Wednesday, 08.01.2020 – Online Advertising is a Giant Bubble

Link of the day: Online Advertising is the New Dotcom Bubble

Very often, advertising makes surprisingly little sense. If you are trying to target the audience that is most likely persuaded by your ad, you are also targeting the people that are most likely going to use your service anyway, without seeing your ad. It is a bit like handing out coupons to people who are already standing in line to get something. The problem: This selection effect often cannot be disentangled from the actual advertising effect (persuading people who would otherwise not have used your service). Companies are therefore very likely overspending on advertising. Changing peoples mind is very hard. Likely, also the frenzy about Cambridge Analytica and similar entities is far overblown.

Related: why targeted advertising fails so miserably.

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