Everything advertised on social media is overpriced junk
Ad targeting isn’t “efficient.”
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In “Behavioral Advertising and Consumer Welfare: An Empirical Investigation,” a trio of business researchers from Carnegie Mellon and Pamplin College investigate the difference between the goods purchased through highly targeted online ads and just plain web-searches, and conclude social media ads push overpriced junk:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4398428
Specifically, stuff that’s pushed to you via targeted ads costs an average of 10 percent more, and it significantly more likely to come from a vendor with a poor rating from the Better Business Bureau. This may seem trivial and obvious, but it’s got profound implications for media, commercial surveillance, and the future of the internet.
Writing in the New York Times, Julia Angwin — a legendary, muckraking data journalist — breaks down those implications. Angwin builds a case study around Jeremy’s Razors, a business that advertises itself as a “woke-free” shaving solution for manly men:
Jeremy’s Razors spends a fucking fortune on ads. According to Facebook’s Ad Library, the company spent $800,000 on FB ads in March, targeting fathers of school-age kids who like Hershey’s, ultimate fighting, hunting or Johnny Cash:
https://pluralistic.net/jeremys-targeting
Anti-woke razors are an objectively, hilariously stupid idea, but that’s not the point here. The point is that Jeremy’s has to spend $800K/month to reach its customers, which means that it either has to accept $800K less in profits, or make it up by charging more and/or skimping on quality.
Targeted advertising is incredibly expensive, and incredibly lucrative — for the ad-tech platforms…
