Home Economy Digital advertising is a desperate gamble in a fantasy economy

Digital advertising is a desperate gamble in a fantasy economy

by SuperiorInvest

Digital advertising is about as useful as making medical decisions by shaking a Magic 8 Ball

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The recent implosion of the FTX exchange seems to have cemented cryptocurrency’s status as a shambolic investment scheme while further destroying the internet. the myth of the brilliant billionaire. But Bitcoin isn’t the only fictional digital economy that consistently appears to be a mirage. There’s a more durable dreamscape that far more of us are buying into, and it’s frothy, largely unproven and similarly underregulated, only dictating the fates of the world’s biggest tech companies. It’s the digital advertising industry—and it’s about as useful as making medical decisions by shaking a Magic 8 Ball.

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Digital advertising drives billions of dollars in revenue for Facebook’s Meta Platforms Inc. and Google Alphabet Inc. in Canada, with Amazon.com Inc. is also emerging as a significant third player, he states recent research from Carleton University’s Global Media and Internet Concentration Project. Google and YouTube advertising generated an estimated $6.2 billion in 2021, or $162 per Canadian. Meta earned just under $4 billion last year from Facebook, Instagram and WhatsApp, accounting for one-third of Canada’s online advertising market and deriving almost all of its revenue from such ads worldwide. Amazon, a recent entrant, generated an estimated $1.2 billion in advertising revenue, or nearly 10 percent of all online advertising in Canada. Together, the three tech conglomerates accounted for about 90 percent of the online advertising market and more than two-thirds of all advertising money in Canada.

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The online advertising industry is clearly profitable for the massive platforms. But we should not confuse its profitability with efficiency. Platforms make money when an ad is viewed or listened to by a captive consumer, but this digestion does not guarantee that a purchase will occur. In reality, that elusive purchase is nothing more than a pipe dream, and we’re all crushing the Kool-Aid believing it’s a sure thing.

Other research shows that micro-targeted digital ads simply don’t work. As a former Google employee Tim Hwang stated in his book 2020 Subprime Attention Crisis, ad tech could be the next internet bubble. Furthermore, the return on investment in digital marketing was proven embarrassingly poor for advertising companies. One study found that ad tech intermediaries are substantially enriched by the online ad game, which siphons up to 50 percent of all online spending. Another study they found that automatic microtargeting performed slightly worse than random guessing. Meanwhile, digital ads are often credited for purchases that would have been made anyway, making them “the most widespread shell game today,” writes Sinan Aral. Hype Machine.

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However, the ability to collect information about people who move around the Internet predetermines the ability of online giants to control advertising dollars for completely random results. This led to a battle against corporate policy between Apple Inc. and everyone else after the tech giant forced developers to get explicit consent from users. This has led to even less precise micro-targeting – a recent Facebook software update practically begs people to submit to tracking. Apple’s change means online advertising now generally costs more, translating into increased costs for small businesses hoping to reach new and relevant audiences online, on top of digital fees charged to developers in mobile app stores. All these expenses and efforts depend on the promise of ad spend paying off handsomely, which is a necessary investment for e-commerce players.

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Maybe it’s time we start seeing online ads for what they really are: a desperate gamble in a fantasy economy. Digital advertising is not very different from investment attempts on the FTX exchange, where people made speculative investments with an uncertain return. In the case of Bitcoin, the lure was the prospect of monumental profits untethered from the traditional financial system. The uncertain contract in online advertising promises that a perfectly placed ad will magically and unconsciously captivate new customers enough to open their wallets.

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While the mythology that access to smaller segments of customers will significantly increase conversions and sales for companies is sticky, the concrete evidence in the form of money spent is simply not there. Crowdfunding, subscriber-driven scenarios or pay-as-you-go can be more authentic and sustainable monetization models. But we’ve built the bulk of the digital economy on the supposed promise of advertising, which itself was the idea of ​​an exponential explosion of social media platforms favored by regular people who enjoy online connectivity, not pimp brands.

The false economy has turned our lives into a cesspool of unrelenting advertising. We avoid sponcon on social media, sponsored material in news media, undisclosed product placement in TV and film, and more. Meanwhile, too many individuals have been harmed by the lack of regulation of cryptocurrencies and the false advertising associated with them.

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The Competition Authority can take action against false and misleading advertising, as it did then Keurig Canada Inc. she boasted that her little cups were recyclable, but they weren’t. Meanwhile, the advertising economy has made us suitably concerned about our personal privacy, prompting the government to overhaul outdated privacy legislation while maintaining hypocritical exemptions for political parties that notoriously divide their advertising according to a number of variables. While updates to privacy laws are welcome, we should pay much more attention to the supposed effectiveness of a regime built on a cotton candy premise that has also manipulated the labor market, created a new form of presumed expertise and an army of digital marketers. .

Meanwhile, brands continue to chase our attention, convinced that we are stupidly susceptible to their advertising, which infiltrates augmented reality and even projects itself into the night sky. Although our attention remains a valuable and finite asset, digital advertising’s random wheel of fortune is the equivalent of throwing dollars into a fraudulent bitcoin exchange. We keep pretending these investment vehicles are different. That’s a really sweet fantasy.

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