picking up cheap shoes in front of a steamroller

Here’s another privacy paradox for people who collect them.

• On the web, the average personalized ad is probably better than the average non-personalized ad. (The same ad campaigns that have a decent budget for ad creative also have a budget for targeting data.)

• But users who block personalized ads, or avoid personalization by using privacy tools and settings, are, on average, better off than users who get personalized ads.

There’s an expression in finance: Picking Up Nickels In Front Of A Steam Roller. For some kinds of investing decisions, the investor is more likely to make a small gain than to lose money in each individual trade. But the total expected return over time is negative, because a large loss is an unlikely outcome of each trade. The decision to accept personalized ads or try to avoid them might be a similar bet.

For example, a typical positive outcome of getting personalized ads might be getting better shoes, cheaper. There’s a company in China that is working the personalized ad system really well. Instead of paying for high production value ads featuring high-profile athletes in the USA, they’re just doing the incremental data-driven marketing thing. Make shoes, experiment with the personalized ad system, watch the numbers, reinvest in both shoe improvements and improvements to the personalized ads. For customers, the shoe company represents the best-case scenario for turning on the personalized ads. You get a pair of shoes from China for $40 that are about as good as the $150 shoes from China that you would get from a a big-name brand. (The shoes might even be made by the same people out of the same materials.) I don’t need to link to the company, just turn on personalized ads and if you want the shoes they’ll find you.

That example might be an outlier on the win-win side, though. On average, personalized (behaviorally targeted) ads are likely to be associated with lower quality vendors and higher product prices compared to competing alternatives found among search results. (Mustri et al.) but let’s pretend for a minute and say you figured out how to get targeted in the best possible way and come out on the winning side. That’s pretty sweet—personalized ads save you more than a hundred bucks on shoes, right?

Here comes the steamroller, though.

In recent news, Baltimore sues 2 sportsbooks over alleged exploitative practices. Some people are likely to develop a gambling problem, and if you don’t know in advance whether or not you’re one of them, should you have the personalized ads turned on? You stand to lose a lot more than you would have gained by getting the cheap shoes or other miscellaneous stuff. It is possible that machine learning on the advertising or recommended content side could know more about some specific vulnerability of yours than you do, and the negative outcomes from falling for something like gambling or an online elder fraud scheme tend to be of much greater magnitude than the positive outcomes from selecting the best of competing legitimate products.

The personalized advertising system can facilitate both win-win offers like the good shoes from an unknown brand or win-lose offers like those from sports betting apps that use predatory practices. The presence of both win-win and win-lose offers in the market is a fact that keeps getting oversimplified away by personalized advertising’s advocates in academia. In practice, ad personalization gives an advantage to deceptive sellers. Another good example comes from the b2b side: malware in search ads personalized to an employee portal or SaaS application. From the CIO point of view, are you better off having employees get better-personalized search ads at work, or better off blocking a security incident before it starts?

People’s reactions to personalization are worth watching, and reflect more widely held understanding of how information works in markets than personalized ad fandom does. The fact that Google may have used this data to conduct focused ad campaigns targeted back to you was disclosed as if it was a security issue, which makes sense. Greg Knauss writes, Blue Shield says that no bad actor was involved, but is that really true? Shouldn’t a product that, apparently by default, takes literally anything it can—privacy be damned—and tosses it into the old ad-o-matic not be considered the output of a bad actor? Many people (but not everybody) consider being targeted for a personalized ad as a threat in itself. More: personalization risks, drinking games with the Devil

Bonus links

What If We Made Advertising Illegal? by Kōdō Simone. The traditional argument pro-advertising—that it provides consumers with necessary information—hasn’t been valid for decades. In our information-saturated world, ads manipulate, but they don’t inform. The modern advertising apparatus exists to bypass rational thought and trigger emotional responses that lead to purchasing decisions. A sophisticated machine designed to short-circuit your agency, normalized to the point of invisibility. (Personally I think it would be hard to come up with a law that would squeeze out all incentivized communication intended to cause some person to purchase some good or service, but it would be possible to regulate the information flows in the other direction—surveillance of audience by advertiser and intermediaries—in a way that would mostly eliminate surveillance advertising as we know it: Big Tech platforms: mall, newspaper, or something else?)

Meta secretly helped China advance AI, ex-Facebooker will tell Congress by Ashley Belanger. In her prepared remarks, which will be delivered at a Senate subcommittee on crime and counterterrorism hearing this afternoon, Wynn-Williams accused Meta of working hand in glove with the Chinese Communist Party (CCP). That partnership allegedly included efforts to construct and test custom-built censorship tools that silenced and censored their critics as well as provide the CCP with access to Meta user data—including that of Americans. (And if they’re willing to do that, then the elder fraud ads on Facebook are just business as usual.)

Protecting Privacy, Empowering Small Business: A Path Forward with S.71 (A privacy law with private right of action gets enforced based on what makes sense to normal people in a jury box, not to bureaucrats who think it’s normal to read too many PDFs. Small businesses are a lot better off with this common-sense approach instead of having to feed the compliance monster.)

This startup just hit a big milestone for green steel production by Casey Crownhart. Boston Metal uses electricity in a process called molten oxide electrolysis (MOE). Iron ore gets loaded into a reactor, mixed with other ingredients, and then electricity is run through it, heating the mixture to around 1,600 °C (2,900 °F) and driving the reactions needed to make iron. That iron can then be turned into steel. Crucially for the climate, this process emits oxygen rather than carbon dioxide…