<story><title>Facebook&apos;s fake account problem</title><url>http://www.aarongreenspan.com/writing/20190723/mark-zuckerbergs-ponzi-scheme/</url></story><parent_chain><item><author>_Understated_</author><text>&amp;gt; The more they know about you, the more relevant your ads will be and the more likely someone seeing your ad will be to buy&lt;p&gt;How much ACTUAL evidence is there for this?&lt;p&gt;Take Amazon for instance... they know everything I have bought from them ever and employ some mega-smart people but the number of times I buy something and they then recommend either absolute shite or the same damn thing is not an insignificant number.&lt;p&gt;Another thing is if I am an advertiser and FB says &amp;quot;your ad was seen by 20 million people&amp;quot;, how can I dispute this? It&amp;#x27;s a closed system.&lt;p&gt;I am sorry... but from my comfy armchair position I&amp;#x27;m calling shenanigans on mass-data collection in advertising being able to move the profitability needle in a measurable way.&lt;p&gt;Edit: Added a bit more stuff</text></item><item><author>ssharp</author><text>I don&amp;#x27;t see the evidence here as being compelling at all.&lt;p&gt;Even if you could prove that Facebook is filling the gaps between new users and churned users by creating fake accounts, you also have to draw a line between those fake accounts and the company&amp;#x27;s bottom line.&lt;p&gt;Fake accounts don&amp;#x27;t buy products, so if advertisers are making decisions off of CAC, numbers potentially inflated by fake accounts (reach, clicks, engagement, etc.) are secondary.&lt;p&gt;Facebook&amp;#x27;s ad power comes from their egregious data collection and lack of privacy concerns. The more they know about you, the more relevant your ads will be and the more likely someone seeing your ad will be to buy. And if advertisers can draw a line that says &amp;quot;if I spend $50 on Facebook ads, I&amp;#x27;ll increase my bottom-line line $100&amp;quot;, they&amp;#x27;ll spend money until it&amp;#x27;s no longer profitable to do so.&lt;p&gt;That said, it&amp;#x27;s not like all Facebook advertisers are acting rationally in that manner. I don&amp;#x27;t know what % of Facebook revenue to coming from unsophisticated advertisers, so it&amp;#x27;s possible that they could be making a lot of money from people focusing on fuzzy metrics like reach.</text></item></parent_chain><comment><author>NathanKP</author><text>I think you are missing the point here and thinking too much about pay per impression. Professional ad buyers don&amp;#x27;t measure their ad effectiveness in &amp;quot;people reached&amp;quot;. That is for chumps who want to be ripped off, and large companies that have too much to burn on their marketing departments.&lt;p&gt;The people who use ads effectively are buying pay per click and measuring the real conversions to measure effectiveness. Bots don&amp;#x27;t buy the products after they click through, but the real clicks often do. (For some categories you can get as high as 10% conversion rate to a real sale from real clicks that you buy because ad targeting on platforms like Facebook and Amazon is really, really good. If your ad is good and your product is good then the ad targeting will get your ad in front of the right people a lot of the time.)&lt;p&gt;If you are smart you don&amp;#x27;t pay for impressions, you pay for clicks and conversions, and you measure how many of those clicks convert into sales to make sure you are coming out net positive. Sure there are always going to be some fake clicks but there are still enough real clicks that convert to make it worth it. A bit of click fraud is just the cost of doing business.&lt;p&gt;Lets say I&amp;#x27;m selling a product that has a 20% profit margin. I might be willing to pay up to 10% of my profit margin on ads if the increased number of real conversions that result will more than double my sales, allowing me to make more money overall than I would have otherwise.&lt;p&gt;There are definitely a lot of people out there who are foolishly wasting money on buying impressions, but there are also tons of people making ludicrous amounts of money from well targeted ads that convert into increased sales of their product</text></comment>
<story><title>Facebook&apos;s fake account problem</title><url>http://www.aarongreenspan.com/writing/20190723/mark-zuckerbergs-ponzi-scheme/</url></story><parent_chain><item><author>_Understated_</author><text>&amp;gt; The more they know about you, the more relevant your ads will be and the more likely someone seeing your ad will be to buy&lt;p&gt;How much ACTUAL evidence is there for this?&lt;p&gt;Take Amazon for instance... they know everything I have bought from them ever and employ some mega-smart people but the number of times I buy something and they then recommend either absolute shite or the same damn thing is not an insignificant number.&lt;p&gt;Another thing is if I am an advertiser and FB says &amp;quot;your ad was seen by 20 million people&amp;quot;, how can I dispute this? It&amp;#x27;s a closed system.&lt;p&gt;I am sorry... but from my comfy armchair position I&amp;#x27;m calling shenanigans on mass-data collection in advertising being able to move the profitability needle in a measurable way.&lt;p&gt;Edit: Added a bit more stuff</text></item><item><author>ssharp</author><text>I don&amp;#x27;t see the evidence here as being compelling at all.&lt;p&gt;Even if you could prove that Facebook is filling the gaps between new users and churned users by creating fake accounts, you also have to draw a line between those fake accounts and the company&amp;#x27;s bottom line.&lt;p&gt;Fake accounts don&amp;#x27;t buy products, so if advertisers are making decisions off of CAC, numbers potentially inflated by fake accounts (reach, clicks, engagement, etc.) are secondary.&lt;p&gt;Facebook&amp;#x27;s ad power comes from their egregious data collection and lack of privacy concerns. The more they know about you, the more relevant your ads will be and the more likely someone seeing your ad will be to buy. And if advertisers can draw a line that says &amp;quot;if I spend $50 on Facebook ads, I&amp;#x27;ll increase my bottom-line line $100&amp;quot;, they&amp;#x27;ll spend money until it&amp;#x27;s no longer profitable to do so.&lt;p&gt;That said, it&amp;#x27;s not like all Facebook advertisers are acting rationally in that manner. I don&amp;#x27;t know what % of Facebook revenue to coming from unsophisticated advertisers, so it&amp;#x27;s possible that they could be making a lot of money from people focusing on fuzzy metrics like reach.</text></item></parent_chain><comment><author>tehlike</author><text>I worked in ads. 
You individually is not what makes advertising useful or lucrative. Aggregate numbers do.&lt;p&gt;How many people see ads on tv, and buy the thing they saw right away? You guessed it, it is probably less than a percent.&lt;p&gt;There are so many impressions in the world, from billons of users. You cannot expect each of them to do meaningful conversions. On a super off the cuff calculation, assume each user see 100 ads a day, 2b users makes it 200b impressions. If each user generously converts once a day, that is 1%. If they convert every other day, it is 0.5% per impression.&lt;p&gt;I particularly left clicks out went straight to conversions. Usual flow goes like this: query, matched query, impression, click, conversion... The funnel is super large and drop offs are huge.</text></comment>