How Facebook determines ad placement in news feeds:
> Millions of auctions take place every minute as users across Facebook load their feeds. ... The algorithm is constantly learning, using past results to inform how it weighs bids in the next auction. The intent, Facebook says, is to maximize value for everybody: to pair the advertiser with its likeliest customers, and to show ads that users want to see. And, of course, to make money for Facebook. [emphasis mine]
So FB wants:
1. advertisers to be successful so that they come back and attract others;
2. users to remain sticky and not be turned off or too distracted by an ad; and
3. sell each ad space at the highest price, so long as 1 and 2 remain true.
Interesting business they're in and an incredibly challenging (and fun/rewarding) algorithm to code.
The problem is that it leaks information. If I place an ad for paperclips targeted at cat-lovers, then if you click on my ad and buy paperclips, I know that you are a cat-lover.
I'm not sure I understand your point. It only leaks a subset of data (cat lovers who have an intent to buy paperclips) and is hardly valuable at scale to anyone for anything other than prospecting new customers.
I dunno, identifying groups like "Jew-Haters" seems useful beyond "prospecting new customers." For example, if the US government cared about tracking hate groups (as opposed to hiring them into the administration) they could use it to identify people to track.
Good question. I graduated college and desperately wanted to work on renewable energy research. After scads of rejections I quit ignoring the expressions of interest in my programming abilities.
I still wish I were doing something that actually bettered the world, but I have bills to pay.
Then again, maybe ensuring people graduate in debt is a great way to ensure we as a society do what folks with cash want us to instead of what we feel we ought to be doing.
I will answer your question with another: what metric are you using to measure ROI?
Edit: When you say you know lots of "marketers and advertisers" that are making money from ads, are you referring to resellers and providers of ad inventory and/or analytics, or are you referring to people who actually sell goods and services other than marketing and advertising inventory?
Return on investment for advertising is very simple:
net present average customer lifetime value acquired per unit of advertising cost
If it's over unity, you're making money with advertising, if it's not, you're wasting money on advertising or need to increase your CLTV or decrease your discount rate.
You put a cookie on their machine when they hit your website, tracking where they came from, and exactly how much you paid for that visit (because FB will give you which cohort they came from).
Then you track that to a sale, and you can determine how much you made from them.
If it is a single sale, then that's basically it (obviously you track return visitors and amortize the cost of them against that too).
If it is a SAAS, then customer value calculation is a little more complicated (you record how long people stay with you etc).
OK, so how is the success of that funnel measured vis-a-vis other promotional channels? And are you able to demonstrate definitively that a visitor from FB concluded a sale? If so, how?
I don’t understand why you seem to think that companies are throwing tens of billions of dollars a year at Facebook (and Google, and Twitter) with not only no returns but also no ability to measure that lack of returns. It’s just such a ridiculous viewpoint to hold.
I think so because the entire history of advertising is based on hiding the ball in terms of ROI. How many sales does a Super Bowl ad generate? How many does a billboard generate?
For some extremely simplistic e-commerce conversions, such as for referrals to SaaS, it is easy to measure. For entire swathes of consumer products, the game is brand recognition and other soft metrics that drive huge ad spends. You can pretend it’s a science, but the incentives are all upside down for a true end-to-end ROI determination.
A large number of companies are advertising /only/ online, and therefore have a pretty pure measurement of ROI via click tracking from the ad to purchase. It's one of the promises of internet advertising: there's sufficient <strike>surveillance </strike> logging to be able to see what's happening with much greater clarity than TV or billboards.
The other half of the promise is that you can target exactly the 'right' people. And this seems sketchier to me, as the article kinda gets at: as targeting complexity increases, it's harder to tell whether problems are arising due to market fit or issues in the targeting algorithms. In the old world, you bought ads on content, and now you buy ads on eyeballs: my guess is that there's an unexplored happy medium between the two.
It's really, really easy. And that is why Facebook and Google are printing money - vendors know it works and can measure exactly how well, so they throw money at them.
FWIW, I am not trolling. FB domains are deliberately blocked via my hosts file, and my business has nothing to do with consumer ads. I am just a skeptic of intertuption advertising effectiveness in general, and curious to see how rigorous the defense of FB advertising will be. I am still not convinced that click tracking is effective, but I’m willing to be wrong.
Yes. Facebook gives you a unique visitor id when they see the ad that persists and is included in the sale form. It's completely linear, and is tracked from beginning to end. Every click is tracked, and users are tracked even if they leave the website and return later.
There's hard, direct evidence involved in every step of the way.
> And, users are still very much annoyed by distracting, irrelevant, or overly-targeted ads.
How would you know, if only users who are actually annoyed are vocal about this?
I, for once, mostly see ads from the companies which I am already a happy and enthusiast customer of, for new versions of products that I enjoy. I even follow the industry news to know about new versions of these products and their reviews - and when I can't buy them, I genuinly enjoy watching youtube reviews about these products.
Do you honestly think that a person like me would be annoyed by these advertisements?
Don't you think that a _lot_ of people can say the same about their own product category that they're enthusiastic about? In my case, it's music software and hardware, but it could be cars, power tools, clothing or some other hobby that people enjoy spending their money on.
Sorry for the rant - I'm just tired of seeing the notion about how bad and annoying the ads are, when I see zero confirmation of this in my reality.
I get it. I like ads in Japan because they're entertaining. You're the first person I've ever hear of who enjoys being a target of online ads, so I'm still convinced that you are very, very unique.
Work on real-time ad auctions is definitely technically challenging, but I'm not convinced about the fun part, and I definitely wouldn't describe that as rewarding (unless you mean that in a purely financial sense).
I was thinking in terms of having the results be immediately measured and quantified. It's kind of a luxury to have such a quick feedback loop. That's all I meant by rewarding, wasn't thinking in financial terms even though that now seems like a more obvious implication.
Given the number of levers they have available to adjust in terms of tuning factors to maximize engagement, and given the changes constantly going out to their platform, and given the changing landscape of the ad market itself over time, I doubt that it's exactly clear to a developer what they're doing right and wrong. Facebook probably has a full-time staff of data scientists to extract conclusions out of that pile of analytics data.
I think most people overlook the intelligence value that GAFAM + Tencent have over nearly every other company on the planet. I don't know of any company out there that doesn't use one or more services from these companies which means you're giving them business intelligence about your activities even if you never talk with one of their BD/CD people.
And make no mistake that business intelligence is absolutely one of the most important things a big company (or nation) can have from a defensibly perspective.
Speaking as a former spy it's a spy agency's dream to have the kind of data on possible competitors and collaborators that these groups have. Individually they can see every threat coming a mile away and then decide to ignore, buy, invest.
This is why I think "this time is different" from a disruption cycle perspective. Never in history have companies had so much intelligence on their competitors and collaborators and actively used it to disrupt themselves - multiple times. Don't get me wrong, companies have always done this, but never at this level of granularity and specificity so quickly.
True, though history seems to show that copy only happens after they aren't able to buy or invest. It's much riskier from a business perspective to copy than to buy usually.
Only for really big things like Instagram that have a network effect helping them, and as such threaten the incumbent.
For smaller features / ideas, it's much less risky to copy than to buy a company (for, say, 10-100M) and hope the acquisition goes well. Most acquisitions don't go all that well.
I'm honestly surprised that these companies haven't started extracting business intelligence information from their data flows and using it to make investment decisions in public companies. Surely there's a correlation between how often people search for "JC Penny" and JC Penny's earnings. And these companies have far more data than that, alongside a giant pile of money that they can use to fund an investment arm.
About a year ago I wrote an essay with this idea [1]. You really don't want your company to be at the behest of facebook/twitter, they can pull the plug on you, change their algorithms, change their rules, force you to pay up, since they control the audience. This is why a platform like Mastodon [2] is attractive (or should be attractive!) to businesses. If you host your own instance of Mastodon, you have full control over your own megaphone.
And that's just the basic principle. Given that Mastodon does not attempt to mess with people's feeds using clever algorithms, instead accepting that when people follow someone they want to see those posts in chronological order, it should be even more attractive to companies used to facebook hiding their posts from their own fans unless they pay up.
There are many pros to a de-centralized and self-governing social network. The con is the network effect working against it. So in whose interest is it to push this network? You argued that businesses should, because Facebook might cut them off in the future. But in the now Mastodon doesn't have customers. Individuals may not like what Facebook is doing with their data, but inconvenience is hard to sell. I'm genuinely curious how people think adoption of decentralized social networks can be accelerated?
Of course, other instance owners may choose to block you for being A Brand, as well. One of the rules of my instance is "don’t be a corporation, or be sponsored by one", and I'm debating if I’d end up blocking corporate instances.
One day there will be a cottage industry focused specifically on exploiting the edge-case behaviour of these algorithms. It doesn't matter that the specifics of the algorithms are secret, there are always ways of reverse engineering them. That's the whole point of statistical inference.
Another type of YouTube video that is taking advantage of youtube blocking/copyrights are happening.
Basically these are YouTube videos that are about current events, content or blocked content with a robotic voice or music that describes the event with a series of photos, text, news and sometimes video clips.
Basically anything that is blocked from youtube, the algorithms post these robotic news videos that drone on that are algorithmically generated on any small news event that may fit this gap.
Lots of events like terror attacks, shootings, sports clips that have been removed, etc will flood in as soon as other content is blocked or removed or copyrighted and youtube can't have real videos about it.
This happened frequently after the Vegas shooting and other major events.
It also happens all the time to NFL content. For instance I was looking for Pierre Garcon's injury on youtube to see how serious it was, here's the type of fluff you will find (https://www.youtube.com/watch?v=i1hZibQCdR8 & https://www.youtube.com/watch?v=lI1CN0uDu-w & https://www.youtube.com/watch?v=N2cJqaE4Em4 as an example and there are thousands of just Pierre Garcon's injury) because nfl videos are blocked immediately. If you search in google "pierre garcon injury youtube" you will get nothing but these videos.
I'm surprised the author didn't mention that Facebook has a history of screwing small business owners.
A few years ago I spent more than $4000 on Facebook to build up about 4000 fans for a karaoke venue I ran at the time. I'd put some news out, and reach most of the fans. Then Facebook told me that to reach all of my fans I would now have to "boost" my posts, while the company simultaneously cut the organic reach to the fans I had paid them for.
They used the excuse that "people have to much stuff on their feed" but we all know that is BS. If I had known they would have done that I would never have bothered in the first place. Why help a company build its audience for you to be treated poorly? I suspect many many small business people feel that same way, and will abandon Facebook as soon as a less greedy alternative comes along.
>They used the excuse that "people have to much stuff on their feed" but we all know that is BS.
It's really not BS. People's feeds are flooded with content from tons of sources.
Why would posts from company that I've 'liked' get guaranteed display when family/friends/friends-of-friends don't get that treatment. Moreover what if I've 'liked' 100+ bands/restaurants/celebrities/businesses/news-sources, they can easily produce enough posts each day that I would never scroll far enough see all of it, nor would I want to.
The thing you want already exists and is called a newsletter.
It's not really a choice between a feed tuned to extract cash from small businesses and a newsletter though, is it? People were seeing my business's posts without any complaint until Facebook throttled the reach. I was also a Facebook user at that time, and didn't notice any particular problem either from pages that I follow. Now we get to see what Facebook thinks makes the most money for itself.
> I suspect many many small business people feel
> that same way, and will abandon Facebook as soon
> as a less greedy alternative comes along.
I guess the tough part is getting the users on to another platform. Businesses will then naturally follow, but convincing the users to switch when they and everyone they know are entrenched in FB is hard to say the least.
I've used FB ads before for business purposes and I feel its a lot more accessible to SMBs than your standard advertising agency or news media group where you have to phone up, wait for a quote and then have not-so-transparent results where you have to be constantly in touch with the news media group/agency.
FB ads is definitely improvement in terms of the time spent and approachability, cost on the other hand depends on how effective your marketing is so its definitely more variable.
One interesting thing to think about is how reliant Facebook is on startups. If there is a wider reduction in VC investment, Facebook may be dramatically affected (like Yahoo in early 2000s).
> And Facebook has even been taking steps to influence offline sales, in order to bring traditional retailers into its orbit. In September, the social network introduced a tool that lets businesses with physical stores show ads to shoppers and their Lookalikes even if they visit the store but don’t buy anything.
"Facebook will also now know you visited a store based on a new feature that matches GPS, beacons, WiFi, radio signals, and cell towers with brick-and-mortar coordinates." [1] Basically harvesting data from your phone's sensors, where their app is installed.
And: "A new Facebook API, called the Offline Conversions API, works with a number of in-store sales systems from companies like Square and IBM to match their customer data with Facebook’s advertising data." [2]
(More science-fictiony: they could broadcast a local audio signal that fingerprints a particular location. Hmm, startup idea.)
That's terrible. I hope that removing all of Facebook's software from a phone and using cash prevents that. I hope you're joking about the audio signal.
Not quite used for in-store advertising, but Google's "Nearby Messages API" does use "near-ultrasound" audio signals to communicate with other devices: https://developers.google.com/nearby/messages/overview. I don't know if it would work at a larger scale, though (maybe you couldn't allow dogs in your store!).
> Millions of auctions take place every minute as users across Facebook load their feeds. ... The algorithm is constantly learning, using past results to inform how it weighs bids in the next auction. The intent, Facebook says, is to maximize value for everybody: to pair the advertiser with its likeliest customers, and to show ads that users want to see. And, of course, to make money for Facebook. [emphasis mine]
So FB wants:
1. advertisers to be successful so that they come back and attract others;
2. users to remain sticky and not be turned off or too distracted by an ad; and
3. sell each ad space at the highest price, so long as 1 and 2 remain true.
Interesting business they're in and an incredibly challenging (and fun/rewarding) algorithm to code.