Ask HN: What does 'efficiency' of ads mean? Why does it lower ad value?

by intellegacy on 7/27/2012, 5:22 AM with 1 comments

At the heart of the Internet business is one of the great business fallacies of our time: that the Web, with all its targeting abilities, can be a more efficient, and hence more profitable, advertising medium than traditional media...

The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency. The nature of people's behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command attention, has meant a marked decline in advertising's impact.

original article: http://www.technologyreview.com/news/427972/the-facebook-fallacy/

I'm having trouble understanding what is meant by "efficiency of ads" and how that lowers ad value. I understand effectiveness, I think: users are habituated to ads and click/notice them less and less over time. Thus ads lose value. (Site operators can't charge advertisers as much)

But efficiency seems to be about targeting users more efficiently. How does efficiency lower ad value? It seems advertisers should be willing to pay more for more efficient ads?

  • by kitcar on 7/27/2012, 5:29 AM

    I didn't write the article, but taking a stab in the dark as to what the author could be thinking: Efficiency relates to waste - not showing ads to people who don't care about the product/service being sold in them. I believe the argument being made here is as people get more used to ads, they become less likely to click them - therefore the ads stop showing themselves to the users (as they are not being clicked), thereby resulting in less overall performance as you are potentially not showing ads to people who could be on target.