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Ignoring the ethics of the adverting for now and looking at the advertisers using Facebook, particularly the many small business that use the platform. This $10

Ignoring the ethics of the adverting for now and looking at the advertisers using Facebook, particularly the many small business that use the platform. This $10B hit in revenue is directly down to a reduction in ad spend, which directly hits revenues. Assuming an estimated ROAS of about 6-10x then this equates to advertisers seeing a $60B to $100B reduction in sales via Facebook. Many of these advertises will not be moving this budget elsewhere, they will just be seeing reduced sales. So, I'm all for criticism of online advertising ethics, particularly targeted at Facebook. But please remember they are an important part of the larger online economy which supports business that employ people. Please remember the people at the bottom of the chain here who have (and will continue to) seen a material impact on their business, income or employment due to these (and the inevitable further) changes.

jl6 5y ago
If $100bn of spend is being caused by advertising rather than by need, then it sounds like a net benefit to society to prevent that spend. Either people need the products and will carry on buying them, or they don’t, and they will spend their money on something else instead.
- amerkhalid 5y ago
  It is not only better for people but also for the environment. In my past life, I bought a lot of gizmos thanks to random ads. Most of those gadgets end being used once or twice, and then go in donation pile or trash. People can invest extra cash, retire early, donate. And I think those jobs that are lost due to less consumption will pave a way towards more meaningful work eventually.
Nextgrid 5y ago
Regardless of whether it puts people or jobs at risk, I don't believe society should be paying this advertising tax (in the form of time wasted being interrupted by ads, consuming garbage misleading content that's only there to generate an ad impression such as chumboxes/Taboola/Outbrain, the privacy violations, etc) just so that a relative minority can have a job. Otherwise, you could also argue that illegal things such as violence or theft also enable people to have "jobs" in countries where law enforcement doesn't or can't crack down on it.
- gefhfffh 5y ago
  You are not only paying by getting the ad itself, but also paying for you getting the ad when you buy products of companies who use ads
- geoduck14 5y ago
  People are so quick to dismiss advertisements as "always bad", but they are part of a legitimate ecosystem that IS BENEFICIAL TO YOU. Sales people, recruiters, advertisements, marketing departments - they all help me understand what is being sold so I can buy things that I GENUINELY want or need It is true that there are garbage advertisements out there, and they should be pruned. But if YOU write really awesome code at work and you want people to use it, ask yourself, how do other people know they should use it? You tell them. You talk, you email, you set up Confluence pages with documentation. All of this is a part of the advertising ecosystem - and it helps the creator AND the consumer
  - boh 5y ago
    This statement is just a perfect illustration of how manipulation has been normalized in our everyday lives. Your attention constantly being undermined for the benefit of perpetual awareness of consumer goods is just how things should be apparently. I guess if you're in the business of writing "really awesome code" to force people's attention into spending money you have to believe in advertising as a civil right or something but society as a whole doesn't have to agree with you.
    - BuyMyBitcoins 5y ago
      I personally believe the vast majority of advertisements are nothing more than mental pollution. While there is a place and time for promotion, I feel like there should be spaces specifically designed for advertisements. I have no problem whatsoever with businesses trying to get my attention when I specifically look for some relevant service. I’m not talking about peppering my search results with interstitial content, but rather, going to a website designed to find and purchase products or to find services/contractors for hire.
spicyusername 5y ago
> Assuming an estimated ROAS of about 6-10x then this equates to advertisers seeing a $60B to $100B reduction in sales via Facebook. That's a pretty big assumption. Do we have any data that backs that up? It's just as easy to assume that there will be very little impact, because most people ignore Facebook ads, and that this is actually saving small businesses money.
- samwillis 5y ago
  A ROAS of 6-10 is apparently the average from what I have read, although I don't quite believe this. Even if its actually closer to a ROAS of 2-3 (which is not unreasonable, 30-50% of sale price paying for advertising), that would still be $20B-$30B in reduced sales.
- aembleton 5y ago
  They must be making a return on their investment, otherwise why would they do it? Maybe not 6-10x but it must be greater than 1x
  - falcolas 5y ago
    > They must be making a return on their investment, otherwise why would they do it? Because of Facebook's advertising that says they should. Or independent contractors who will helpfully create an ad campaign that will "earn 6x their investment". There's plenty of stories out there of folks who actually put in the effort to measure the income generated by FB and Google ads, and they aren't flattering.
  - Sander_Marechal 5y ago
    Because everyone else is doing it and they feel like they need to do it. Also, statistics manipulation by said ad agencies. They do anything for conversion "attribution" metrics. Saw an ad 6 months ago and now you buy the product? That's tracked as a conversion by the ad company, telling the business how great their ads are doing. I'm convinced that a vast amount of sales attributed to online ads are sales that would have been made anyway.
- 5y ago
UncleMeat 5y ago
Revenue for businesses comes from people. $100B in sales is not necessarily a good thing. I think there is a somewhat reasonable argument for a huge amount of advertising being harmful to consumers given the vast power imbalances and deep psychological weaknesses inherent to the human mind. How much stuff is purchased not because of a real need but because of a need that has been implanted via advertising?
luplex 5y ago
It's not clear to me that privacy-preserving ads do actually perform worse than intrusive ads. Maybe advertisers spend less for similar impact.
- afiori 5y ago
  The most reasonable position is that for some purposes intrusive ads perform worse and for others significantly better. In a sense ads can measure a few axes of a buyer, if your critical axes correlate well with that noisy signal then it will perform well.
mox1 5y ago
On the other hand, consumers haven’t stopped spending. So that 60-100B that consumers might have spent on Facebook advertised businesses will probably end up elsewhere, like their local economy (or Amazon…probably Amazon) So I would argue it’s just a shift. Similar to what has happened with the pandemic and restaurants. Consumer restaurant spend didn’t disappear, it got reallocated to electronics, vehicles, etc.
boh 5y ago
Please remember that any resistance to the loss of your privacy might lose people money. Let's not also forget to use basic manipulation and reference poor little small businesses in our example to make people sympathetic. I guess if unethical behavior is used persistently enough, it'll be normalized and we can start talking about how important it is to keep doing it (and oh yeah the little guy, think about the little guy--especially over any general societal goals)
- gumby 5y ago
  > Let's not also forget to use basic manipulation and reference poor little small businesses... It's the corporate version of "think of the children". Often cited by big predators (from Amazon to Walmart, Exxon to Utilities) for cover.
- samwillis 5y ago
  > Let's not also forget to use basic manipulation and reference poor little small businesses in our example to make people sympathetic. While I appreciate that these tactics are used by large business (including Facebook) to manipulate people. As the author of the comment you are replying to I'm speaking from experience as a small business owner. We have seen this impact directly and I can attest to it being true. So, yes it does impact small businesses and yes I am asking for people to sympathetic to them and their employees.
  - boh 5y ago
    I think you're under-appreciating how unsympathetic and narcissistic this argument is. If you're suggesting that the original response didn't take into account that it would literally be you who would be losing money, please rest assured everyone made that assumption. Being the smaller agent of a parasitical industry doesn't make you or your bid to continue the status quo sympathetic.
    - samwillis 5y ago
      I'm not asking for the status quo to continue and didn't intend my comment to imply that. I purposely started my original comment suggesting I was ignoring the ethics in order to concentrating on the wider economic impact of changes such as that implemented by Apple. The other comment threads on this post are doing a good job of debating the ethics, I'm just trying to ensure people have in mind the wider impact when they debate these changes. Personally I think the privacy invasive advertising is long overdue heavy regulation and I look forward to it both as a person and particularly as a parent. I fully support Apples change and hope the rest of the industry follow. We have always tried to minimise our usage of privacy invasive advertising (we actually barely use Facebook narrow targeting tools and have avoided targeted remarking as I personally hate being chased around the internet by ads for something I have looked at), and will continue to do so.
jtbayly 5y ago
Which ad spend is being cut, though? Is it little shops like you describe or huge link farms with barely any return on ad spend? Or both? I’m not sure. Are you?
chinathrow 5y ago
Doesn't that boil down to the argument "oh but look at the jobs!". Where I live, we have the same argument when it comes to the oil and gas industry, the military industry etc. etc.
micromacrofoot 5y ago
>Ignoring the ethics of the adverting for now Selectively ignore the worst part so we can feel guilty about improving it? for what purpose?
kodemager 5y ago
How do you know though. Maybe business are simply investing less money into Facebook because the ROAS isn’t 6-10x times anymore. Maybe 100% or this is on Apple, but maybe it’s also because nobody under the age of 20 uses Meta platforms. I can only speak for my country of course, but if your target isn’t in the 40+ category then Facebook or Instagram advertisements rarely pay off in any sort of data we collect on it. In my line of work Facebook works, but it doesn’t work better than targeting banner adds on financial websites or financial news papers, and you still only start the onboarding journey with that, the real sale state waaaay later. 5 years ago the sale journey started on Facebook, and now it just doesn’t.
crhulls 5y ago
I bet average ROAS is much closer to 1. So many companies have upside down unit economics and the ads never pay off. Even if you have good economics you would not want to see 10x ROAS as it means you’d be massively underspending in a profitable channel. So I’m sure the shift is real, but probably lower than your estimate. I also assume Facebook will quickly figure a workaround through alternate IDs or fingerprinting in other ways.
hnaccount141 5y ago
> Please remember the people at the bottom of the chain here who have (and will continue to) seen a material impact on their business, income or employment due to these (and the inevitable further) changes. We see this dynamic in so many industries and it's holding us back as a society. <Thing> is a net negative to society, but regulating/reducing/banning <thing> causes suffering for workers. If we want to advance as a society we'll need to be willing to support the people affected by changes like this.

jl6 5y ago

If $100bn of spend is being caused by advertising rather than by need, then it sounds like a net benefit to society to prevent that spend. Either people need the products and will carry on buying them, or they don’t, and they will spend their money on something else instead.

amerkhalid 5y ago
It is not only better for people but also for the environment. In my past life, I bought a lot of gizmos thanks to random ads. Most of those gadgets end being used once or twice, and then go in donation pile or trash. People can invest extra cash, retire early, donate. And I think those jobs that are lost due to less consumption will pave a way towards more meaningful work eventually.

Nextgrid 5y ago

Regardless of whether it puts people or jobs at risk, I don't believe society should be paying this advertising tax (in the form of time wasted being interrupted by ads, consuming garbage misleading content that's only there to generate an ad impression such as chumboxes/Taboola/Outbrain, the privacy violations, etc) just so that a relative minority can have a job. Otherwise, you could also argue that illegal things such as violence or theft also enable people to have "jobs" in countries where law enforcement doesn't or can't crack down on it.

gefhfffh 5y ago
You are not only paying by getting the ad itself, but also paying for you getting the ad when you buy products of companies who use ads
geoduck14 5y ago
People are so quick to dismiss advertisements as "always bad", but they are part of a legitimate ecosystem that IS BENEFICIAL TO YOU. Sales people, recruiters, advertisements, marketing departments - they all help me understand what is being sold so I can buy things that I GENUINELY want or need It is true that there are garbage advertisements out there, and they should be pruned. But if YOU write really awesome code at work and you want people to use it, ask yourself, how do other people know they should use it? You tell them. You talk, you email, you set up Confluence pages with documentation. All of this is a part of the advertising ecosystem - and it helps the creator AND the consumer
- boh 5y ago
  This statement is just a perfect illustration of how manipulation has been normalized in our everyday lives. Your attention constantly being undermined for the benefit of perpetual awareness of consumer goods is just how things should be apparently. I guess if you're in the business of writing "really awesome code" to force people's attention into spending money you have to believe in advertising as a civil right or something but society as a whole doesn't have to agree with you.
  - BuyMyBitcoins 5y ago
    I personally believe the vast majority of advertisements are nothing more than mental pollution. While there is a place and time for promotion, I feel like there should be spaces specifically designed for advertisements. I have no problem whatsoever with businesses trying to get my attention when I specifically look for some relevant service. I’m not talking about peppering my search results with interstitial content, but rather, going to a website designed to find and purchase products or to find services/contractors for hire.

spicyusername 5y ago

> Assuming an estimated ROAS of about 6-10x then this equates to advertisers seeing a $60B to $100B reduction in sales via Facebook. That's a pretty big assumption. Do we have any data that backs that up? It's just as easy to assume that there will be very little impact, because most people ignore Facebook ads, and that this is actually saving small businesses money.

samwillis 5y ago
A ROAS of 6-10 is apparently the average from what I have read, although I don't quite believe this. Even if its actually closer to a ROAS of 2-3 (which is not unreasonable, 30-50% of sale price paying for advertising), that would still be $20B-$30B in reduced sales.
aembleton 5y ago
They must be making a return on their investment, otherwise why would they do it? Maybe not 6-10x but it must be greater than 1x
- falcolas 5y ago
  > They must be making a return on their investment, otherwise why would they do it? Because of Facebook's advertising that says they should. Or independent contractors who will helpfully create an ad campaign that will "earn 6x their investment". There's plenty of stories out there of folks who actually put in the effort to measure the income generated by FB and Google ads, and they aren't flattering.
- Sander_Marechal 5y ago
  Because everyone else is doing it and they feel like they need to do it. Also, statistics manipulation by said ad agencies. They do anything for conversion "attribution" metrics. Saw an ad 6 months ago and now you buy the product? That's tracked as a conversion by the ad company, telling the business how great their ads are doing. I'm convinced that a vast amount of sales attributed to online ads are sales that would have been made anyway.
5y ago

UncleMeat 5y ago

Revenue for businesses comes from people. $100B in sales is not necessarily a good thing. I think there is a somewhat reasonable argument for a huge amount of advertising being harmful to consumers given the vast power imbalances and deep psychological weaknesses inherent to the human mind. How much stuff is purchased not because of a real need but because of a need that has been implanted via advertising?

luplex 5y ago

It's not clear to me that privacy-preserving ads do actually perform worse than intrusive ads. Maybe advertisers spend less for similar impact.

afiori 5y ago
The most reasonable position is that for some purposes intrusive ads perform worse and for others significantly better. In a sense ads can measure a few axes of a buyer, if your critical axes correlate well with that noisy signal then it will perform well.

mox1 5y ago

On the other hand, consumers haven’t stopped spending. So that 60-100B that consumers might have spent on Facebook advertised businesses will probably end up elsewhere, like their local economy (or Amazon…probably Amazon) So I would argue it’s just a shift. Similar to what has happened with the pandemic and restaurants. Consumer restaurant spend didn’t disappear, it got reallocated to electronics, vehicles, etc.

boh 5y ago

Please remember that any resistance to the loss of your privacy might lose people money. Let's not also forget to use basic manipulation and reference poor little small businesses in our example to make people sympathetic. I guess if unethical behavior is used persistently enough, it'll be normalized and we can start talking about how important it is to keep doing it (and oh yeah the little guy, think about the little guy--especially over any general societal goals)

gumby 5y ago
> Let's not also forget to use basic manipulation and reference poor little small businesses... It's the corporate version of "think of the children". Often cited by big predators (from Amazon to Walmart, Exxon to Utilities) for cover.
samwillis 5y ago
> Let's not also forget to use basic manipulation and reference poor little small businesses in our example to make people sympathetic. While I appreciate that these tactics are used by large business (including Facebook) to manipulate people. As the author of the comment you are replying to I'm speaking from experience as a small business owner. We have seen this impact directly and I can attest to it being true. So, yes it does impact small businesses and yes I am asking for people to sympathetic to them and their employees.
- boh 5y ago
  I think you're under-appreciating how unsympathetic and narcissistic this argument is. If you're suggesting that the original response didn't take into account that it would literally be you who would be losing money, please rest assured everyone made that assumption. Being the smaller agent of a parasitical industry doesn't make you or your bid to continue the status quo sympathetic.
  - samwillis 5y ago
    I'm not asking for the status quo to continue and didn't intend my comment to imply that. I purposely started my original comment suggesting I was ignoring the ethics in order to concentrating on the wider economic impact of changes such as that implemented by Apple. The other comment threads on this post are doing a good job of debating the ethics, I'm just trying to ensure people have in mind the wider impact when they debate these changes. Personally I think the privacy invasive advertising is long overdue heavy regulation and I look forward to it both as a person and particularly as a parent. I fully support Apples change and hope the rest of the industry follow. We have always tried to minimise our usage of privacy invasive advertising (we actually barely use Facebook narrow targeting tools and have avoided targeted remarking as I personally hate being chased around the internet by ads for something I have looked at), and will continue to do so.

jtbayly 5y ago

Which ad spend is being cut, though? Is it little shops like you describe or huge link farms with barely any return on ad spend? Or both? I’m not sure. Are you?

chinathrow 5y ago

Doesn't that boil down to the argument "oh but look at the jobs!". Where I live, we have the same argument when it comes to the oil and gas industry, the military industry etc. etc.

micromacrofoot 5y ago

>Ignoring the ethics of the adverting for now Selectively ignore the worst part so we can feel guilty about improving it? for what purpose?

kodemager 5y ago

How do you know though. Maybe business are simply investing less money into Facebook because the ROAS isn’t 6-10x times anymore. Maybe 100% or this is on Apple, but maybe it’s also because nobody under the age of 20 uses Meta platforms. I can only speak for my country of course, but if your target isn’t in the 40+ category then Facebook or Instagram advertisements rarely pay off in any sort of data we collect on it. In my line of work Facebook works, but it doesn’t work better than targeting banner adds on financial websites or financial news papers, and you still only start the onboarding journey with that, the real sale state waaaay later. 5 years ago the sale journey started on Facebook, and now it just doesn’t.

crhulls 5y ago

I bet average ROAS is much closer to 1. So many companies have upside down unit economics and the ads never pay off. Even if you have good economics you would not want to see 10x ROAS as it means you’d be massively underspending in a profitable channel. So I’m sure the shift is real, but probably lower than your estimate. I also assume Facebook will quickly figure a workaround through alternate IDs or fingerprinting in other ways.

hnaccount141 5y ago

> Please remember the people at the bottom of the chain here who have (and will continue to) seen a material impact on their business, income or employment due to these (and the inevitable further) changes. We see this dynamic in so many industries and it's holding us back as a society. <Thing> is a net negative to society, but regulating/reducing/banning <thing> causes suffering for workers. If we want to advance as a society we'll need to be willing to support the people affected by changes like this.