Re:Facebook executives shut down efforts to make the site le...
by ThrustVectoring on Wednesday May 27, 2020 @04:27AM
(#23320750)
There's a fundamental mismatch between how consumers value ads shown to them and how advertising platforms value the ads.
Suppose there is a $100 product that produces $110 worth of value for a specific person and costs $50 to produce and deliver to them. To use economics terms, there's a $10 consumer surplus here, and a $50 producer surplus. The consumer willingness to see the ad is proportional to the consumer surplus, while the producer's willingness to pay for ad placement is proportional to producer surplus.
This is a fundamental divergence in interests; because the ad networks are paid by producers, they'll serve the ads that tend to make ad buyers the most money, not the ads that best enrich the viewers' lives.
Suppose there is a $100 product that produces $110 worth of value for a specific person and costs $50 to produce and deliver to them. To use economics terms, there's a $10 consumer surplus here, and a $50 producer surplus. The consumer willingness to see the ad is proportional to the consumer surplus, while the producer's willingness to pay for ad placement is proportional to producer surplus.
This is a fundamental divergence in interests; because the ad networks are paid by producers, they'll serve the ads that tend to make ad buyers the most money, not the ads that best enrich the viewers' lives.