Social Media Ads May Not Influence User Satisfaction as Much as You Think

How much do the ads in your social media feeds change how you enjoy the experience? Common sense suggests relevant ads might improve your enjoyment of a site, while irrelevant ones might annoy or frustrate you.

A new study shows that advertising might not make that much difference.

Researchers from Stanford, Carnegie Mellon, and Meta analyzed advertising on Facebook, comparing the effects on consumers of seeing ads versus not seeing ads. They found both groups still rated the value of Facebook similarly, suggesting that either the harmful effects of ads are relatively small or that certain benefits offset the harms.

The study, co-led by Stanford Digital Economy Lab Director Erik Brynjolfsson and Avinash Collis, assistant professor of management science and economics at Carnegie Mellon’s Heinz College, published as an NBER working paper.

Read the full study, The Consumer Welfare Effects of Online Ads: Evidence from a 9-Year Experiment

Understanding the effects of online advertising on consumer welfare is limited due to the challenges of running large-scale experiments and tracking effects over extended periods. In this study, the researchers worked with Meta scholars to analyze a long-running field experiment of online advertising on Facebook, which began in 2013 and continues today. In that work, a random 0.5% subset of Facebook’s user base of nearly 3 billion people was assigned to a group that never sees ads while the rest of users experience their usual levels of advertising.

The research team recruited a sample of more than 53,000 Facebook users in the ads and no-ads groups. Participants from 13 countries including the U.S., U.K., Mexico, Japan, and South Korea were invited to take part in a survey, which included an incentivized online choice experiment that measured users’ valuations of Facebook. Participants were asked, “Would you be willing to stop using Facebook for one month in exchange for X?” where X was a randomly chosen amount of money between $5 and $100. The median price it took for people in the no-ads group to quit Facebook for a month was $31.95, while the ads group wanted $31.04.

Overall, the research team found no significant differences in welfare gains from Facebook or time spent on Facebook between the two groups.

There is a growing debate in the policy community around the societal costs and benefits of digital ads, Brynjolfsson noted. On one hand, ads allow social media sites to offer their services for free; on the other, personalized ads raise concerns around consumers’ data privacy. 

“A key underlying question in these debates is whether ads create harmful effects for consumers,” Brynjolfsson said. “If so, a no-ads alternative would be a sensible remedy, and we would expect consumers to more easily give up an ads-based Facebook over an ad-free version. In this analysis, though, we saw no statistically significant difference in consumer value between the two versions.”

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