Advertisers Manipulated You - Ad Industry Dirty Secrets & Techniques - FutureIQ

3,700 views Wait, is this logic right? • May 03, 2024

Slog Reference: The economics of advertising

Description

The advertising industry manipulates you in more ways than you realize. Let's understand the economic incentives of the advertising industry in this episode of the FutureIQ podcast. Find out how advertising encourages outrage and anger directly or indirectly. The reason you find only polarizing posts on social media and traditional media outlets is probably the economics of advertising. Learn more about those to stay safe from it.

Books mentioned in the video:
Atomic habits: https://tapthe.link/AtomicHabitsBook

More videos for you:
The brilliant advertising of diamonds: https://youtu.be/EjJ4GmcgukU
The world is improving: https://youtu.be/2l0jnwf-2kA
Geopolitics of America: https://youtu.be/NGnUTDPkWUo
Wealth distribution in India: https://youtu.be/z4Qf44Ti338

Hope you enjoyed FutureIQ by Navin Kabra and Shrikant Joshi. Do hit us up on Twitter:
@ngkabra http://twitter.com/ngkabra
@shrikant https://twitter.com/shrikant

Listen it on the podcast provider of your choice: https://tapthe.link/FutureIQRSS
Watch other episodes of The FutureIQ podcast: https://www.youtube.com/playlist?list=PLAppTB0r5_TaYueZ0adD42Wiw5X-wTE4v

00:00 Introduction
00:50 How ads work? Impressions & CTR
04:00 CTR
05:00 Relevance & buckets
07:45 Data collection
09:10 Inducing addiction
11:30 Clickbait & influence
14:32 The problem with data collection
18:24 An example of excessive targeting
20:50 The bright side of data collection
22:20 The key takeaway

#futureiq #advertising

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Transcript

0m 01s do you realize that advertising manipulates everything in your life not just the obvious stuff like what to buy but the far more important things like what you read what you see what you consume who your friends are on social media and even what your friends post do you realize that you are not free the advertising card is the Puppeteer and you are all puppets puppets chill it you are scaring people and on this channel we don't well actually we do scare people but we do it in a more sedate way okay yes so to SC let us try to understand the religion of these advertising Gods all the free apps and websites and social media and

0m 49s everything that you use all right they make money from ads we've done an episode on K let's understand what is it that drives these people okay okay so let's ask the simple question how much is an Advertiser willing to pay for an ad right what does it depend on uh it depends on how much money they can make correct so basic thing to understand is that the purpose of an ad huh is for the advertiser to sell extra stuff correct right and how much you are willing to pay for the ad will directly depend on how many extra sales are driven by this ad correct and basically the profit that you make from those extra sales as long

1m 38s as it is greater than the money you spent on the ad you're going yeah you're right so that is what it boils down to how many extra sales are you going to make and how much is the profit per sale yeah that that's the basic way to look at things correct so and what does that depend on right now we are doing like five wise instead of prse five wats okay so what does that depend on how many people will buy more depends on how many people saw the ad in the first place correct right that is one the reach and second is how many people actually take the action of by we're convinced by the

2m 17s ad corre uh right so what all advertisers are trying to do is two things one is increase the number of people who see the ad correct and second increase the fraction of people who actually buy after seeing the ad correct because if if thousand people watch it and five people see it uh you would be you would have a greater profit if 10 people see correct yeah so uh let's take those number right, and five 10 people buy it sorry yeah, and five now uh the technical term used is if thousand people see it that is thousand Impressions okay so Impressions means impressions of the ad on some person correct okay and if five people actually

3m 05s uh buy it right then that is the rate conversion rate correct okay now uh sometimes I mean buying is a very Advanced step right uh it's easier to measure whether how many people just took some action right because if you are selling on a different website then the most I can do is send that person to your website if there was an ad if somebody clicked on it we just count that as a conversion it's a type of conversion right so that is called The Click through rate so for five people in a thousand uh going to that or clicking is a 5% CTR correct so CTR is Click through rate and that's what the

3m 49s advertising industry works on the two numbers are one is how many people saw the ad how many Impressions and for those Impressions what is the click through uh rate right now let's first talk about the clickthrough rate okay first thing to realize is that click through rates are generally low 1 2% right you know uh YouTube click through rates are around 2 to 10% for YouTube ad and that's like a lot and that's why you know Google is so rich it's one of the most valuable companies in the world right and like you said earlier if you do nothing else if you are just able to increase the click through rate you double it and you

4m 33s double the amount of money you make correct uh correct usually I mean you pay for how many people saw the ad right so you pay per impression correct uh or pay per th000 Impressions or something like that CPM cost per Mill so payment is per how many people saw it and money you earn is how many converted right that's why they focus so much on improving the click rate correct corre now what does the clickthrough rate itself depend on right so you tell me what do you think the clickthrough rate will depend on a lot of factors one being the content uh of whatever you're are showing uh two being the quality of whatever it is that uh well it basically

5m 19s depends on is the ad that is shown H relevant to the person who saw the ad fair that relevance how relevant is the ad correct now let's take an example for this yeah if I'm not if I'm not looking to buy a car then there is no point showing me car advertising so on this channel if we show arthritis medication ads they will probably do badly because most of you people are young you don't have arthritis issues that's what our Chanel demographics say we are not pulling those out of our brains If instead if I show Bank of America mortgage ads most people are not going to be interested again why again our demographics are India Centric and this

6m 03s is like America so correct if I show fantasy Cricket ads then there'll be some there is some some of these people but maybe not that many if I show BMW ads not I I mean YouTube right if they show BMW ads again not too many because most of you guys are not rich I'm sorry not as light on you it's yeah when kind of as light but sorry if YouTube shows ads H to buy the book Atomic habits that will have a very high click through rate because we keep talking about that book and the people are interested in this kind of stuff right so I chose this examples carefully right arthritis medication the ad

6m 49s targeting can be based on age Bank of America mortgage at targeting can be based on geography fantasy Cricket at targeting can be based on area of interest BMW car ad targeting can be based on income right and atomic habits right our targeting can be based on the content of the show itself right pretty much assuming that those guys will be interested in that so these are the different buckets that you can use to decide how to Target right and these are not the only uh categories and buckets right they can they have literally like hundreds of buckets these are uh these are are broadly the uh kinds of things that advertisers will look for I'm

7m 34s guessing yes while while deciding where to as in every customer can be fit into these buckets for sure correct otherwise there are interest based buckets Gore which is the reason why all of these companies are trying to collect information about you right they want to know your age they want to know your geography they want to know your areas of Interest they want to know your income uh and so on right to increase the clickthrough rate they want to know which buckets you fall into so the more data they collect about you the better they can Target the ads to you the better the chances you will actually click on the ad and that is why data

8m 16s collection is such a big business that is why cookies on websites are such a big business that is why tracking you across websites as you go to different websites uh is a big business right it terrifies me that big business terrifies me because literally creates a profile of you as a person well sometime you should look up how much information about you say for example Twitter has right if you go into Twitter settings yeah and there is one page there which says what do we tell advertisers about you you will be very interesting before I actually completely swore off Twitter I went and looked into all of the advertising buckets that I was put put into and it

8m 57s was incredible how many of them they got right and also how many of them they got wrong but just the sheer number of buckets was overwhelming you but let's talk about the more dangerous stuff yeah right this was to increase the clickthrough rate but they also want to increase the number of Impressions right now what does that depend on right either huh you increase the number of people who see the ad correct or you increase the number of times the same person sees that ad right so you want to increase the number of people or you want to increase the amount of time each person spends there right uh how do you do that what by increasing the number of ads

9m 41s from 1 to two to five to 10 unskippable ads no what you want to do is to increase the amount of time the person spends on the app oh yeah get them addicted then it doesn't matter how how often you show the first thing they want to do is if increase outrage or fear yeah right that's the thing that most moves people right to come and to start screaming and to start posting angrily and forwarding to people and all of that right because of this every website every social media app right Twitter Facebook Instagram all of them what they are trying to do is they want to increase how much time you spend and how

10m 25s much you're forwarding to people right so they will will show you more posts correct with outrage and fear okay yeah because those go viral more than Feelgood posts that if you have been very careful to follow only good people right you chose all the friends you follow and they are posting a bunch of stuff still the algorithm will pick out the most outrage and fear oriented posts out of those those to you I want to make a differentiation here we are anthropomorphizing the algorithm I don't want us to do that because it's the algorithm didn't think of choosing it a uh well there is a person sitting behind the algorithm let's anthropomorphize that person that person is getting paid

11m 16s like half a million dollars per year corre to Target you that person decided that the way to tweak the algorithm was to bring up more uh outrage driving posts so that person is basically who we should all be blaming for this situation and it's not just social media right just take mainstream media TV channel or a newspaper right for them pretty much the same things apply there also right they want to show articles which will cause you to get angry right they want to show articles which will cause you to feel afraid and they might even want to do I mean even if the article itself doesn't have that they want to put it in

11m 56s the headline they want the headline to scare you so that you will come and read the whole article right so that's called clickbait um there is an interesting take I heard about clickbait uh it is not clickbait if you deliver value inside which kind of makes sense except when you realize that clickbait is actually the value that clickbait often delivers is Outreach and that's not a good value correct now that is about them choosing what to show you right but it also influences what your friends post correct because what happens is that whether you like it or not you might be an exception but most people do want their posts to get more engagement corre do want their posts to get more uh

12m 43s uh likes so I am not an exception I want I I want this video to get as many views as possible so over the years your brain your system one starts noticing patterns that if I do it this it is going to work better right if I change the phrasing like this it is going to do better if I write a blog post what should I make the title to increase right so believe it or not there are entire courses out there that teach how don't teach you even if they don't teach you human brain is amazing at seeing the patterns and learning from itre and so what's happening is that even the good guys who are not doing the

13m 23s courses on how to go viral right even the good guys are subtly and slowly but were a long-term influenced so that they start posting more such things that's how the advertising gods are changing the behavior of your friends and you know you are going to fall to it right you are yeah can Rome do as Romans do if you want to get a message across you eventually have to speak the language of the masses correct I a different way to put it is that you are the average of The Five People You spend most time with and if they are posting outrageous stuff then you are also slowly going to go towards that you're learning by

14m 01s osmosis maybe we'll do an episode on that right so that is one problem okay which is why I have I have essentially stopped using almost every social media out there unless but no it's not just social media right it is just every newspaper you read every news item uh you read there are people like better India who are trying to uh post information about what is good that happened in the world and nobody reads that right so um let's come to the second part of this right which is the data collection the thing you were so afraid of right why is that really bad I mean I can imagine a lot of you saying you know what if you

14m 40s have nothing to hide then what is the problem with data collection right and big deal let them take my data as long as they're giving me free stuff no no why no absolutely no there's a difference between Ty and secrecy what I want to stay private is not necessarily okay let us move from this Theory I am fumbling examples say um period tracking apps oh yes okay so women can use these apps to keep track of when they have their periods because and men can use these apps to keep track of when they need to buy chocolates and flowers correct in general life gets quite difficult for women around their periods so it is important for them to keep track of when

15m 24s it is likely to come so they can plan accordingly yeah now what do you think is the problem with that right period tracking apps have information about when women are having periods in the US um a very important ruling uh happened recently called uh the overturning of r v Wade which uh allowed uh which was basically a federal rule that stated you cannot make a law against abortion now states are allowed to make laws against abortion and guess what they are doing so basically there are states in the US which have made abortion illegal and one of the worries is that period tracking apps will know when a woman misses her period yeah so that

16m 10s she's pregnant and they will also know when the periods restart so that they can kind of guess they can Target people who might be thinking of an abortion or they can Target people who have had an abortion secretly right um so suddenly you can see how this can get really dangerous but very let's talk about dangerous no it has already gotten dangerous a mother and daughter were recently convicted uh because of this reason and it was not a period tracking app but it was uh guess who Facebook who released their chats to the enforcement law enforcement on authorities correct second in China there is a minority called the UR Muslims uh right and what the Chinese government does is collects

16m 59s information about them and uses information collected by various apps and uh uh cameras uh CCTV cameras and so on and based on some of the information collected these people actually get put in concentration camps okay what is the kind of information regular calls from foreign numbers under right going off the grid right switching off the phone repeatedly that's suspicious Behavior under there right using VPN peer-to-peer file sharing uh apps peer-to-peer downloading torrent kind of apps yeah suspicious Behavior under right now you can see how if other countries start becoming a little more like China how all this data collection can become seriously uh problematic right the great Chinese firewall uh we essentially joke about it

17m 57s often but it's it's definit itely not a joke for these people living in China and uh if there's a great Chinese firewall there can also be a great American firewall there can also be a great Indian firewall there can be a great European firewall British firewall and all of those firewalls and then you can imagine what that will mean for everybody in the world not just you and me and him and pratique and shangar and Akash and all of us here so um talking about pregnancy and data collection there is one really creepy example that I love to talk about right so there is the store called Target chain of stores called Target in the US yeah and they

18m 38s once got a really angry dad come in the store and start blasting them because Target somehow after whatever their data collection yeah they managed to send a discount coupon uh of for pregnancy uh related it three diapers and wet wipes and whatnot to his 16-year-old unmarried daughter 16-year-old unmarried and he was so angry how dare you how can you do this they obviously had to apologize and they had to give him free stuff and send him away and there to change their systems and all of that but what happened was that a little later that guy came and apologized because it turns out that she was actually pregnant and the apps had correctly figured out that she

19m 30s is pregnant based not this is not even period tracking apps you're talking about this is just browsing history Target browsing history this is just her browsing history Target figured out that she was probably pregnant and got it right got it more right than her own parents yeah okay as a result what target has forced was forced to do and I think many companies do this now is that they make it a rule that in any discount coupons or targeting of ads that you do don't make it too specific put in an extra fudge Factor because you don't want to creep out your customers yeah okay so it's in fact they have they're so accurate that they have to force

20m 13s themselves to be a little inaccurate get Target there are times when I have seen uh ads pop up on Instagram I don't use it I have seen it on other people's Instagram uh about topics that are completely random like the only connection is that I have been randomly speaking about it with someone else at some point in time and an ad has popped up like can you imagine seeing ads for car tires on your Instagram okay now go ahead open Instagram probably see ads for car tires car tires four-wheel car tires although you should keep in mind that data collection isn't all bad right I when it gives you relevant results when you do searches on Amazon

21m 02s and doesn't show you crap it shows you things that you're actually interested in see that's good that I I get that I get I get that uh collecting data can be useful because ideally I would want an assistant a butler who knows every single thing about me and you know anticipates my needs before I there is a study uh done on Alibaba which saw that when you turned off use of tracking data like this the number of sales fell drastically like 42% or something like that yeah because people were no longer finding things that they wanted to buy completely agreed I mean I I I completely agreed my my problem is not the data collection my problem is the

21m 48s blatant of it the indiscriminate manner in which it is collected and the indiscriminate manner in which it is shared with people who are no business having that data but people who are okay with that they should know that there are advantages to this also and you are getting free stuff uh and you know why say no to free stuff but yeah but always remember if you getting free stuff you're not the consumer you the product the thing to remember related to that huh is that those people the people giving you free stuff right it isn't in their interest to make you angry y to make you afraid yep to make you feel for more correct

22m 34s right and all of these are manipulated manufactured or overemphasized right without those you would be much less angry you would be calmer you would be less afraid and you would probably not spend as much uh doing impulse shopping on Amazon and Flipkart you would be more content with life You' be more content with your body right so keep that in mind as in you want to push yourself in that direction to sort of undo some of their manipulation infinite scrolling comes at a cost a mental physical Financial cost the other thing to remember is that because they are doing all of this manipulation yeah you just see the bad news and the angry news and

23m 22s you know all the horrible things that are happening in the world whereas in reality the world is getting better right we did an entire episode on it please check it out the world is improving yes okay but talking about an improving world doesn't increase advertising that doesn't get people uh engaged right so it's much better to talk about the ways in which somebody is being nasty to someone else right so the number of people who don't know that the world is improving is ridiculously high something we covered in that episode yeah find that out and always keep reminding yourself that the world is getting better there is hope right it isn't just all a lost cause and the

24m 06s reason you have to always do it is because uh advertising isn't going anywhere the advertising industry is far too big far too entrenched for it to go anywhere in fact if anybody ever sells you an ad free subscription know for a fact that eventually that ad free subscription will also have ads because ad free B basically means we can play ads for this group of people if you pay us more if you give us a better cost a better price than what we are getting from them in terms of subscription so there is never ever going to be truly ad free that's something I'm willing to that's a hill I I'm willing to die on

24m 46s but uh ads are not going anywhere so here you will have to take responsibility of keeping your sanity in Check Yes Shri Kant nain ended with a rant again few TR i k