him ads for toasters and flatware rather than jewelry and chocolate.
In general, you may do better to advertise your stuff to the people who aren't already interested in and knowledgeable about it. Which actually looks kind of a lot like random scattershot rather than targeting.