Facebook Ads: Annoying or of Value?

I just logged onto my personal Facebook page. I saw the following ads.

• Netflix – makes sense because I list movies as an activity
• Website inviting me to connect with other people from my high school graduating class
• American English concert – understandable because I “like” the Beatles

I didn’t click on any of them, but I did not mind them either. I am frankly a little puzzled about some of the vitriolic comments about Facebook ads. Basically, advertisers can direct ads to people on Facebook based upon the content the users themselves post: profiles, wall posts, status updates, etc. The advertiser does not know the identities of specific individuals who are exposed to the ads. Yet one person described Facebook’s approach in the Chicago Tribune as “a stealth digital surveillance apparatus.” Really? Maybe the Defense Department, CIA or Jack Bauer’s CTU should talk with Facebook.

This person then is quoted as saying: “Facebook users should be cautious about whether the social network giant ultimately has their best interests at heart.”

Get real. In February, more than one-third of all online ads were placed on Facebook. There is a simple reason for that. Facebook has more than 600 million users. Advertisers go where the people are. Advertisers can also target Facebook messages based upon profiles, wall posts, status updates, etc. The key is: advertisers are leveraging information the people themselves are putting out there. There is no prying. There is no stealth.

There is another reason more brands are advertising on Facebook. It works. One of the great things about Facebook advertising, and most online advertising for that matter, is that you can track results. You can track clickthroughs, and often tie them back to actual purchases. We have done some Facebook advertising. Some of it has worked, some of it has not. But we know.

I actually do not mind getting ads on Facebook. Most of the ads I am served are relevant to my interests and activities. I will occasionally click on them, especially if it a deal to a restaurant or retail outlook I like. Those I am not interested in I ignore. But to those of you out there who are offended when you go onto your Facebook page and see advertising, I offer these alternatives.

1. Stop using Facebook. Sure, you will deprive yourself of the many benefits, but at least you won’t be exposed to those “annoying” ads. Of course, if you don’t like to see any ads online, stop going online altogether.
2. You could limit what you post on Facebook. But that probably will not substantially reduce the number of ads you see. It just means advertisers will have less information about you, and the ads you receive will be less relevant to you.
3. Best advice. If you don’t like the ads, ignore them. Maybe operate on the assumption that if everybody ignores the ads, brands will stop advertising. But don’t bet on it.

What are your thoughts? Do you find Facebook ads annoying? Do you respond to ads on Facebook? When and why?

Solve this problem, and you can solve the healthcare problem

Americans love apples. And fortunately, there are plenty of apples to go around. But what if there weren’t?

Let’s assume the average American eats an apple a day (it is actually nowhere near that, but let’s keep it simple). Then let’s say American apple growers produce exactly that amount. Supply equals demand, equilibrium pricing, everybody is happy.

Now let’s complicate things.

First, let’s assume as people get older, they need to eat more apples. So there is greater demand for apples. Unfortunately, apple growers cannot physically produce more apples than they do now. Anybody that has taken high school economics can tell you that if supply stays flat and demand increases, prices must go up.

While apple growers cannot increase the number of apples they produce, they can improve the quality of apples, which makes people healthier and enables them to live longer. That increases the demand even more, causing prices to go even higher.

So what do we do in this state of disequilibrium, now that the price of apples has risen so much that many people cannot afford it? Well, you could try to do a few things.

First, you could focus on demand and tell people they can’t have all the apples they want. But people think eating apples is a right, and you should not ration apples.

So, second, let’s focus on supply. You could try to increase supply by getting more people to grow apples. But people don’t want to become apple growers, because there are big barriers to entry like education and insurance. Then once you become an apple producer, the cost of the supplies needed to grow apples, the cost of paying people to work in orchards, and shipping costs keep going up. Plus, because they are afraid of getting sued, apple growers are doing things they really do not think they need to do to ensure the quality of apples, but do just to avoid lawsuits.

Third, you could raise prices, but subsidize the cost of apples for people. People would pay middlemen money so that they could get apples whenever they wanted. The amount of money people would pay would depend on how many apples they wanted, and what kind of apples. These middlemen would then pay the apple growers.

Unfortunately, the apple growers still have to pay for labor, supplies, insurance and shipping. Those prices keep going up, so they have to raise prices to the middlemen. The middlemen also have their own business to run and salaries (some say exorbitant) to pay. So the middlemen raise prices to consumers. Soon it would get to the point that people could not even afford to pay the middlemen, so they could not get apples.

At the same time, these middlemen now have huge buying power, so they can actually force the apple growers to provide the apples at sharply discounted prices. So the apple growers are faced with increasing costs, barriers to entry, and now reduced revenues. Clearly, no motivation for people to become apple growers, even though there is clearly a demand for more apples.

That is the core of this hypothetical apple problem (sorry about that). What is your solution? If you can figure this out, congratulations, because you have also solved the healthcare problem.