May 18 2024, 08:09
The great internet ad scam: Trusting the efficacy of online ad spend is irrational;bubble waiting to pop:
What if all this spending is based on misconceptions about personal behaviour and the illusion of precision that these platforms offer? From an advertiser's perspective, the more funds that go into creating compelling content and targeting the right potential buyers, the better. Everything else is a waste. But reality is different.
Inflection points often burble along for decades. When they cross a tipping point, we say, 'This came completely out of the blue!' Take internet advertising, particularly programmatic ads that leverage data to target you and aim to sway your decisions.
97% of Meta's and 80% of Google's revenue comes from programmatic ads, while Amazon rakes in close to $47 bn.
Worldwide spend on digital advertising will be about $740 bn in 2024.
The whole programmatic ad concept is based on an obvious idea: if we know what someone is interested in, we can send them ads that are likely to appeal to them. But when put to empirical test, this idea is not borne out. A 2019 study, 'Frontiers: How Effective Is Third-Party Consumer Profiling? Evidence from Field Studies', found that digital audiences for gender are, on average, less often correct than random guessing (accuracy of 42%).
Bubble waiting to pop associated with the 2011 'End of the World prediction', showed that people who believed in the prophecy had accepted the offer of $5 before the Doomsday, but wouldn't take any amount up to $500 after the special date. 'Beliefs formed on insufficient evidence seem tough to move,' the study concluded. It seems companies, similarly, can't assess whether their ad spend makes money, so continue to 'believe' in it.
When marketing funds are divided between various media options, which also have no honest reporting, what do marketers do? As Citibank CEO Chuck Prince said during the 2007 housing bubble, 'When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing.'
source: et
May 18 2024, 08:34
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