These companies know "more about your life than you do", but yet the targeted ads continue to be pretty useless. The ad on this site was an Amazon ad for a pool filter I bought on Amazon about a week ago. It should know that I don't need these for like another year now. The other was for a cruise which I just got back from last week. Maybe some after-sun lotion or something vehicle related for the fact I drove 6 hours each way? The ads I always see just never seem that smart given the terabytes of data that everyone supposedly has on me. They really just seem to reflect my search history.
The purpose of these ads is not to sell you stuff. Its to sell advertising to companies that don't understand this internet stuff but are terrified of being "left behind". The ads need to be plausible, thats why someone has to see them, but who that is literally doesn't matter.
Another alternative is that perhaps people are clicking on ads for things they already own. I mean, let's say there's a 1/5000 chance that a random person is going to buy a SDXC card. You go ahead and buy one. After the purchase, statistically does your likelihood of buying another SDXC go up or down? For some people, they've fulfilled their SDXC quota, so now their likelihood is zero. For other people, they may be in the market for SD cards generally, so they will be more likely to make a second purchase than a random person. Or, after having bought one, they'll want to buy another one as a gift. Or they're looking to return the original and buy a cheaper one at a sale price. Just the fact that they have equipment that takes SDXC cards means they're more likely to buy another one than a random person.
Same thing with a pool filter even. If you live in an apartment, or if you're a minor, or you don't own a pool, your chances of buying a pool filter are extremely low. So the fact that you just bought a pool filter puts you in the narrow group of people who would potentially have need for another pool filter. Even though you just bought one, you're still more likely to be a customer than a random person. Hence, generally speaking, sending you ads for the same thing you just bought may be a rational choice for the advertiser.
An intelligent advertising engine would know the typical interval between two purchases of the same product, and start advertising similar products just before that interval has elapsed since the last purchase.
Examples:
pool filter: 12 months
reptile UV lamp: 6 months
gift-wrapping paper: 12 months
oil filter, recycling box, 5 qt oil: 4 months
8-ct paper towel rolls: 2 months
television: 4 years
automobile: 10 years
magazine subscriptions: 1 year
tacos: every Tuesday
Indeed, but this engine doesn't exist, and in 15+ years of weaponised adtech, noone's been sufficiently economically incentivised to make it. Telling, no?
You're underestimating how hard it would be to build such an engine. Google and Facebook have sunk $billions into their knowledge graphs so far, and not made much of a dent.
Maybe. The current heuristic is "he has bought X so show him an ad for X", but would it be so difficult to flip that to "he has bought X so show him the next thing on the list of interests we know he has" or even just "anything but X". I strongly suspect noone is doing this because there is no point, they get paid the same regardless.
That's not the current heuristic; it's not nearly that simple.
Think about how you know if someone is interested in something. What does it mean to be interested? How does that translate into a sale?
A person just bought a vacuum cleaner. Does that mean they are interested in vacuum cleaners? Are vacuum cleaners things that people get interested in? Do people who are interested in vacuum cleaners buy more than people who are not interested in vacuum cleaners?
To us these answers are so obvious that it's humorous. To a computer, not so much.
There are many millions of interests, opinions, and things to buy--so count the combinations. We understand it all intuitively because we are adult humans with decades of experience in this society.
This is why search and ad companies hire so many AI researchers.
EDIT: to understand the financial incentives, see my other reply to you. In a PPC ecosystem it is better to match too greedily than to risk missing a customer ready to buy.
That's the intuition, but I wonder if there isn't a spike in near-term repurchase behavior that the algorithms are correctly exploiting?
Ex: I bought a vacuum, but I'm unhappy with it. I bought a pool or oil filter, but it was the wrong one. I bought an X, but it was defective. I bought an 8-ct of paper towels because I run a cleaning service or property management company and use a lot of paper towels. I bought a pair of jeans and they're the wrong size or I bought a pair of jeans and they're exactly the right size and now I want to order 3 more pair so I can have the ones I like.
Years ago, we built a conditional offer engine and the humans operating it kept complaining that it was "broken" because it was suggesting non-sensical combinations. In split-run, those non-sensical combinations were clear winners, even if the humans couldn't get comfortable with them.
In the cases you provide, though, it seems to me (and I am certainly no expert) that you wouldn't need to advertise the same item again. If I bought a vacuum that I'm unhappy with, showing me another ad for it (which is what Amazon does) is the wrong thing to do. Not only will I not buy the same machine again, but I will google and research the products- I will ignore ads unless they are offering me a discount on the one I decide on. Likewise for wrong-sized jeans or buying three more pair.
Acxiom has done this in a more invasive way for decades: figure out women's menstrual cycle and then mail them ads when they will be most likely to make a purchase according to prior research.
You've got to think beyond the computer. Most big companies pay per ad view, not per click. Per click is for the low-end advertisers. Per action is for bottom-feeders.
Think about billboards, TV, radio, and magazines. Can't click on any of them, yet hundreds of billions of dollars are spent on them every year because repeating the brand, logo, visual, or message works. There's a reason McDonald's and Coca-Cola advertise heavily. It works.
I strongly disagree about your CPM/PPC/CPA categorization.
I work on conversion focused ad campaigns, so YMMV. For conversions, obviously CPA and PPC are superior. I do agree that CPA can be bottom feeders, but PPC is probably the bread and butter of most people I know.
I would suggest that most big companies are paying their agencies, who like pay per view because they can spend more without direct accountability like Return on Ad Spend (ROAS). Their job is easier without having to prove their efforts work.
Grain of salt and all. I'm also a guy who has yet to see proof that a branding campaign has value. (It may lift sales, but is it the most effective use of those dollars? Doubtful.)
Why is CPA for bottom feeders. What do you mean by that? Seems like the perfect way to optimize the funnel if you know exactly what you're after (an "acquisition").
The problem isn't 100% negative matching (ads shown only to people who already own the thing), the problem is greedy pattern matching (ads shown to anyone who might possibly be interested). That ends up matching against people who want the thing, and people who just got the thing.
And that's not really that bad for advertisers because they only pay for the clicks. People who don't want it (perhaps because they just bought it) just won't click.
It is only a "problem" for the ad platform, in terms of the efficient use of inventory. In theory a poorly matched ad is displacing a better targeted ad that would perform better and make the platform more money.
But practically speaking it is only a competitive disadvantage if your targeting is worse than competing platforms. Even if the targeting leaves a lot be desired, if it is even a little better than everyone else, you'll still land contracts and make money.
Amazon is a marketplace/platform more than it is a direct seller at this point. The ads they're showing you were likely purchased by sellers, possibly including other sellers of the product you purchased (if you were shopping around).
Whether it's Amazon wanting a customer to take additional action or an affiliate trying to drive traffic, relevant retargeting is much more effective than non-relevant.
And from the affiliate's perspective, interfacing to good retargeting is just as easy as interfacing to bad. That is, it's a black box owned and managed by Amazon.
I'm asking for something even more basic from ad targeting: as a Canadian, with a Canadian IP address, don't advertise products/services to me that are US-only.
You'd think the web advertising industry would at least figure out how to never show me an ad for Hulu or Blue Apron, seeing how those companies don't do business outside the US so the ROI on having me click that is zero.
Nobody from the US ever visits Canada? This is a good example of how the spotlight effect combines with confirmation bias to make advertising look awful. All algorithms like this are going to have false positive rates, if their most successful ads are the ones shown to Americans in Canada should they stop because sometimes Canadians see them and are annoyed by them?
It's doubtful that the most successful ads are ones specifically shown to Americans in Canada, and the number of Americans in Canada at any given time is probably very insignificant compared to the number of Canadians in Canada.
It really does seem like a boneheaded advertising strategy to market yourself to a consumer audience when the overwhelming majority of them can't pay for your products, and when it's presumably easy to screen that audience out by IP address.
Reverse IP lookup is far from perfect when it comes to location identification. Also if you've recently travelled to the US wouldn't be out of the question to have a cookie set with that location info.
The seemingly lack of intelligence isn't due to them being ineffective, but rather being effective at a task you weren't necessarily evaluating.
The key difference between marketing and advertising is that marketing is advertising with the added intent of creating a sale to the person viewing the advertisement - advertising directly to their target market.
Advertising is more about brand awareness and viral marketing. You bought a pool filter and won't need one for another year, but you probably have friends/live near/know people who may be in the market for a pool filter, and if they ask you about buying one, the brand awareness may encourage you to suggest that brand, even though you may not have used it yet or no anything else about other brands - which is another key benefit.
Essentially, advertising has a 2-tier benefit. Firstly, it solidifies brand awareness, and secondly, it takes up space that would have gone to a competitor. Now the cost of competing is that much higher, because in order to get your business a competitor would need to invest in a superior product and invest in bringing awareness to you.
"If you judge a fish by its ability to climb a tree, it will live its whole life believing it's stupid."
One of the points of advertising is to get you to recognize the brand, so that in the future when you shop for similar products you'll think of theirs as a familiar brand (even tough you may have no memory of ever having seen their ads).
Ads also often get you to associate positive feelings with the brand or product. Again, this might not result in directly buying the product right away, but next time you think of it, you'll be more likely to buy it than if you never saw the ad.
I use remarketing and it definitely annoys some people and they complain that I'm following them around. But you know what? They buy. Without remarketing they forget.
I would love to turn it off after they do buy, but it's too hard to configure and hey, it reminds them to actually use the thing they bought. Customers are great, but only users tell their friends,
Your comment explains something crucial about targeted advertising that other people often fail to understand. The ad tech companies provide a platform for advertising, but it is up to the user (the advertiser) to configure and use the platform correctly. Often, advertisers may configure their targeting in ways that are suboptimal. Or, their e-commerce platform may not be properly set up to record conversions and associate them with targets. (Depending on the platform, they may not even have that option.)
Poorly configured ad targeting happens just as often as poorly configured firewalls, servers, Wordpress installs, cloud deployments, etc... probably more often since the consequences aren't as dire.
(Not a fan of targeted ads either, but I often see people complaining about post-purchase targeted ads as if this is a universal problem. So much depends on the specific platforms involved, the skill levels and intentions of the many different ad buyers on each platform, and so on. Results will vary.)
The better ad would market the product your friend just bought to you. The privacy concerns are enormous, but regardless, the data is there today and I'd be surprised if it isn't already at work.
I used to think the same but I've read recently the rationale as follows: apparently, you're most likely to buy a pool filter just after you bought one, because maybe the one you bought broke, or you don't like it, or whatever else, and you need a new one.
Not sure how much truth is there behind it, but maybe there's a bit. Obviously, it does not apply much to the cruise though.
A local grocery store has a points card that bases its offers on prior purchases, and suffers from the problem that you identified. I have often wondered if it would be practical to turn the tables by making a token purchase just before an anticipated sale, then reaping the rewards the following week.
It shows that even with huge inefficiencies web ads are making tons of money for all the major players both supply and demand (sorry bloggers). Amazon and Google are well aware of the problem and working on it to some extent but I guess there are bigger fish to fry in the meantime.
