You are likely paying more if buying from Ads online

If you saw a Facebook ad recently for Jeremy's Razors, which bills itself as a "woke-free" razor for men, you may well be a father of school-age children who likes Ultimate Fighting, Hershey's chocolate, hunting or Johnny Cash. This is according to Facebook's ad library, which describes the audiences to whom marketers target their advertisements.
I can see why Jeremy's Razors is focusing its ad dollars on men who might appreciate its hypermasculine message. But the reverse is not as clear: Are these men better off for having been pitched an "anti-woke" razor?

In the traditional media world, ads are sold in context of the area in which publications are sold: Perhaps Jeremy's Razors might favor advertising in Deer & Deer Hunting magazine, for example. But online, ads are sold based on the many details advertisers have gleaned about your behavior and interests based on your online activity.


Tech firms track nearly every click from website to website, developing detailed profiles of your interests and desires, and make that data available to advertisers. That's why you get those creepy ads in your Instagram feed or on websites that seem to know what you were just talking about.

The ability to track people has turned out to be an unbeatable advantage for the online ad industry, which has grown to a $540 billion market worldwide.

Calls to Reform Surveillance Business Model
The online ad industry has dwarfed all other forms of advertising, including TV, radio and newspapers, according to the media agency GroupM. It has propelled the massive growth of Google and Facebook as well as hundreds of so-called "adtech" firms that serve as intermediaries between the buyers and sellers of targeting information. But the rise of microtargeting has come with a staggering price tag.

"There is limited evidence to suggest that the efficiency and efficacy gains to advertisers and publishers of this system outweigh the societal impact," concludes a 274-page study published by the European Commission earlier this year. It calls for reforming the surveillance business model.

Already, we know that web tracking has decimated publishers. This has been particularly devastating for traditional news outlets: Global newspaper revenue plummeted from $107 billion in 2000 to nearly $32 billion in 2022, according to GroupM. This is a blow for democracy: Studies show that voting decreases and corruption increases in communities without strong news outlets.

Microtargeting has also enabled advertisers to discriminate in ways that are hard for regulators to catch. It is illegal, for example, for advertisers to use language in their ads suggesting that jobs, housing or credit opportunities are being offered to people of a certain race, gender, age or other protected characteristics.

Facebook has repeatedly been shown to have enabled discriminatory advertising. Microtargeting also allows politicians to deliver divisive messages directly to niche groups. Last year, researchers at Carnegie Mellon and Virginia Tech presented a study of the consumer welfare implications of targeted ads.

The new study, published online this week, confirmed the results: The targeted ads shown to another set of nearly 500 participants were pitching more expensive products from lower-quality vendors than identical products that showed up in a simple Web search.

The products shown in targeted ads were, on average, roughly 10% more expensive than what users could find by searching online.