If big tech has our data, why are targeted ads so terrible?

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For more than a year I’ve been chased by insanely happy ads for a spell checking start-up called Grammarly on the internet. Established in Ukraine, the company is offered as an assistant for people who have difficulty writing simple sentences in English. When viewed 50th, it felt less like a targeted advertisement and more like the algorithm being trolled.

Personalized advertising is the dirty fuel that powers some of the world’s greatest tech giants. Privacy activists want it banned. Facebook is so concerned it has launched a campaign defending targeted advertising to help people find “businesses they love”. A colleague in his fifties followed by ominous online funeral plan advertisements would disagree. If targeted advertising technology is so effective, why is online advertising so rubbish?

Data is supposed to be the new oil – a resource so valuable it warrants billions of dollars in market valuations. Companies are shifting marketing budgets online, lured by the promise of laser-focused campaigns. The digital ad duopoly of Alphabet, the parent company of Google, and Facebook had sales of $ 182.5 billion and $ 86 billion, respectively, last year. These numbers are based on personal information that has been gobbled up and re-presented as tailored advertisements.

In the Lex column I work on, we tried to calculate the value of this information in a number of different ways. For example, divide Facebook’s annual revenue by the number of people using at least one of its platforms, and each user is worth about $ 26. However, this only applies to past sales – not potential ones. A better way might be to break down the company’s market value by users. This gives you a number in excess of $ 200 – a closer approximation of each user’s worth to Facebook.

But what if $ 200 is a huge overestimation, and targeted advertising is slacker than tech companies claim? Take a look at the user analytics companies do and the data-driven research seems less impressive. According to Facebook, my ad-friendly interests include rugby union, family, greeting cards, and goth fashion. Beyond the family – and who is not interested in their family? – they are all far from the goal. Nobody likes greeting cards that much.

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I’ve been using Facebook platforms for more than a decade. The company has had the ability to track my movements and gather information for years. The end result, however, is a random, largely imprecise overview. If I were an advertiser I would want my money back.

There is a growing movement to limit invasive data tracking. Just as email services can’t open letters and use the information they contain to make money with advertisers, activists say that browsing histories and other online data should be treated as private. New laws in Europe and California are helping more people opt out of sharing data. Google has announced that it will block third-party cookies that track users’ browsing. Apple plans to promote a privacy option that will make it difficult for companies to target advertisements.

But perhaps advertisers should also ask themselves whether data collection and targeted advertising are worth the effort. Nonsensical user analytics undermine the notion that internet giants use the data they collect so effectively that they can predict and influence the behavior of millions of people – a horror story that has been propagated since the victories of Brexit and Donald Trump in 2016. The Guardian once described targeted advertising as “one of the world’s most destructive trends”. Vice magazine claimed it is “ruining the internet and destroying the world”.

Filmmaker Adam Curtis, known for his interest in shadowy power players, views such claims with the utmost skepticism. In his latest film, Can’t Get You Out of My Head, he suggests that there may not be magical data manipulation by tech companies for us to pull our strings – even if there is an ecosystem of well-paid jobs to promote. “There’s not enough differentiation between correlation and causality,” he says. “Take a look at eBay.”

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A decade ago eBay economists, including a former economics professor at UC Berkeley, suggested an experiment to see how effective the company’s marketing was. All eBay search ads on Google have been suspended for three months in a third of the US. There was only a small difference in sales. The economists concluded that those who clicked on search ads were already planning to buy something from the site. eBay wasted millions of dollars. Other companies may come to similar conclusions. Airbnb cut its digital marketing budget last year in response to the pandemic, saying that online traffic has not changed.

At least one Facebook employee can agree. According to an internal memo contained in a recently unsealed court file, an unnamed product manager wrote in 2016 that “more than half the time we serve ads to other than intended advertisers”. Facebook declined to comment.

If so, what is the point of invasive data tracking? All this data collection, all this data breach. For what? Gothic fashion and greeting cards. The dirtiest secret about targeted advertising might be that it doesn’t work.

Elaine Moore is assistant editor for the Lex column

Email Elaine at elaine.moore@ft.com and follow her on Twitter @ElaineDMoore

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Letters in response to this column:

How a search in Stonehenge ends at the undertaker / From Bridget Rees, Maidenhead, Berkshire, UK

Social media buyer explains the role of Facebook / By Jennifer Cunningham, London SW6, UK