And then
> Google's visibility of all transactions on every e-commerce website on the internet is insane.
Ah, so they have all of the information and yet their ad products don't work. They don't know this?
Of course they do, but people pay crazy money for this and it plays the important role in Google's market valuation, so it's in Google's best interests to continue chanting the Big Data Big Money mantra. It doesn't help that the myth/meme is strongly backed by the whole cyberpunk genre, as people love the dystopian themes of "big corporations know everything about you, down to your most secret desires you don't even realize yourself".
And it probably even work by some small but statistically significant margin, compared to some arbitrarily picked baseline, so they can even back this up if necessary.
The king is naked, though.
Still, people buy a lot of AdWords and similar, and occasionally I see a relevant ad I click. BTW ads within Facebook are usually of much better quality (for me as a reader), likely because they can correlate.more sources inside FB.
I sometimes click on ads about things related to IT and programming, if they mention something novel and important, just to be aware of the landscape, and what potential competition are pushing.
I see ads relatively rarely though, because I run uBlock Origin. So the ads I see are usually placed in context with some care, not just randomly tucked on to an unrelated webpage. Most of the ads are really poor, as I can see if I use an unprotected browser.
I've done the math on this for a few small companies. I an thoroughly convinced that this is just not true for many companies. The vast amount of sales attributed to online ad campaigns are sales that a company would have gotten anyway even without the ads.
This is a simple test. Turn off all of your ads for a year, compare against the previous. Write a blog post about it, destroy the industry.
Some time in 1980s Coca-Cola decided that they have enough of an iconic status, and they don't need as much advertising on expensive large surfaces. They prudently lowered such advertisement a bit, and checked. Shockingly, they noticed a decline in sales. They reverted to the old policy.
The opportunities are still there in local minima, places where it's too small for Google to optimize. But the trend is clear.
Costs go up because winners have been found. Like monopolies in capitalism.
Concretely: if I am the only pie baker in the world (I won), who else would bid against me for "place to buy pie"?
My unsubstantiated hypothesis is that google has gotten better at cross-promoting - so they could target people who like cake, increasing the market and competition for bids, making prices go up.
I believe there are some agreements for larger corporations to continue to promote things even if it is not necessary. People with funny money can treat ad markets like billboards.
Another fucked up aspect is that the government often runs ads to promote its own policies.
Much like real markets there is sometimes unnatural activity that keeps it moving.
Also if you aren't buying anything by clicking them, advertisers are ignoring you because you aren't a valuable user to them.
You are most likely reaping what you sew. Which shows that the ad networks are actually working.
It works for them.
They might need to make it work a tad more for their customers if they had to, but right now they apparently don't.