Meta ads are mostly obvious fraud afaict - unregistered lotteries, jet washes that don't need power, flashlights so powerful they'll fry an egg by shining at them, household goods developed by NASA, air-conditioning/heating that doesn't need outside air and plugs direct into a socket, ...
I've reported a few to Advertising Standards in the UK, but they're not really interested in combatting Facebook/Amazon fraud.
What's hilarious is having reported an ad to Facebook, they show you that ad more because you didn't longer looking at it. Mad.
The ones advertised on Meta platforms (and others like YouTube), at least the ones I've seen, claim to do so in a device that looks like it can't have more than a tiny battery and no cooling in there, or that they actualy show using standard AA batteries, or recharging inside an hour by solar energy, or other claim that thumbs its nose to the lawsof physics. But they must be real, after all that nice man left NASA to work on it and now the nasty commercial interests are trying to shut him down! I must buy one now while I still can!
The brand name that comes to mind is the Wicked Lasers Flashtorch, which uses a 65W halogen bulb that emits most of its energy as infrared, and a ~30 Watt-hour Li-ion battery. The old-fashioned light source is better suited to party tricks than illumination.
More modern, and also capable of improvised cooking are handheld searchlights from Acebeam and Imalent with many large LEDs, cooling fans, and even bigger Li-ion batteries. There are third-party videos of these and the older halogen type cooking eggs and setting fire to paper on Youtube.
What you're describing from the ads obviously violates the laws of physics. An alkaline AA would have a hard time cooking an egg on a dead short.
yes, they are wasting money, they know it, but caveats:
famous saying 'i'd cut my ad budget in 1/2 if i knew which 1/2 to cut'
'attribution' is the holy grail of hard thing in marketing.
so they know for sure the channel spend is iffy.
but it's hard to measure, esp. for brand and indirect campaigns.
so as a 'starting point' - it's a very 'noisy channel problem'.
the next wild idea is that ads come from a marketing budget which has $X to spend, and they have to spend it.
this is where the ROI stuff is wildy upside down.
large companies with 'market power' have a lot of surplus. they put that towards relatively lucreative marketing. the $ must be spent.
the cmo makes a budget, allocates, the managers follow the campaign, front line staffers spend. they try to get the best results they can.
there is often an unbelievable lack of true roi concern in all of that.
sometimes it's very aggressive, aka for some keywords, for sure.
but a remarkable amount of $ is spent in very unnacountable way, over what are 'grey' channels anyhow.
the marketing ops person is going home at 5pm and does not care one bit about bots. they were paid to spend it, they did. Facebook is paid to 'show a chart of view' ... they did that. 'everyone is happy'.
im not saying the whole system works that way, but much of it does.
the wild part is - there is so much 'dumb big money' in ads, it makes the whole thing very inneficient.
companies like P&G have 'distribution monopolies' on so many packaged goods, they have to keep up brand awareness.
It's why so many commercials are for commodity products like home stuff - the market is huge, the market channels are locked, they pay $$$ for ads for 'toothpaste' - the least novel and least productive kind of thing imaginable.
so 'Colgate' costs $5 at the store, it costs 50 cents to manufacture - that $4.50 gross margin is stuffed into a system of relative inneficiency up and down the economy. much of it in 'nearly useless ads'.
it's a deep market inefficiency people dont want to recognized because people assume private capital is inherently efficient and that a dollar spent = GDP = value and that's it.
our lives could materially be improved if we banned ads for a lot of things - feels like 'socialism' but really it'd just be about a kind of 'regulated market efficiency'.
So the gigantic incumbents with retail distribution being inefficient makes sense to me. What about the long tail of D2C brands that live on Meta ads? AFAIK, they live and die by their ROAS. I would have to believe that these companies just don't really exist to buy that Meta ads are a "con".
the roi is better at smaller corps that pay attention, but you would still be surprised.
and where it is more efficient its where there is better attribution models aka direct sales.
note: there are certain kinds of products that are 100% 'click driven sales'. they zero brand awareness, they want to sell you that 'fleece hoodie' on the spot. those guys have their funnel math down solid.
but startups and other companies ... not the same.
well funded startups burn $ thinking it's productive - and hugely: buying fake customers, or, spending $2 to get $1 in revenue to either pad the books, show investors, make themselves feel good or 'strategic'. FYI 'strategic' is often rational. those are big pools of money.
but usually campaigns are mixed and attribution is hard, even for smaller companies.
the tighter the budget, the more 'direct purchase', the more 'nominally efficient' it is.
also note - most ad $ is big companies who ironically spend a smaller share of their revenue on ads <- this is the power of scale.
"that $4.50 gross margin is stuffed into a system of relative inefficiency up and down the economy. much of it in 'nearly useless ads'." is easy to disprove because we know how much these companies spend on advertising (and marketing more broadly) and how much product they sell.
I didn't imply that all of their gross was going into ads.
I'm highlighting that the gross on commodity consumer goods is huge - and that it just pays for mounds of white collar bureaucracy, including advertising, and yes 25 points is about right.
Consider that companies pay more for advertising than COGS.
That should tell us something about 'productivity'
FB/Goog revenues could be cut by 60% and the good may very well flow just the same, aka they are not just capturing surplus but facilitate aggressive inefficient competition.
A western nation will post the $5.00 to the GDP when much of it is inefficient make-work.
This is why 'Pricing Parity' has to be used even to begin to compare relative wealth etc.
Toothpaste is a particularly high-margin product so it might not be the best example generally. COGS is generally the largest line item for CPG (or non-CPG products), and distribution isn't free either.
Toothpaste manufacturers can probably get away without advertising on FB/Goog, but I'm not sure that would work for other products or brands. It's not make-work to tell people about your product or service, although in markets with limited players you could see how a marketing arms race would drive prices up.
It's 'make work' because it's a unnecessarily competitive system wherein prices will by definition be driven up to absorb all of the surpluses of any given business.
Google and Facebook are in the business of 'economic rent' of people's attention.
25% of sales price going to Google might leave 5% for manufacturer and possibly even more for the Ad channel. Aka 'Google is where most of your profits are absorbed'.
You're not competing against product competitors - you're competing for attention of individuals, which is very narrow, through a very small number of pathways wherein there are quasi monopolists.
Your 'competitors' are actually 'value chain competitors' - Google and Meta - in this case, who require you to pay extraordinary amounts to access their captured audience.
Google is a massively 'high margin' business, which is an indication of their market power in the value chain, and they could be much more profitable if they wanted to be.
Whatever you make - you are bidding against McDonalds, Mondelez and Proctor & Gamble, not your just your competitor.
To realize this power, do a little 'thought experiment' and imagine of the 'ad layer' of the system would commoditized and extremely efficient, due to heavy competition and/or 'good' regulation (or socialization). Say for example, people were served ads with perfect efficiency, and accounting for some kind of community/regulatory guidance - which meant that 'local services and companies' were guaranteed a tranche of time, along with public services and community things - like School events, local street plays, art houses.
This could probably achieved for a fraction of the cost in the system now, and it would mean 1) the profits parked at G and Meta would be distributed to other layers of the value chain - aka the advertiser/maker, manufacturers, parts suppliers, and also to consumers. 2) likewise a system that defies the 'race to the bottom' competition of advertising (imagine very simple, relatively cheap and authentic ads) and 3) the hidden surplus of the benefit of community awareness, issue awareness, which is invisible on the GDP because 'money does not change hands'.
Another way to put it, is that the 25% spend on Ads is mostly spent on 'economic rent' not really on the cost and effort associated with that activity, in addition to that system being extremely optimized for certain outcomes (profits for private enterprise) and not others (aka 'financialization' of social and community aspects).
All of the extra money, time and effort people have to invest in fighting with each other over very limited attention, through captured attention, is inefficient 'make work'. It's the 'private economy' version of the government paying people to dig holes and fill them.
In almost all areas where there is heavy economic rent, there are inefficiencies; Advertising and Real Estate are huge ones there, there are a few others.
Obviously, Google and Meta do 'real things' - they're not fake businesses, but the massive profits are an indication of the oligarchic power and it's definitely sub optimal.
SMBs can find an audience that would otherwise be impossible to reach. The thing that is advertised is so diverse it's hard to generalize, however the main thing I've noticed is SMBs live and die by the quality of their ad creatives.
For big businesses which make up the other 50% of Meta ads revenue: They are very effective in circumstances where your main offering is operational and the long term value of a customer is very large. For example it would be a very good place to advertise health insurance and TV subscriptions (which is a significant amount of the big business spend). Here I am more certain. If you didn't invent your product, and it is a beneficiary of the zeitgeist promoted by social media itself (beauty-focused, soft core brain rot), and your thing is basically fungible, you will thrive.
Why's it hard to believe? Look around you at how belligerently foolish, irrational, inefficient, dysfunctional, and confidently wrong every large organization acts. Marketing departments confidently report that their marketing campaigns work, because to report otherwise would be to have their budget slashed to zero. Ad networks confidently report that the ads you buy are effective, because to report otherwise would destroy their companies. Ads are just a tax on the consumer which result in no improvement to any product whatsoever, a pure rent-seeking middleman, an intellectual landlord, a red queen's race, a dead weight on the economy, and, of course, a trillion-dollar industry, because we live in hell.
Meta ads are mostly obvious fraud afaict - unregistered lotteries, jet washes that don't need power, flashlights so powerful they'll fry an egg by shining at them, household goods developed by NASA, air-conditioning/heating that doesn't need outside air and plugs direct into a socket, ...
I've reported a few to Advertising Standards in the UK, but they're not really interested in combatting Facebook/Amazon fraud.
What's hilarious is having reported an ad to Facebook, they show you that ad more because you didn't longer looking at it. Mad.
> flashlights so powerful they'll fry an egg by shining at them
Flashlights that can do this exist. I don't know if they're being advertised on Meta platforms.
The ones advertised on Meta platforms (and others like YouTube), at least the ones I've seen, claim to do so in a device that looks like it can't have more than a tiny battery and no cooling in there, or that they actualy show using standard AA batteries, or recharging inside an hour by solar energy, or other claim that thumbs its nose to the lawsof physics. But they must be real, after all that nice man left NASA to work on it and now the nasty commercial interests are trying to shut him down! I must buy one now while I still can!
The brand name that comes to mind is the Wicked Lasers Flashtorch, which uses a 65W halogen bulb that emits most of its energy as infrared, and a ~30 Watt-hour Li-ion battery. The old-fashioned light source is better suited to party tricks than illumination.
More modern, and also capable of improvised cooking are handheld searchlights from Acebeam and Imalent with many large LEDs, cooling fans, and even bigger Li-ion batteries. There are third-party videos of these and the older halogen type cooking eggs and setting fire to paper on Youtube.
What you're describing from the ads obviously violates the laws of physics. An alkaline AA would have a hard time cooking an egg on a dead short.
yes, they are wasting money, they know it, but caveats:
famous saying 'i'd cut my ad budget in 1/2 if i knew which 1/2 to cut'
'attribution' is the holy grail of hard thing in marketing.
so they know for sure the channel spend is iffy.
but it's hard to measure, esp. for brand and indirect campaigns.
so as a 'starting point' - it's a very 'noisy channel problem'.
the next wild idea is that ads come from a marketing budget which has $X to spend, and they have to spend it.
this is where the ROI stuff is wildy upside down.
large companies with 'market power' have a lot of surplus. they put that towards relatively lucreative marketing. the $ must be spent.
the cmo makes a budget, allocates, the managers follow the campaign, front line staffers spend. they try to get the best results they can.
there is often an unbelievable lack of true roi concern in all of that.
sometimes it's very aggressive, aka for some keywords, for sure.
but a remarkable amount of $ is spent in very unnacountable way, over what are 'grey' channels anyhow.
the marketing ops person is going home at 5pm and does not care one bit about bots. they were paid to spend it, they did. Facebook is paid to 'show a chart of view' ... they did that. 'everyone is happy'.
im not saying the whole system works that way, but much of it does.
the wild part is - there is so much 'dumb big money' in ads, it makes the whole thing very inneficient.
companies like P&G have 'distribution monopolies' on so many packaged goods, they have to keep up brand awareness.
It's why so many commercials are for commodity products like home stuff - the market is huge, the market channels are locked, they pay $$$ for ads for 'toothpaste' - the least novel and least productive kind of thing imaginable.
so 'Colgate' costs $5 at the store, it costs 50 cents to manufacture - that $4.50 gross margin is stuffed into a system of relative inneficiency up and down the economy. much of it in 'nearly useless ads'.
it's a deep market inefficiency people dont want to recognized because people assume private capital is inherently efficient and that a dollar spent = GDP = value and that's it.
our lives could materially be improved if we banned ads for a lot of things - feels like 'socialism' but really it'd just be about a kind of 'regulated market efficiency'.
So the gigantic incumbents with retail distribution being inefficient makes sense to me. What about the long tail of D2C brands that live on Meta ads? AFAIK, they live and die by their ROAS. I would have to believe that these companies just don't really exist to buy that Meta ads are a "con".
the roi is better at smaller corps that pay attention, but you would still be surprised.
and where it is more efficient its where there is better attribution models aka direct sales.
note: there are certain kinds of products that are 100% 'click driven sales'. they zero brand awareness, they want to sell you that 'fleece hoodie' on the spot. those guys have their funnel math down solid.
but startups and other companies ... not the same.
well funded startups burn $ thinking it's productive - and hugely: buying fake customers, or, spending $2 to get $1 in revenue to either pad the books, show investors, make themselves feel good or 'strategic'. FYI 'strategic' is often rational. those are big pools of money.
but usually campaigns are mixed and attribution is hard, even for smaller companies.
the tighter the budget, the more 'direct purchase', the more 'nominally efficient' it is.
also note - most ad $ is big companies who ironically spend a smaller share of their revenue on ads <- this is the power of scale.
That does make sense, thanks
"that $4.50 gross margin is stuffed into a system of relative inefficiency up and down the economy. much of it in 'nearly useless ads'." is easy to disprove because we know how much these companies spend on advertising (and marketing more broadly) and how much product they sell.
It's more like 25% of their budget.
https://www.statista.com/topics/7725/cpg-industry-advertisin...
I didn't imply that all of their gross was going into ads.
I'm highlighting that the gross on commodity consumer goods is huge - and that it just pays for mounds of white collar bureaucracy, including advertising, and yes 25 points is about right.
Consider that companies pay more for advertising than COGS.
That should tell us something about 'productivity'
FB/Goog revenues could be cut by 60% and the good may very well flow just the same, aka they are not just capturing surplus but facilitate aggressive inefficient competition.
A western nation will post the $5.00 to the GDP when much of it is inefficient make-work.
This is why 'Pricing Parity' has to be used even to begin to compare relative wealth etc.
Toothpaste is a particularly high-margin product so it might not be the best example generally. COGS is generally the largest line item for CPG (or non-CPG products), and distribution isn't free either.
Toothpaste manufacturers can probably get away without advertising on FB/Goog, but I'm not sure that would work for other products or brands. It's not make-work to tell people about your product or service, although in markets with limited players you could see how a marketing arms race would drive prices up.
It's 'make work' because it's a unnecessarily competitive system wherein prices will by definition be driven up to absorb all of the surpluses of any given business.
Google and Facebook are in the business of 'economic rent' of people's attention.
25% of sales price going to Google might leave 5% for manufacturer and possibly even more for the Ad channel. Aka 'Google is where most of your profits are absorbed'.
You're not competing against product competitors - you're competing for attention of individuals, which is very narrow, through a very small number of pathways wherein there are quasi monopolists.
Your 'competitors' are actually 'value chain competitors' - Google and Meta - in this case, who require you to pay extraordinary amounts to access their captured audience.
Google is a massively 'high margin' business, which is an indication of their market power in the value chain, and they could be much more profitable if they wanted to be.
Whatever you make - you are bidding against McDonalds, Mondelez and Proctor & Gamble, not your just your competitor.
To realize this power, do a little 'thought experiment' and imagine of the 'ad layer' of the system would commoditized and extremely efficient, due to heavy competition and/or 'good' regulation (or socialization). Say for example, people were served ads with perfect efficiency, and accounting for some kind of community/regulatory guidance - which meant that 'local services and companies' were guaranteed a tranche of time, along with public services and community things - like School events, local street plays, art houses.
This could probably achieved for a fraction of the cost in the system now, and it would mean 1) the profits parked at G and Meta would be distributed to other layers of the value chain - aka the advertiser/maker, manufacturers, parts suppliers, and also to consumers. 2) likewise a system that defies the 'race to the bottom' competition of advertising (imagine very simple, relatively cheap and authentic ads) and 3) the hidden surplus of the benefit of community awareness, issue awareness, which is invisible on the GDP because 'money does not change hands'.
Another way to put it, is that the 25% spend on Ads is mostly spent on 'economic rent' not really on the cost and effort associated with that activity, in addition to that system being extremely optimized for certain outcomes (profits for private enterprise) and not others (aka 'financialization' of social and community aspects).
All of the extra money, time and effort people have to invest in fighting with each other over very limited attention, through captured attention, is inefficient 'make work'. It's the 'private economy' version of the government paying people to dig holes and fill them.
In almost all areas where there is heavy economic rent, there are inefficiencies; Advertising and Real Estate are huge ones there, there are a few others.
Obviously, Google and Meta do 'real things' - they're not fake businesses, but the massive profits are an indication of the oligarchic power and it's definitely sub optimal.
It's complicated.
SMBs can find an audience that would otherwise be impossible to reach. The thing that is advertised is so diverse it's hard to generalize, however the main thing I've noticed is SMBs live and die by the quality of their ad creatives.
For big businesses which make up the other 50% of Meta ads revenue: They are very effective in circumstances where your main offering is operational and the long term value of a customer is very large. For example it would be a very good place to advertise health insurance and TV subscriptions (which is a significant amount of the big business spend). Here I am more certain. If you didn't invent your product, and it is a beneficiary of the zeitgeist promoted by social media itself (beauty-focused, soft core brain rot), and your thing is basically fungible, you will thrive.
Why's it hard to believe? Look around you at how belligerently foolish, irrational, inefficient, dysfunctional, and confidently wrong every large organization acts. Marketing departments confidently report that their marketing campaigns work, because to report otherwise would be to have their budget slashed to zero. Ad networks confidently report that the ads you buy are effective, because to report otherwise would destroy their companies. Ads are just a tax on the consumer which result in no improvement to any product whatsoever, a pure rent-seeking middleman, an intellectual landlord, a red queen's race, a dead weight on the economy, and, of course, a trillion-dollar industry, because we live in hell.