Hacker News Reader

Comment by fairity | Hacker News Reader

Facebook's ad inventory is sold by auction. Inaccurate targeting isn't a big deal as long as all advertisers are treated the same. Furthermore, granular targeting is no longer the way to scale on Facebook. Therefore, inaccurate targeting will have little to no effect on most campaigns' efficacies (at least the ones designed by those who are knowledgable of the ecosystem). Any FB marketer worth their salt knows this.

Many people are claiming FB ads are a scam due to their personal inability to make ads work for themselves. As someone who's spent 8 figures on FB with no special connections, I can tell you this assertion is complete hogwash.

In fact, the opposite assertion than the one in the article is true: Facebook is LEAGUES ahead of its competition as far as its ability to accurately predict user conversion rate given a specific ad and user.

View on HN

Couldn't this be sample bias since you were spending 8 figures? At that level of spending, you might be getting a proportionally higher 'correct' target demographic.

For small-time advertisers, FB knows these folks would have less capital to fight back against poor ad practices.

I think it's possible but unlikely first and foremost bc FB has financial incentive to create a fair advertising ecosystem. Since FB sells inventory by auction, they make more money when there's more competition. There's a very long tail of small advertisers on Facebook, and handicapping them would ultimately lead to lower revenue for FB. On top of that, if such favoritism were real and ever were revealed, FB would suffer huge reputational damage which just isn't worth the risk when they're sitting on a cash cow.

I started out with low budgets too, and I can see how it would be easy to blame the platform when the real problem is poor campaign design and creative. Don't get me wrong, big advertisers have a huge advantage bc they can iterate on creative and campaign design faster. And, this advantage often explains why most small advertisers fail. But, at the actual auction level, I've never seen any evidence of favoritism nor do I think it would make sense from Facebook's perspective.

> Furthermore, granular targeting is no longer the way to scale on Facebook.

Can you elaborate on this? I’m not sure I understand what the alternative is.

3-5 years ago, the most effective way to design campaigns was by micro-targeting audiences. That is, you would have thousands of adsets, and each adset would target a small slice of your target audience.

The theory behind micro-targeting was that your audience's conversion rate varies considerably by certain key targeting attributes. And, if your audience has varying conversion rates, your CPC bids ought to reflect this.

For example, let's assume your LTV is $100. And, let's assume your average conversion rate is 1%, but actually, males convert at 0.5% and females convert at 1.5%. If you do NOT split your audience by gender, you will be forced to bid $1 per click for every user. However, if you split your audience by gender, you can bid $0.5 for men and $1.5 for females. By splicing your audience, you gain considerable efficiency. The theory behind micro-targeting was to find the permutations of targeting attributes that split your audience into segments with the most variance in conversion rates.

However, what's happened over the past few years is that Facebook's AI has become vastly better at doing micro-targeting than even the best individual marketers. This is partly because they have more data than platform participants, but also because they have much smarter engineers. As a result, it's now become better to hand over targeting responsibilities to Facebook's AI. For the most part, you just tell them what you want the average CPA to be, and they do the targeting for you behind the scenes.

This has actually been true since at least 2013, as long as you were optimising for something that made you money.

If you're optimising for a proxy objective, more granular targeting can make sense (if you have more information about your customers), but if you can just make money from website conversions or in-app purchases, you're better off letting the algorithm do its thing.

(The magic is driven not by incredible engineers but by more people to show the ad to enabling the only people who see it to have high expected conversion rates. This is perhaps the real dirty secret of internet advertising, in that they are predominantly platforms for showing ads to people who were probably going to convert anyway).

Reply on news.ycombinator.com