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 hav

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.