Tech bubble

Ask your investment, budget, and other money related questions here
Post Reply
shemp
Posts: 120
Joined: Wed Jun 12, 2019 11:17 am

Tech bubble

Post by shemp »

https://www.wired.com/story/ad-tech-cou ... et-bubble/

Interesting article which supports my own long-held doubts about the effectiveness internet advertising. I know I'm an unusual person, so my own behavior doesn't necessarily match that of other people, but for what it's worth, I can't think of a single instance where I bought something due to an internet advertisement. Google or Amazon search placement does matter: all other things being equal, I tend to go for first item in the list. (Of course, all other things aren't usually equal.) But ads themselves I just skip, Facebook ads especially.

The only advertising that works is where the YouTube video itself is useful and free, but then connects to a website selling an even more useful product/service. In orher words, the video itself is an ad, but an ad worth watching for its own sake. However, Google makes nothing from this fremium sales model.

It's the implications of this ineffectiveness on stock values, especially Facebook, that especially interest me.

Alphaville
Posts: 1603
Joined: Thu Oct 03, 2019 10:50 am
Location: Quarantined

Re: Tech bubble

Post by Alphaville »

the thing works for me when it pops a reminder of something i've already been looking at on my own.

i tend to look for things, put them in the cart, let them sit there, mull it over for a while, save them for later, forget about it for some time, look again, etc.

then i get the ad when im reading the news or something and say "oh yeah, ok, i'm ready to buy this now" (if i truly am after all the delays).

otherwise, nope.

oh, wait, one time in recent months it worked by showing me the uplift desk when i had been looking at the varidesk for a while. ended up buying the uplift desk which i had no idea it existed.

so it doesn't work as a cold call for me, but rather as a targeted offering. this function i don't mind, in spite of the minor espionage.

eta: right now it's showing me fermentation crocks, but i already ordered one. too late! :lol:

ertyu
Posts: 1295
Joined: Sun Nov 13, 2016 2:31 am

Re: Tech bubble

Post by ertyu »

people do buy things off fb ads. fb targets them with something that looks like a very good deal to them but in the end turns out to be a scam. While the internet advertising thing might be useful (or not), the highest value these services can generate is by harvesting your data and supplying you to buyers who would like to use their platforms to manipulate your worldview and opinions. Do not discount the role of social media in the radicalization of the US population, for instance, or on election outcomes. They are much more significant as tools for social engineering and control.

there have been articles recently about how the top 50 individuals in the US have as much wealth as the bottom 50% of the population combined. Would those people not pay? Would the CCP, or Putin, not pay, especially in the coming war for natural resources?

shemp
Posts: 120
Joined: Wed Jun 12, 2019 11:17 am

Re: Tech bubble

Post by shemp »

ertyu wrote:
Fri Oct 09, 2020 12:20 pm
there have been articles recently about how the top 50 individuals in the US have as much wealth as the bottom 50% of the population combined
Bottom 50% by wealth in any country is, and always has been, comprised of children, prisoners, mentally and physically disabled, plus the huge mass of employed/retired and often high-income adults who simply choose to live paycheck to paycheck, or even live permanently in debt. More important ratio is wealth held by top .1% versus top 10%. That ratio has changed significantly in past 40 years, but there was always concentration.

Rich do spend to influence public policy, but what is remarkable is how little they spend, not how much. Top 50 in USA has at least $1 trillion in wealth. So why not spend a mere 1% or $10 billion a year on political lobbying? In fact, they spend much less, at least in ways that must be reported. What's more, they often take different sides on issues. Where they unite is wanting to maintain the status quo pf concentration of wealth, and indeed that is the constant theme of the last 40 years of politics in the USA at least. Amidst all the uproar about abortion, homosexuals in the military, racism, child pornography, climate change, etc, the constant is lower taxes on the rich. That is, the rich keep their eye focused on the money ball, while everyone else keeps getting distracted by something else.

Anyway, I doubt it's the rich or Putin or the CCP doing all that internet advertising spending that keeps Facebook, etc stocks elevated. Possibly in the future, if such political advertising is really as effective as you suggest, they might give tens of billions to Facebook, etc. But not now, I don't think. Unless you have better information.

7Wannabe5
Posts: 6311
Joined: Fri Oct 18, 2013 9:03 am

Re: Tech bubble

Post by 7Wannabe5 »

I don't think the primary intended audience of any sort of advertising is "people who pride themselves on their frugality" or even the readership of Wired. The teenage girls I taught were constantly shopping online instead of doing their math. What does Taiya Maddison have to say on the topic?

daylen
Posts: 1689
Joined: Wed Dec 16, 2015 4:17 am

Re: Tech bubble

Post by daylen »

Hard to measure the long-term effects of unconscious association.

Alphaville
Posts: 1603
Joined: Thu Oct 03, 2019 10:50 am
Location: Quarantined

Re: Tech bubble

Post by Alphaville »

now king arthur is offering me stuff. obviously, it’s flour season and they know what i’m up to. i went and looked, but they didn’t have what i need. maybe another day.

Blackjack
Posts: 2
Joined: Sat Oct 17, 2020 12:36 am
Location: Colorado

Re: Tech bubble

Post by Blackjack »

Alphaville wrote:
Fri Oct 09, 2020 11:32 am
i tend to look for things, put them in the cart, let them sit there, mull it over for a while, save them for later, forget about it for some time, look again, etc.

then i get the ad when im reading the news or something and say "oh yeah, ok, i'm ready to buy this now" (if i truly am after all the delays).

otherwise, nope.
This is on purpose. People who already added things to the cart are drastically more likely to buy, and when it was added to your cart you also probably got a nice little cookie that says that said thing should be advertised to you because you are likely to buy. Then you end up on some other website which calls an auction for banner ads, one of the bidders is the site on which you have stuff on the cart, then they will bid higher (even a ridiculous bid rate for a single ad costs maybe a penny) because they know you are more likely to buy the thing, then advertise it to you on their site.

I'm speaking with about 4 years of experience working on the backend/ automation for one of the larger online video advertising auction companies in the US. In general, yes advertising only works a small amount of the time, right? but the thing you probably don't see is that these ads are sold off by a metric called CPM, or cost per mille (thousand ads shown), and with banner ads that cost is very very low (think a dollar or less for a thousand people to see your ads). If my margins on a product are halfway decent, i don't really care if it takes 10k views (read as < $10) to sell one of my product with a $50 or $100 margin.

Now those margins are fairly absurd, but it makes the point correctly in terms of luxury goods.

With respect to the larger article, when GDPR (european data privacy rights) dropped a couple years ago, it became a right for you to go to doubleclick (google), Xandr (at&t), facebook, adobe, bluekai, basically anywhere that has data on you and have them show you what data they have on you. I went around a couple sites, and the data is honestly just pretty general and/or incorrect (i.e. this guy is 18-34 we think and likes sports and marvel movies and workout equipment and healthy food). So I've brought up the same question with people on the business side, and they basically say, "it doesn't really matter because sales numbers go up with targeted advertising, or they wouldn't be buying from us". So to some effect it does work? Don't know exactly how much but apparently enough to build the ability to have 3 or 4 companies in the middle pulling slices out of it too.

Also in agreement that good data is ungodly useful in political campaigns / etc (read Cambridge Analytica and others) and personal data shouldn't really be underestimated in value. But on the other hand tech is very bubbly in producing massive massive companies where nobody is really sure how they make large amounts of capital until they make a service everyone wants and then eventually someone finds a way to exploit it for maxiumum $$$ (facebook, youtube, insta, etc.) (I swear there used to be a money face emoji? but its been a hot minute since i've been to these forums, so i can be wrong)

Also, Adtech AMA if you guys want to know anything.

ertyu
Posts: 1295
Joined: Sun Nov 13, 2016 2:31 am

Re: Tech bubble

Post by ertyu »

I like the argument that the current tech valuations are based on TINA more than anything else, and that the rotation into fiscal would bring about a contraction in tech multiples and a rotation into value as passive flows get redirected away from tech.

Post Reply