Posts tagged ‘Bob Hoffman’


Big Tech and advertising: the con is being revealed

13.11.2019

People are waking up to the fact that online advertising isn’t what it’s cracked up to be.
   Last month, Bob Hoffman’s excellent The Ad Contrarian newsletter noted, ‘I believe the marketing industry has pissed away hundreds of billions of dollars on digital fairy tales and ad fraud over the past 10 years (in fact, I’m writing a book about it.) If I am right, and if the article in question is correct, we are in the midst of a business delusion unmatched in all of history.’ He linked to an article by Jesse Frederik and Mauritz Martin (also sent to me by another colleague), entitled ‘The new dot com bubble is here: it’s called online advertising’ in The Correspondent. In it, they cast doubt over the effectiveness of online ads, hidden behind buzzwords and the selection effect. If I understand the latter correctly, it means that people who are already predisposed to your offering are more likely to click on your ads, so the ads aren’t actually netting you new audiences.
   Here’s the example Frederik and Martin give:

Picture this. Luigi’s Pizzeria hires three teenagers to hand out coupons to passersby. After a few weeks of flyering, one of the three turns out to be a marketing genius. Customers keep showing up with coupons distributed by this particular kid. The other two can’t make any sense of it: how does he do it? When they ask him, he explains: “I stand in the waiting area of the pizzeria.”

   The summary is that despite these companies claiming there’s a correlation between advertising with them and some result, the truth is that no one actually knows.
   And the con is being perpetuated by the biggest names in the business.
   As Hoffman noted at the end of October:

A few decades ago the advertising industry decided they couldn’t trust the numbers they were being given by media. The result was the rise of third-party research, ratings, and auditing organizations.
   But there are still a few companies that refuse to allow independent, third-party auditing of their numbers.

   No surprises there. I’ve already talked about Facebook’s audience estimates having no relationship with the actual population, so we know they’re bogus.
   And, I imagine, they partly get away with it because of their scale. One result of the American economic orthodoxy these days is that monopolies are welcome—it’s the neoliberal school of thinking. Now, I went through law school being taught the Commerce Act 1986 and the Trade Practices Act 1974 over in Australia, and some US antitrust legislation. I was given all the economic arguments on why monopolies are bad, including the starvation of innovation in their sector.
   Roger McNamee put me right there in Zucked, essentially informing me that what I learned isn’t current practice in the US. And that is worrisome at the least.
   It does mean, in places like Europe which haven’t bought into this model, and who still have balls (as well as evidence), they’re happy to go after Google over their monopoly. And since our anti-monopoly legislation is still intact, and one hopes that we don’t suddenly change tack (since I know the Commerce Act is under review), we should fight those monopoly effects that Big Tech has in our country.
   What happens to monopolies? Well, if past behaviour is any indication, they can get broken up. Sen. Elizabeth Warren is simply recounting American history when she suggests that that’s what Facebook, Google and Amazon should endure. There was a time when Republicans and Democrats would have been united on this prospect, given the trusts that gave rise to their Sherman Act in 1890, protecting the public from market failures like these. Even a generation ago, they’d never have allowed companies to get this influential.
   Also a generation ago, we wouldn’t swallow the BS an advertising platform gave us without something to back it up. Right now, it seems we don’t have anything—and the industry is beginning to cry foul.


Lorie Shaull/Creative Commons Attribution–Share Alike 2·0

Regardless of your political stripes, Sen. Elizabeth Warren calling for the break-up of Big Tech made sense as recently as a generation ago.

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Posted in business, internet, marketing, New Zealand, technology, USA | 4 Comments »


Facebook is getting away with it again—even though it knew about Cambridge Analytica

25.07.2019

Thanks to my friend Bill Shepherd, I’ve now subscribed to The Ad Contrarian newsletter. Bob Hoffman is one of the few who gets it when it comes to how insignificant the FTC’s Facebook fine is.
   Five (American) billion (American) dollars sounds like a lot to you and me, but considering Facebook’s stock rose on the news, they’ve more than covered the fine on the rise alone.
   Bob writes: ‘The travesty of this settlement guarantees that no tech company CEO will take consumer privacy or data security seriously. Nothing will change till someone either has to pay personally or go to jail. Paying insignificant fines with corporate money is now an officially established cost of doing business in techland and—who knows?—a jolly good way to boost share prices.’
   There’s something very messed up about this scenario, particularly as some of the US’s authorities are constantly being shown up by the EU (over Google’s monopoly actions) and the UK’s Damian Collins, MP (over the questions being asked of Facebook—unlike US politicians’, his aren’t toothless).
   The US SEC, meanwhile, has released its report on Facebook, showing that Facebook knew what was happening with Cambridge Analytica in 2015–16, and that the company willingly sold user data to the firm. SEC’s Stephanie Avakian noted, ‘As alleged in our complaint, Facebook presented the risk of misuse of user data as hypothetical when they knew user data had in fact been misused.’ You can read the entire action as filed by the SEC here.

In its quarterly and annual reports filed between January 28, 2016 and March 16, 2018 (the “relevant period”), Facebook did not disclose that a researcher had, in violation of the company’s policies, transferred data relating to approximately 30 million Facebook users to Cambridge Analytica. Instead, Facebook misleadingly presented the potential for misuse of user data as merely a hypothetical investment risk. Moreover, when asked by reporters in 2017 about its investigation into the Cambridge Analytica matter, Facebook falsely claimed the company found no evidence of wrongdoing, thereby reinforcing the misleading statements in its periodic filings.

   As I have been hashtagging, #Facebooklies. This is standard practice for the firm, as has been evidenced countless times for over a decade. The settlement: US$100 million. Pocket change.

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Posted in business, internet, media, politics, technology, USA | No Comments »