> The fact that you receive mattress ads after buying a mattress online tells you essentially nothing about the entire market. I suspect it's unlikely that the majority of ads that most people see are retargets (although even if they are, that still doesn't contradict the point I'm making).

There's two ideas rolled up in here:

One, is like you mention elsewhere, the Baadar-Meinhof phenomenon where you suggest that people don't actually see as many targeted ads as they think. I'm not going to debate that, I don't have the stats to debate it, you could very well be right on that point. Maybe people do just overestimate the number of repeats they see, and the reality is that retargeted ads are a minority of ads online.

The second idea though is more confusing to me: if I buy a mattress and 50% of the ads I see are for that mattress, and I know that in order to get those ads delivered to me a (reasonably) efficient market had to decide that 50% of the time, the ROI on repeated mattress ads were higher than literally any other ad I could have been shown instead (because the mattress ads were willing to outbid them) then that scenario does say that the market believes that the retargeting is more effective than 50% of the other ads I could have been shown.

The difference here is that when I walk into a furniture store, I'm not actively being advertised to by competitors. In order for the retargeted ads to reach me, the company needs to decide that it's willing to outbid the other advertisers currently bidding to sell me an ad. It's not a separate environment with separate rules, the retargeting is happening in the same place as all of the other advertising.

Honestly, I assume that if other companies had the ability to have a salesperson walk up to me when I entered a mattress store and advertise to me on a competing store -- I think they'd probably jump at that opportunity. So I don't think it's a great analogy here, because in the online advertising space they can do that, they can outbid the other company and place their own ads. So we need to ask why they're not doing that more often.

The variance doesn't really change that either (again, unless you're claiming Baadar-Meinhof). Because if the majority of my experience online is actually retargeted and/or naively targeted ads, then what the market is saying is that in the majority of cases, retargeted/naive ads are worth bidding more on than sophisticated ML-targeted ads, regardless of whether there are some occasional periods of variance that tip in the other direction.

What I'm saying is that I'm not convinced the sophisticated ads are performing better than the naive approaches, because from what I can see, the majority of the ads are using the naive approaches. If that is the case, then from that we need to either conclude that the bidding process for ads is not an efficient market, or we need to conclude that sophisticated targeting is rarely more effective than the naive approaches.

Or again... if the argument is that retargeted ads are not a majority, that would also be a reasonable claim to make. But it's got to be one of those 3 things.

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Separately, I would claim that in a way the ROI and raw numbers matter a lot less than the consumer's subjective experiences, because I don't think the argument about whether privacy-invasive ads are 'good' can be separated from the consumer impact. But I do recognize that's not the point you're making, so I don't want to double down on that and argue at you about something unrelated.