Is your phone listening to serve ads? No, the real answer is worse

Wednesday, 1 July 2026

At some point, we’ve all had this moment.

We’re chatting with a friend, we mention some specific shoe, car, or toothpaste and we get home and see our feed is cluttered with ads for that very brand despite never searching for it.

Cue suspicious look at our phone.

The idea that our devices are constantly recording us to serve ads is so persistent that Instagram CEO Adam Mosseri made a public video after even his wife thought her phone was listening in.

The good news is, they aren’t listening to you. The bad news is they don’t need to.

We’ll get into more detail shortly but the point is, social media advertising is so targeted it can make us think we’re being spied on.

That kind of efficacy means everyone from big brands to our own politicians depend on it to spread their message.

In 2006 digital advertising revenue was about $65m. In 2025, digital revenue was close to $3b, more than double all other traditional advertising combined.

Stuff recently revealed that more taxpayer cash was spent advertising with Alphabet (owners of Google) and Meta ($14.4m), than advertising with or subscribing to major local media brands combined ($13.7m).

But is it worth spending so much? What’s actually happening under the hood when we get served an ad? And are we really sure they aren’t listening?

Here’s what you need to know.

So, they aren’t listening to us?

No, for a few reasons.

Firstly, everywhere you go online you leave a trail of data behind you, it’s essentially digital exhaust.

The fortunes of social media giants were built when they figured out how to refine that exhaust into something they could sell to advertisers.

As the old saying goes, when a service is free, you are the product.

“It goes beyond what you're posting about but also which posts you're looking at, how long you're looking at them for, what order you're looking at them in, who you're interacting with,” explains Auckland University Honorary Research Assoc. Andrew Chen.

Social media companies are also able to tell when you’re close to someone - literally. If you’re connected to the same Wi-Fi, using Bluetooth or even just sharing a desk at work.

If you’re spending a lot of time around certain people, their searches can affect what ads you see, even if you aren’t friends on Instagram.

Lastly, a practical reason we can be fairly sure they aren’t listening.

The amount of computing power required to covertly listen to billions of devices 24/7, meaning trillions of hours of audio daily, would be astronomical.

That’s money, hardware and energy these companies currently desperately need to power frontier AI.

It would also chew through your actual device's battery life extremely quickly and be very hard to disguise.

Basically, why would they need to secretly listen to us at huge expense and reputational risk when we already tell them everything about ourselves for free?

Trillions of invisible auctions, every day

So what’s actually happening when you get served an ad on social media?

When it comes to their actual business, a tech titan like Meta isn’t really a social media company, it's an advertising company.

Globally, Meta brought in roughly $350b in total revenue last year, with advertising making up 98% of its total earnings.

But the king of digital advertising is still, for now, Google, which made around $500b NZD off advertising in 2025. For context, the GDP of New Zealand is $450b.

Google’s genius from an advertiser’s perspective is they have premium access to people who are at the actual point of purchase.

Once you are actively searching for ‘best restaurants near me’ or ‘second hand cars Auckland’ it’s a reasonable guess you’re about to buy.

To leverage this premium access to buyers, Google pioneered the ‘ad auction’ model, where advertisers compete to serve you an ad.

Every time you refresh your feed on YouTube, Facebook, or Instagram, an incredibly complex digital auction happens in the background to decide what ad you see next. It’s happening billions of times per second and trillions of times per day.

The more relevant your ad is, the more key search terms it includes, the more likely it is to lead to a sale and the more other people are competing for that ad block, the more you end up paying to serve your ad.

For example, a bank would put a very high bid into the auction to serve its ad next to ‘Best home loan rate New Zealand’ for someone who had recently looked at new house listings.

Where things get murky

So, if these ads are extremely effective and they aren’t listening in when they serve them - what’s the problem?

Outside of data privacy concerns, the most obvious issue, as Stuff has covered, is that most of the money we spend with tech giants in advertising goes overseas.

Another is that ad buyers can be incentivised to use these platforms over local alternatives.

“There is no doubt that the global agency groups have agreements with the likes of Google and Meta, whether they're large spend agreements or whatever the structure of those agreements might be, they definitely are incentivised to work closely with them,” explains Richard Thompson, co-founder and partner at D3, an NZ independent media agency.

Details of exactly what’s given are tightly guarded but Thompson says it can range from access to inventory trials, training, research, or other incentives.

Another area where incentives can become murky is ‘Principal Media Agreements’, where a large advertising group buys up ad space at a competitive rate through buying at scale and then can sell that ad space to clients for a mark-up.

“How they structure those agreements are very much behind closed doors and at a group level, not an individual agency level,” says Thompson.

“A global agreement with one of the platforms might mean that there's pressure to deliver against the global agreement rather than what your client and customer has briefed you on.”

To be clear, these kinds of agreements and incentives are not exclusive to social media and are used widely across different parts of advertising.

But since Meta and Google are some of the most valuable companies to ever exist, and essentially control the social media ad market, there’s an inherent power imbalance heading into any negotiation.

Instead of trying to compete with global giants in the ad space, Thompson says having a healthier industry relationship with big tech requires a vibrant local sector.

“There are still many things that local media can deliver that Google and Meta can't. But we shouldn't try and sort of beat them at their own game. You're dealing with somebody with much deeper pockets, greater resources, and greater data.”