Re:Apple’s Ad-Targeting Crackdown Shakes Up Ad Market
by WoahNoun on Monday December 09, 2019 @08:21PM
(#21748714)
Numbers below are just for making a point:
Let's say someone is trying to sell snowboards using ads. Previously they could target say "young male users who have previously browsed snow sports." Let's say the ad had a 5% conversion rate and they were willing to spend $100 per conversion (sale). This means they are willing to pay $5 per ad displayed. Now they can only target "all safari users" and their conversion rate is now 0.5% since not everyone likes snowboarding. They are still only willing to pay $100 per conversion, but now they are only willing to pay $0.50 per ad displayed since they need to display 10x as many ads per conversion. If the auction rate is >$0.50, they stop buying ads completely which decreases aggregate demand for ad slots.
Let's say someone is trying to sell snowboards using ads. Previously they could target say "young male users who have previously browsed snow sports." Let's say the ad had a 5% conversion rate and they were willing to spend $100 per conversion (sale). This means they are willing to pay $5 per ad displayed. Now they can only target "all safari users" and their conversion rate is now 0.5% since not everyone likes snowboarding. They are still only willing to pay $100 per conversion, but now they are only willing to pay $0.50 per ad displayed since they need to display 10x as many ads per conversion. If the auction rate is >$0.50, they stop buying ads completely which decreases aggregate demand for ad slots.