Hey Advertisers: The Data-Mining Emperor Has No Clothes

Hey Advertisers: The Data-Mining Emperor Has No Clothes by Charles Hugh Smith – Of Two Minds

When a big advertiser pulls its online adverts and its sales remain unchanged, that tells everyone who’s paying attention something important. 

It’s an article of widespread faith that data-mining enables advertisers buying online adverts to target consumers with laser-like precision. Vast warehouses of servers grind through billions of records of consumer profiles and transactions and with a bit of algorithmic magic, distill all this data down to the prime target audience for whatever good or service you’re selling: probiotic goo, battery-powered back-scratchers, Zombiestra(tm), investment newsletters based on darts tossed by monkeys, etc.

And everybody knows online media is the place every advertiser wants to be and needs to be. By some measures, online advertising exceeded television advert spending in 2016 (around $70 billion each). Unlike traditional media advertising, which is stagnating or declining, online advertising is still expanding smartly–especially in mobile media.

Combine the promise of god-like targeting via data-mining with fast-growing online platforms, and you’ve got advertisers falling over themselves in their rush to spend billions more on online advertising.

As if that wasn’t enough to get advertisers salivating, the time consumers spend online continues to expand as well:

There’s one little problem with this narrative: online adverts don’t work as well as they’re advertised. Proctor and Gamble recently announced that a significant reduction in their online social-media advert spending had no measurable effect on sales.

The only possible conclusion (unless you’re selling online adverts for a living) is: online adverts don’t work.

There’s another little multi-billion-dollar fly in the ointment of online advertising known as click-fraud— the clicks on adverts may not be humans actually interested in the product being advertised but automated bots skimming money from advertisers or competitors.

So all those clicks aren’t from actual consumers; they’re bots clicking on click-farm sites which send a small fee for every click to the owner of the site, which just so happens to be the owner of the bots clicking on the adverts.

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