I wonder how it works from the business perspective. There is an adverse-selection argument against introducing ad-free versions of an ad-supported service: the people who are most likely to pay for an ad-free experience are also the same people who are most valuable to advertisers. So if that group is gone, the remaining users could either command less ad revenue, or be shown higher CPM ads (e.g. ads for prescription drugs, not available in EU; or ads for adult content, incompatible with a family-friendly platform). How would this work? Or maybe the adverse selection assumption is faulty? Or maybe this choice could help avoid an EU fine of some sort?
This is surely part of why they started with the EU - it’s (1) relatively wealthy but not US wealthy, and (2) their ad businesses are already at risk and becoming a liability.
A quick Google search says that Metas Average Revenue Per User is $11 worldwide, $60 in US/canada, and $18 in Europe. They have a 40% profit margin. So a $10/mo subscription in Europe is likely more profitable than ads. And would still be so in US market.
There is a risky balance still - they’re obviously the best customers so the statistics may dramatically shift and they likely lose a chunk of signals to train their ad models against, meaning worse performance. That’s an opportunity though, I suspect that a huge cost of theirs is the ad engineering and they can potentially cut down on all that infra - from training to serving.
And yea, if the billion dollar fines keep coming, it may also be a meaningful accounting decision.
Do you think Coca Cola advertises to get you to go buy a coke right now? United Airlines expects a click-through to get you to book a flight right there and then with no planning or talking to your spouse? Think Audi expects you to click their facebook ad and order a car online?
No, they want to become ingrained in your mind. So to them, just exposing you to their ad is enough. Whether you click on it or not is irrelevant.
I keep a low effort fuzzy mental list of things that advertise themselves in ways I find unpleasant. They are the first thing I think of when I go to buy something, but the last thing I'll ever buy.
An example: The North Face edited wikipedia to change the photos of famous hikes/outdoorsy locations with people wearing North Face jackets with the logos visible.
Wow, I hadn’t heard of this before but it’s actually disgusting and despite this happening some time ago they just got added to my shit list of companies I won’t buy from.
“North Face Brazil’s CEO said in a statement. “With the ‘Top of Images’ project, we achieved our positioning and placed our products in a fully contextualised manner as items that go hand in hand with these destinations.””
5/2019: The North Face, in a campaign with advertising agency Leo Burnett Tailor Made, hatched a scheme to get its products to the top of Google Images by replacing Wikipedia photos with its own product placement shots.
In the promotional video, the company notes how all trips begin with an initial Google search, and often the first image that shows up is from a Wikipedia article about the destination. ...
The video brags about how North Face cleverly hacked the results to get its products to the top of Google search, “paying absolutely nothing just by collaborating with Wikipedia.” Only, it wasn’t a collaboration at all; it was a violation of Wikipedia’s terms of service for paid advocacy. ...
> An example: The North Face edited wikipedia to change the photos of famous hikes/outdoorsy locations with people wearing North Face jackets with the logos visible.
I hadn't heard of this but it is beyond sleazy in my book. Though, to the company's credit, I cannot fault for the actions of likely one or a small group of marketing people. Though I don't know, maybe, that type of idea had visibility all the way to the top.
It's not because I want something that I actually need something. I've wanted to build a UPS with lithium batteries for a while, my ads are all BMS, lithium cells, etc... This is definitely good for advertiser, but as one of the "people", all I see are hard-to-resist ads.
AliExpress is especially good at this for maker gear, I'll look at a reflow station and they will spend the next 6 months showing me reflow station ads until I cave and buy it, even though it is a purely frivolous purchase.
Personalized ads are extremely effective when your profile is good, but that does not mean that I don't see it as a bad thing.
I think personalized ads are way worse, because they entice you to buy products you actually want. Buying things is usually a bad idea, so personalized ads make this problem worse.
There is a type of advertising called "brand advertising" where the goal is more about brand awareness (e.g. think of a Coca-Cola superbowl ad) than "direct response advertising". Such advertisers don't really care if you click on ads, but they still want to reach high-value users.
I’m pretty sure most meta-originated ads are direct response. At least most of the ones I’ve seen. Most brand advertising shows up in places where engagement is hard (eg TV, billboards) while direct response is perfect for absentmindedly scrolling (you don’t feel bad clicking away).
