The Hype Machine: How Social Media Disrupts Our Elections, Our Economy, and Our Health and How We Must Adapt by Sinan Aral

We have evolved to seek social relationships to heal the pain caused by loneliness. The Hype Machine delivers social information in rich detail at an unprecedented scale. As it does so it stimulates our brains in ways we have evolved to crave. Studies of primates show that brain size is correlated to the size of one’s social group. Humans, with the biggest brains, have the largest social networks. Over evolutionary time as social interactions increased, so did the average human brain size (or more correctly the ratio of the size of the neocortex to the size of the rest of the brain). Social media then is built for our brains as they are wired to process social signals.
Every time we connect via social media our brain receives a small dopamine hit as a reward. This means that social media is designed to be habitual. The pace of reward delivery is random, which is why we constantly check our phones. When we take in information, part of what we do is consider who we might share it with. When we see that the people we are connected to like something, we are more likely to like it ourselves. This can include positive things and negative things like risky behaviors.

5. A Network’s Gravity is Proportional to Its Mass

Here “mass” is used as an analogy for the number of people you are connected to via a social media platform. The value is also a function of the value of the people you are connected to, not just the number. Some people have more value to you as they are either family, friends, or celebrities you like. The reason Facebook came from way behind and killed MySpace is that it started in colleges where people already knew each other. It then moved on to high schools and office groups so when you joined, you already knew a lot of people. Networks like Facebook are incompatible with each other and if you leave you can’t take your data with you. In essence, active users create their daily history as they view the memories of other people they value.

6. Personalized Mass Persuasion

With Russian interference in the 2016 presidential election as a backdrop we get a crash course in digital marketing and social media analysis. The fuel is money spent on ads located on social media platforms. The lift is the amount of behavior change you get for your money. Lift, however, is difficult to measure. Note that Lift is behavior change, not the correlation between seeing a message and engaging in a behavior. Social media ads, for example, are targeted at people who are likely to be susceptible to them. Conversion rates are easy to measure, but they don’t measure lift. To measure lift you need to do a randomized experiment, which isn’t always possible. Sometimes, however, randomized natural experiments present themselves.
Since the 1980s we have gone from mass marketing like super bowl ads, to marketing targeting specific segments based on who watches which shows, to personal marketing based on what we can find out about individuals based on their behavior and social media network. Any effort, however, misses some people who would convert or purchase and hits some that won’t. It may not be a problem if you increase your errors as long as you also increase your successes. The dirty secret is that digital ads don’t work nearly as well as they’re advertised to. They are at least overvalued by a factor of three and probably a lot more. Everyone in the industry is also incentivized to keep the secret.
To measure effectiveness you need huge amounts of data, which favors platforms like Facebook, Google, and Amazon. This means that most firms don’t know the effectiveness of their ads. Clicks rarely produce sales while 93% of increases result from visits to brick-and-mortar stores. Knowing this P&G drastically cut its digital ad budget and nearly doubled its growth compared to competitors.