The basic idea is that the real value in advertising is as a signaling mechanism, and targeted advertising removes most of that signal.
I feel like personalized pricing has some of the same issues, in that it erodes consumer trust and makes it more and more difficult for consumers to confidently spend their money in the market. I am not sure how we fix the problem, though, because it is a collective action problem; any individual company will need to use personalized pricing to compete, but that behavior will hurt the economy as a whole.
There's bqsically IMO two types of ads - marketing and sales.
Marketing ads are signalling, brand recognition, etc. You want the cool earbuds that everyone knows. You want to buy them from a big, reputable company with good r&d.
Sales is simpler - click on the ad and buy the product. It tends to be a bit sleasier - sales doesn't care as long as it makes a sale.
There's often a bit of tension between sales and marketing. A 50% ooff exploding offer can be good for sales in the short term, but can make the brand look cheap.
I don't quite follow... Advertisers want their product sold. Consumers want to buy whichever product is most suitable for their needs (based on both price and performance), ad networks have every incentive to connect these two.
In an ideal world an ad network would show me 10 ads for products I want to buy (ie. new shoes, ice cream, etc). I would have confidence that those products are the exact ones I want and that any more research would only show up inferior (worse value) products.
The ad network gets to take no profit margin - since if it did, I could find that same product cheaper elsewhere.
This leads to an equilibrium where the ad network shows mostly the perfect products - and charges a small margin - where the margin size is set to be slightly below my willingness to shop around for a better deal.
Personalized pricing just represents different users estimated willingness to shop around - but if the model is correct, even those paying a higher price are happy with the situation or else they'd shop around.
Ad networks have every incentive to lie to consumers to get a sale. If the strength of the economy is measured in total sales, that's great. If the strength of the economy is measured by consumer satisfaction, not so much.
An ideal ad network would not show you a product ideal for you, but a misleading ad for the lowest-cost product you'll buy for the most expensive price, with 95% of the difference pocketed by the ad network.
Informing the target that a product exists is a small part of advertising. It's important for the small players, but for the big advertising spenders it's much more about communicating values, trustworthiness, emotions. Building a brand image, and maintaining brand awareness
Just the fact that you are running an advertising campaign of a certain size used to be a signal in itself. Same with advertising in or for subcommunities. That signal is heavily dilluted by targeted advertising
Similarly, personalized pricing is removing signal from the price. Sure, price was always a noisy signal, but better a noisy signal than no signal
Price discrimination is bad. It's worth trying to ban. You'll never stop 100% of it (and trying to go too over-the-top in terms of stopping it would not be worthwhile), but this is a useful area for regulation.
> Who knows why? I’m usually more willing to spend than she is, and I bet that's represented on my user profile. I was paying with a gift card, which surely contributes. Maybe it was a price scraping update, comparison shopping detection, or a system that explores “face-in-the-door” high prices before backing down. From the outside, no one really knows.
The most obvious possibility omitted is that your wife got the first, easy, cheap car and then Uber had to quote you a higher price to get a second car. Cars don't fall from the sky; if two people successively ask for bids, how else could it work? What if the app quoted you both the cheap price for the only car within X blocks, and you bought it before she did? Is it suddenly going to go 'oops sorry, changed my mind, it now costs twice as much'? Sounds like a very bad experience to me! More sensible to give the first person a low quote and then when - unexpected and unpredictably - someone requests something similar, quote them the higher price reflecting the sudden local micro-shortage.
I wish it were easier to have ephemeral interactions with companies. Why do I need a tracked and maintained user profile for things like Uber? Shouldnt it be possible to only interact for the single transaction, ending as soon as I leave the car.
I imagine trying to continuously cycle accounts will run into various blocks, e.g. you can't sign up using your email/phone/credit-card because it is already linked to an existing account.
I hate the way the world is going. As the article states, Uber can probably classify my exact spending habits to maximize a price I'm willing to pay for. But id much rather them have to treat me as a new soul every time, and hopefully along those lines have to fight a bit harder to get my business.
On the other hand, if you're an Uber driver it is nice to know the person getting into your car was rated positively (not a dangerous individual, smelling of alcohol, etc.)
But I have actually no idea if drivers can say "no" based on ratings.
This is why I refuse/back out of eshops that require accounts.
Has the unintended upside that I often think twice about buying something and often dont.
If I really need something though, ill create an account with a filler email, receive my product, and then make a really tedious (for the company) GDPR request because sometimes I like to be petty. Then I delete my account. If I need something from that store again, I will repeat that process.
A lot of the theoretical underpinnings about why capitalism is a good system are based on the law of one price. Especially in the context of an oligopoly, being able to price-discriminate on such an individual level leads to really bad outcomes.
Might be a good idea to get a cheap secondary Android phone to avoid having to pay the iPhone ecommerce/digital tax that companies like Uber will upcharge you for.
New job: poor person personal shopper. Someone with a "poor" profile follows you around the store so you can use their quoted prices instead of your own. Or travel agents that only book flights for you using early-2000s flip phones, shielding clients from the iPhone premium price.
There was an article about targeted advertising a number of years that really changed my perspective on it called, "Targeted Advertising Considered Harmful": https://zgp.org/targeted-advertising-considered-harmful/
The basic idea is that the real value in advertising is as a signaling mechanism, and targeted advertising removes most of that signal.
I feel like personalized pricing has some of the same issues, in that it erodes consumer trust and makes it more and more difficult for consumers to confidently spend their money in the market. I am not sure how we fix the problem, though, because it is a collective action problem; any individual company will need to use personalized pricing to compete, but that behavior will hurt the economy as a whole.
I don't know the solution to this problem.
There's bqsically IMO two types of ads - marketing and sales.
Marketing ads are signalling, brand recognition, etc. You want the cool earbuds that everyone knows. You want to buy them from a big, reputable company with good r&d.
Sales is simpler - click on the ad and buy the product. It tends to be a bit sleasier - sales doesn't care as long as it makes a sale.
There's often a bit of tension between sales and marketing. A 50% ooff exploding offer can be good for sales in the short term, but can make the brand look cheap.
> that behavior will hurt the economy as a whole.
I don't quite follow... Advertisers want their product sold. Consumers want to buy whichever product is most suitable for their needs (based on both price and performance), ad networks have every incentive to connect these two.
In an ideal world an ad network would show me 10 ads for products I want to buy (ie. new shoes, ice cream, etc). I would have confidence that those products are the exact ones I want and that any more research would only show up inferior (worse value) products.
The ad network gets to take no profit margin - since if it did, I could find that same product cheaper elsewhere.
This leads to an equilibrium where the ad network shows mostly the perfect products - and charges a small margin - where the margin size is set to be slightly below my willingness to shop around for a better deal.
Personalized pricing just represents different users estimated willingness to shop around - but if the model is correct, even those paying a higher price are happy with the situation or else they'd shop around.
Ad networks have every incentive to lie to consumers to get a sale. If the strength of the economy is measured in total sales, that's great. If the strength of the economy is measured by consumer satisfaction, not so much.
An ideal ad network would not show you a product ideal for you, but a misleading ad for the lowest-cost product you'll buy for the most expensive price, with 95% of the difference pocketed by the ad network.
Informing the target that a product exists is a small part of advertising. It's important for the small players, but for the big advertising spenders it's much more about communicating values, trustworthiness, emotions. Building a brand image, and maintaining brand awareness
Just the fact that you are running an advertising campaign of a certain size used to be a signal in itself. Same with advertising in or for subcommunities. That signal is heavily dilluted by targeted advertising
Similarly, personalized pricing is removing signal from the price. Sure, price was always a noisy signal, but better a noisy signal than no signal
Why isn't making it illegal a solution?
“Collective action” < union < regulation
Price discrimination is bad. It's worth trying to ban. You'll never stop 100% of it (and trying to go too over-the-top in terms of stopping it would not be worthwhile), but this is a useful area for regulation.
> Who knows why? I’m usually more willing to spend than she is, and I bet that's represented on my user profile. I was paying with a gift card, which surely contributes. Maybe it was a price scraping update, comparison shopping detection, or a system that explores “face-in-the-door” high prices before backing down. From the outside, no one really knows.
The most obvious possibility omitted is that your wife got the first, easy, cheap car and then Uber had to quote you a higher price to get a second car. Cars don't fall from the sky; if two people successively ask for bids, how else could it work? What if the app quoted you both the cheap price for the only car within X blocks, and you bought it before she did? Is it suddenly going to go 'oops sorry, changed my mind, it now costs twice as much'? Sounds like a very bad experience to me! More sensible to give the first person a low quote and then when - unexpected and unpredictably - someone requests something similar, quote them the higher price reflecting the sudden local micro-shortage.
I wish it were easier to have ephemeral interactions with companies. Why do I need a tracked and maintained user profile for things like Uber? Shouldnt it be possible to only interact for the single transaction, ending as soon as I leave the car.
I imagine trying to continuously cycle accounts will run into various blocks, e.g. you can't sign up using your email/phone/credit-card because it is already linked to an existing account.
I hate the way the world is going. As the article states, Uber can probably classify my exact spending habits to maximize a price I'm willing to pay for. But id much rather them have to treat me as a new soul every time, and hopefully along those lines have to fight a bit harder to get my business.
On the other hand, if you're an Uber driver it is nice to know the person getting into your car was rated positively (not a dangerous individual, smelling of alcohol, etc.)
But I have actually no idea if drivers can say "no" based on ratings.
In general I would agree with you.
I'd rather have those smelling of alcohol be passengers than drivers.
This is why I refuse/back out of eshops that require accounts. Has the unintended upside that I often think twice about buying something and often dont. If I really need something though, ill create an account with a filler email, receive my product, and then make a really tedious (for the company) GDPR request because sometimes I like to be petty. Then I delete my account. If I need something from that store again, I will repeat that process.
A lot of the theoretical underpinnings about why capitalism is a good system are based on the law of one price. Especially in the context of an oligopoly, being able to price-discriminate on such an individual level leads to really bad outcomes.
Might be a good idea to get a cheap secondary Android phone to avoid having to pay the iPhone ecommerce/digital tax that companies like Uber will upcharge you for.
New job: poor person personal shopper. Someone with a "poor" profile follows you around the store so you can use their quoted prices instead of your own. Or travel agents that only book flights for you using early-2000s flip phones, shielding clients from the iPhone premium price.
The "poor" people would be getting the raw end of the deal - their profile would soon become "wealthy" and they'd have to pay more themselves.
aside from everything else this seems ripe for abuse of people with cognitive disabilities