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Comment by EgoIncarnate | Hacker News Reader

I don't think it's that simple.

Nobody wants their privacy invaded, but they do want cheaper products. In theory better targeted ads allow a company to spend it's advertising budget more effectively. Selling more products for the same amount of ad cost should allow for cheaper products.

I'm sure some companies will not pass on the savings, but I believe economic theory says the market as a whole should.

If the savings are enough, some people may be willing to give up some of their privacy in the name of cheaper products.

How much more do companies make? Is all this invasive tracking really necessary in order to keep websites like Google and Facebook free? Is it worth saving 10% (or whatever) on some product?

Unfortunately the decision is forced upon everyone by advertisers with little thought to allowing for an informed choice (or any choice really).

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Yeah but can you quantify exactly how much savings you get for giving up your privacy? If targeted ads lowered the cost of an 8 dollar widget by 10 cents, I think most people would take their privacy.

But we don't know how much online advertising lowers prices. Would be interesting for an economist to study.

For all we know, online ads could have no effect. And what about ads intended to generate demand instead of address current demand? Maybe online ads are tricking us to by more of what we don't want (Yay, another subscription box).

Agreed. It's not currently an informed choice, nor clear it's even necessary. To steal from another of my replies: "You can have still have ads without invasive tracking, they just might not be as effective.

If the difference in effectiveness is enough to make Google, etc unprofitable than maybe there is an argument to be made that it is necessary.

If it means they make 10% less profit, people would probably prefer privacy."

> For all we know, online ads could have no effect.

Possibly in aggregate, but they almost certainly have an effect for individual advertisers. No company is going to cut their advertising if their competitors aren't going to make the same cuts.

But it would be very cool.

Imagine if all browsers suddenly shipped perfect ad blockers[1]. Many sites would die off; but I suspect a number of micropayment platforms would quickly spring up in their place. The result might not be as diverse, but it would be interesting.

[1] A perfect ad blocker would have to do the impossible, i.e. identify sponsor segments of YouTube clips, slice out native advertising, and somehow kill off all promotional consideration. I.e. absolutely impossible and probably not desirable.

> In theory better targeted ads allow a company to spend it's advertising budget more effectively.

I still don't see why customers want this. I would rather a company struggle to spend its ad budget effectively, and then conclude that it could better spend its resources investing in making a better product (or its employees, or its infrastructure, ..).

I don't have an econ background, so feel free to clear up what's wrong here.

Should the company spend any money at all telling potential customers about their product? If so, should they use the incremental dollar to reach a random person, or a person who seems likely to be interested in the product?

There's lots of ways to target without being personally invasive. You can simply put your message in places where the target audience tends to be, like has always been done.

If the goal on the social level is to get valuable information to potential customers, then it would follow we should get rid of most tracking and most advertising. Most of it is disinformation and deception that buries lower-budget information in the stream of messages from those with the biggest pockets.

A company should spend a minimum amount on advertising, and to incentivize that, advertising should be expensive. If effective advertising is cheep, then there is less incentive to compete on product, and instead pressure to pour your resources into marketing, structured around a quick buyout and exit.

Advertising needs to be expensive enough that it is always dominated by quality of product and reputation spread by word-of-mouth, as this puts the power in the hands of consumers. This is critical for the healthy functioning of markets, because advertising distorts the natural expression of demand.

The current hype-fueled cryptocurrency craze is the apotheosis of advertising dominating product.

Should the company spend any money at all telling potential customers about their product?

Ah, but this is not what the discussion is all about, is it? "Telling potential customers about their product" can be done with a static hypertext page, it does not require infesting the entire Internet with tracking parasites to profile every individual. And your "incremental dollar" can be spent on SEO to improve the visibility of your page.

I don't think there's a future in telling customers about the product via direct advertisement. It's too easy to filter out or ignore. The most reliable conversions are by word-of-mouth and friend recommendation, and those are nearly impossible to buy.

I'd prefer this too, and I'd buy from companies like this every time if I actually knew they were there.

Lower costs do not straightforwardly translate into lower consumer prices, unless we're dealing with commodities in a perfectly competitive market.

Moreover, in this scenario where the entire market is now able to spend their advertising budget "more effectively", there are many possible outcomes besides more products being sold for the same ad cost. The market-wide increase in "ad effectiveness" may effectively cancel itself out. Ad spend may remain the same, but with more budget allocated to speculative ad strategies. Or the savings may be funneled back into product to further differentiate it from competitors.

The market-wide increase in "ad effectiveness" may effectively cancel itself out.

This. At least in the US, consumers are pretty much spent out. In that situation, advertising does not increase economic activity. It just moves it around. This is an argument for not allowing advertising and marketing as a deductible business expense, an idea that's been floated in Congress a few times.

Historically, advertising was a small part of product cost. Today, in many industries from movies to drugs, it dominates. This runs up prices for everyone. There's an economic argument for limiting advertising spend.

>Historically, advertising was a small part of product cost. Today, in many industries from movies to drugs, it dominates. This runs up prices for everyone. There's an economic argument for limiting advertising spend.

Advertising spend as a share of GDP hasn't changed much at all on average over the last century: https://www.bloomberg.com/news/articles/2014-03-03/advertisi...

And some say it has even declined in recent years: https://www.mediapost.com/publications/article/273094/us-adv...

The strange thing is that it doesn't feel like that at all. Advertising has become obnoxious to such a degree that it renders many sites entirely unresponsive on some devices (like my aging iPad). I have stopped visiting some sites or reduced the number of visits dramatically.

The advertising industry and indeed the publishing sector itself is clearly on a suicide mission. Someone needs to save them from themselves.

The prevalence of Alexa and other “assistance” devices shows that people willingly allow their privacy to be invaded for the perceived benefit gained from it. Advertising is one of those things where they want to analyze every action, effort, and thought, without any regard for the impact it has on the affected users’ privacy and there will be lines of potential customers waiting to signup after being enticed by the carrot. I think the blame is shared between both sides and I do believe the pendulum will continue to shift as long as technology continues to be embedded in our everyday lives.

I think it’s more likely most people outside the HackerNewsosphere don’t understand what it is, let alone the value of the “it” they are trading away.

If it doesn't cost them any actual ongoing money then I think most people simply don't care. Same reason people find advertising annoying, but don't really care on any deeper level, it doesn't cost them anything tangibly.

Citation?

Although there's some portion of apathy, the vast majority of people are ignorant or even misinformed. You can't conclude from the actions of an ignorant person that they don't care about the thing they don't know about / don't understand.

Well, I use supermarket loyalty cards as the primary example, they've existed for years, lots and lots of people carry them, if you point out that companies are using them to track your spending habits (across multiple different industries and product categories) people don't care. They receive a tangible benefit from it (discounts) and don't perceptibly pay anything for it.

I don't think that's a fair example. The vast majority of the people have never thought about all the ramifications. It's not a case of well-informed people who understand the issues deciding that they don't care. It's a case (like most) where people don't sense that the issue is important enough to make even understanding it be a priority in their busy lives.

Most people do understand that the loyalty-cards are not necessarily the only way to get discounts or even that they are actually discounted (in the absence of those cards, prices would be set differently overall).

There are certainly stores we may legitimately feel more trusting of than others.

Anyway, lots of people really appreciate a store like Trader Joe's that just has reasonable prices across the board, never does any sort of discount promotions and never tracks anyone — even if the customers never explicitly thought through that aspect of the experience, they still experience it and feel differently than they do with the other tracking-focused stores.

On a side note: I learned recently that sales and such at most grocers are actually driven by the brands themselves. The reason Trader Joe's is free of all that is because they sell relatively little that is of the big-marketing-budget style branded products…

With Alexa, there's a clear value proposition. In exchange for this device listening, you can perform various tasks by voice control that would previously be done at a computer or manually.

With advertising, it's a lose-lose proposition. In exchange for being tracked everywhere, we get shown pictures of things we don't want. Who would opt into that?

If you gave people the offer of "you have to let companies search through your financial details, but you'll get more free mobile games", how many people do you think would take you up on it? I'm sure some would, but it'd hardly be popular.

Stuff like this comes about organically. No one held a big meeting and decided the internet would be funded by privacy invading ads. The ad ecosystem just shifted that way over time due to competition.

This is not the choice the users get. The profit from tracking goes disproportionally to Google/Facebook, not creators of mobile games. So more tracking like financial information will make that disbalance even worse making it rather pointless for mobile game industry.

There are a lot of dollars taken besides Google and Facebook.

Before there was internet, companies already spent all their marketing dollars on stupid TV and radio ads.

Exactly. I hope at some point we are going to have to ask how much is too much because left to it's own devices the market answer seems to be "enough to not be obviously creepy".

I do not want lingerie ads showing up on every page I view just because I browsed /r/tallgonewild for an hour last night.

If viewing lingerie ads meant I could get my alcohol half price, I might start accepting them.

Advertising is already a competitive arms-race. More effective advertising means that more of a firm's spending will shift to advertising because it will have a bigger effect than more engineering or QA or anything else.

(If we could make advertising less effective, we could have better products ... maybe because spending more on advertising wouldn't work as well as spending more on engineering or QA. But overall spending/cost is a bit orthogonal.)

> Selling more products for the same amount of ad cost should allow for cheaper products.

If the ad companies are making less money; it doesn't suggest that the ad cost is going up

Trickle-down advertiser-to-consumer economics, ladies and gentlemen!

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