The Law of Shitty Clickthroughs
andrewchenblog.com
andrewchenblog.com
There are two ways succeed: 1) create new forms of media (author talks about this a little at the end) and 2) make better ads on existing media. Pretty much every advertising company I know about tries #2. Improved targeting by xyz fancy algorithm or better creative, which works until it succeeds too much.
An alternate wording might be "you can fool people into thinking an ad is something else for a little while, but they soon wise up". Left unstated: exactly why a potential customer who's been tricked into clicking on an ad is going to be in the mood to buy anything from you or associate with you in any way.
You could make an analogous observation about the "channel decay" for "email opening rates".
If your marketing mechanisms prompt potential customers to actually INSTALL SPECIAL SOFTWARE in order to avoid your message, you're probably doing something wrong, yo.
This is the kind of thing advertisers should be doing. Actually be involved in the communities you're advertising to and you're going to know what they want to buy. This is why ads on PA are non-intrusive (rarely more than one loop on the animated ones), and are always relevant. There's quality control on both ends of the deal.
Nothing can help someone advertising garbage. But that's a whole other discussion.
What about people who enjoy ads during the Super Bowl?
The broader point is to think about the world in terms of feedback loops -- what we might call feedback theories. Our modern understanding of nuclear chain reactions works this way; once you get above a certain density, a neutron will be likely enough to hit a fissionable isotope, that the average number of neutrons produced per neutron is more than 1.0 -- then the neutron makes itself more likely, the chain reaction grows exponentially with positive feedback, and boom. Otherwise it will just peter out to 0 from negative feedback. Evolution by natural selection is also a feedback theory, if you focus on the genes themselves.
Coming back to the economic examples, it is now considered a relatively good economic model to assume that the stock market already knows everything that there is to potentially know about a company. If you just imagine that there was some person who magically started moving money to the day's top performers, you can reasonably envision that others might try to jump on this magical predictor, then attempted to bail out just before they did -- but so many would potentially sign up for this that it would damp that predictor's own profits to have a massive sell-off just before they were supposed to sell themselves, negative feedback. It's thought that on a smaller scale this would tend to happen with insider knowledge. Or, for another econ 301 example, there is a powerful argument that competitive markets are efficient, because they must be among the least profitable markets around. Why must they be the least profitable? Because if competing is easy, then anyone in a less profitable market cuts their losses and jumps into the competitive market instead, which concentrates profits in the market they're leaving and dilutes profits in the market they're joining. And if there's no profit, there's no room for inefficiency. (There's also a sort of odd pseudo-Marxist corollary: that agents within a market always want the market to be less competitive, so that their profits can be higher.)
Anyway, the law of shitty clickthroughs amounts, I think, to a particular feedback theory of marketing. If you market well, that generates negative feedback, both in the form of people following your example, and in the form of people getting desensitized to your ads.
I've just realised how true that is by making a brief inventory of my own repeat purchases. I have rewarded sources that give information and support, and ignored the spammy banners.
The core of advertising is generally not to match a user to a product that fits them well and will be genuinely a good use of time/money. The end goal of most advertisements is to sell a product, or to change the way you view a company, regardless of how closely the company and the products matches your needs and ideals.
Many of the most successful forms of advertising use a certain level of behavior modification via methods like classical conditioning. Instead of showing a fancy car, they show a fancy car and a very attractive woman, and you are more likely to associate 'want' with the car as a result of the woman. Food companies will often try to advertise to you at times and locations where you are most likely to be hungry, so that when you are hungry again, you are more likely to think about their food.
I would view many of these types of advertising as parasitic, because they allow potentially inferior companies and products to out-compete potentially superior companies and products.
I do not think that most people consider this consciously, but perhaps it plays into their subconscious processing of advertisements. They click on a cool looking advertisement, and find a less cool product (or maybe a product that they recognize as overpriced), and then they associate that form of advertising (banner, etc.) with a gimmick, and therefore are less likely to follow through on that advertisement format in the future.
To summarize, I think that the 'shitty clickthrough rate' effect would be much less significant if advertisements were less gimmicky and more authentic, and geared towards matching the customer to the product that matches them, instead of matching the product to a potential customer.
Who clicks on them? I wonder how many are accidental.
I've also been captured by retargeting campaigns by web services. Quite a few YC-funded companies run them. You only see their ads after you've been to their site... but they follow you all around the web, everywhere AdSense/DoubleClick reaches, which is 90% of all display advertising.
That's not the point, though. Being exposed to a brand's banner ads increases one's likelihood of searching for the brand, visiting the brand's website, making a purchase online, and making a purchase in a store.
There's a reason why online advertising technology today is so focused on measuring 'view-through' conversions - as the pool of heavy clickers decreases, click-through rates are less and less correlated with the actual effectiveness of the advertising.