blog: Don Marti


Under-served niche in the ad market?

25 August 2021

In case you missed it, here's the new version of the FTC complaint against Facebook: FTC Alleges Facebook Resorted to Illegal Buy-or-Bury Scheme to Crush Competition After String of Failed Attempts to Innovate.

To me, it looks like there is a gap in the Internet advertising market that might be explained by the actions covered in that complaint.

Customer lifespan Long?high-quality sites
Short Facebookmisinfo sites

Right now if companies want to buy advertising with low complexity—ease of placement and easy-to-interpret attribution data—they can get it from Facebook. But because of the buy-or-bury scheme, it comes as part of a single service that also tends to kill off a fraction of the customers, through medical misinformation, extremist violence, climate disasters, and so on. This ad option appears to meet the needs of advertisers with shorter time horizons, such as several quarters of DTC startup runway or CMO job tenure. Most of the years of customer life lost will not enter into consideration because they will take place outside the time frame relevant for making the decision.

Judy Shapiro points out that In 2017, just five years ago, the CPM to run a Facebook ad was $4.21, meaning you had to spend $4.21 to reach 1,000 impressions, presumably people. Today, the price is $13.87 – a whooping increase of 222%.

Judging by that, the combination of advertiser convenience and lowering customer lifespan seems to be a winner. Some advertisers, however, have investments in facilities and goodwill that make them prefer longer customer lifespans but lack the advertising know-how to be able to run high-complexity advertising. It is possible that one of the companies acquired by Facebook might have, if it continued to operate independently, been successful in the low-complexity/high-lifespan niche. Today that niche seems to be an opportunity.