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Comment by cortesoft | Hacker News Reader

There was an article about targeted advertising a number of years that really changed my perspective on it called, "Targeted Advertising Considered Harmful": https://zgp.org/targeted-advertising-considered-harmful/

The basic idea is that the real value in advertising is as a signaling mechanism, and targeted advertising removes most of that signal.

I feel like personalized pricing has some of the same issues, in that it erodes consumer trust and makes it more and more difficult for consumers to confidently spend their money in the market. I am not sure how we fix the problem, though, because it is a collective action problem; any individual company will need to use personalized pricing to compete, but that behavior will hurt the economy as a whole.

I don't know the solution to this problem.

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There's bqsically IMO two types of ads - marketing and sales.

Marketing ads are signalling, brand recognition, etc. You want the cool earbuds that everyone knows. You want to buy them from a big, reputable company with good r&d.

Sales is simpler - click on the ad and buy the product. It tends to be a bit sleasier - sales doesn't care as long as it makes a sale.

There's often a bit of tension between sales and marketing. A 50% ooff exploding offer can be good for sales in the short term, but can make the brand look cheap.

The in-industry terms for these are "brand marketing" and "performance marketing," FWIW. Brand marketing is the first thing, performance marketing is what you're calling sales.

Don't ban it, just require that next to the current price merchant displays low/high/median price for the same good/service in the last 30 days.

Exactly. Most of the icky stuff is based on a lack of consumer knowledge.

> I am not sure how we fix the problem

Regulation that causes big business to lose money and rich people to be a little less wealthy so society is better

no that's crazy talk. There must be some super obscure technological solution to a societal problem. Ideally something that can be sold as a SaaS.

Why isn't making it illegal a solution?

> that behavior will hurt the economy as a whole.

I don't quite follow... Advertisers want their product sold. Consumers want to buy whichever product is most suitable for their needs (based on both price and performance), ad networks have every incentive to connect these two.

In an ideal world an ad network would show me 10 ads for products I want to buy (ie. new shoes, ice cream, etc). I would have confidence that those products are the exact ones I want and that any more research would only show up inferior (worse value) products.

The ad network gets to take no profit margin - since if it did, I could find that same product cheaper elsewhere.

This leads to an equilibrium where the ad network shows mostly the perfect products - and charges a small margin - where the margin size is set to be slightly below my willingness to shop around for a better deal.

Personalized pricing just represents different users estimated willingness to shop around - but if the model is correct, even those paying a higher price are happy with the situation or else they'd shop around.

Ad networks have every incentive to lie to consumers to get a sale. If the strength of the economy is measured in total sales, that's great. If the strength of the economy is measured by consumer satisfaction, not so much.

An ideal ad network would not show you a product ideal for you, but a misleading ad for the lowest-cost product you'll buy for the most expensive price, with 95% of the difference pocketed by the ad network.

Informing the target that a product exists is a small part of advertising. It's important for the small players, but for the big advertising spenders it's much more about communicating values, trustworthiness, emotions. Building a brand image, and maintaining brand awareness

Just the fact that you are running an advertising campaign of a certain size used to be a signal in itself. Same with advertising in or for subcommunities. That signal is heavily dilluted by targeted advertising

Similarly, personalized pricing is removing signal from the price. Sure, price was always a noisy signal, but better a noisy signal than no signal

Sometimes it's not even a part. I remember ads for a shoe company not even showing or mentioning shoes

>In an ideal world an ad network would show me 10 ads for products I want to buy

Ideal for who? What if you don't want to buy anything, much less have all of your personal information hoovered up and sold/shared/exfiltrated around to everyone in the world for the benefit of the advertisers that have no value for you?

What is the incentive for ad networks to suit you to whichever product best fits your needs? On price, if an ad network knew how much you needed something, why isn't their incentive to show you the the highest confidence-weighted price you'd pay rather than the absolute best deal?

e.g. if they know you absolutely need to get on a flight (dying family member or something), what is their incentive to find you the best one rather than gouging you? And if they sell that information to other groups so everyone knows to gouge you?

None of these ideals are how reality works though. In reality consumers aren't completely rational, don't have access to perfect information, and the models for pricing/advertising have perverse incentives to extract as much as possible from consumers.

I remember a successful advertisement for a yogurt in the 90s with a naked woman in a shower (so not in the US). I remember in the 2000 ads for Nike (or another shoe brand) not even showing a shoe. Recently there was a (very nice) ad for a retail corp that became viral and didn't even talk about the retails

the goal of advertising is not to inform, it is to sell, even if that means manipulating people.

“Collective action” < union < regulation

... < union + regulation

... < democratic socialist republic without social media

You don't need to resort to communism, you can have a market economy where companies are owned by their own employees. It took millenia for humanity to dump its broke-ass monarchies for democracies, and yet we still haven't realized that our prevailing corporate structures are just the same broke-ass monarchies with a king at the top and the serfs laboring beneath.

ares623 did say "democratic socialist"

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