[HN Gopher] When Big Brands Stopped Spending on Digital Ads, Not...
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When Big Brands Stopped Spending on Digital Ads, Nothing Happened.
Why?
Author : ZeljkoS
Score : 108 points
Date : 2021-01-03 09:29 UTC (13 hours ago)
(HTM) web link (www.forbes.com)
(TXT) w3m dump (www.forbes.com)
| soared wrote:
| Augustine fou is basically a troll in r/adops.
| doopy1 wrote:
| To some extent yes, but I think he's better than a troll,
| because IMO there is value in what he's doing, despite the
| hyperbole.
| rainyMammoth wrote:
| I always saw ads as a zero sum game. We all have limited dollars
| and attention. When you advertise, you might slightly change the
| allocation of attention and dollar to your product.
|
| When everyone advertises, it is back to the same status quo. And
| when everyone stops advertising it ends up being the same.
|
| I really hope more companies would stop advertising or at least
| question the value they are getting out of those money pits. Ads
| created some of most horrible companies the world ever saw
| (Google, Facebook).
| julienfr112 wrote:
| There is also one agent problem : manager status is linked to
| headcount or/and budget. As a head of marketing, you have no
| interested at all at reducing your ad budget, quite the opposite
| !
| seg_lol wrote:
| Right, if you do science and it turns out your department has a
| smaller effect on revenue you just lost power/status. So these
| experiments won't be done at most orgs.
| objclxt wrote:
| That's a rather naive way of looking at how corporations work.
| If you're the head of marketing and go to the CFO and say "hey,
| we found a way to get the exact same results we currently get
| but at half the cost" you can bet you will be rewarded for it.
| tehlike wrote:
| Headcount is a sad driver for promotions, so managers are not
| really incentivize to do it. Only the good ones would try to
| keep the team lean and fast.
| MattGaiser wrote:
| Depends. Are you sticking with that company or do you want to
| shop your resume around?
| one2know wrote:
| No one is going to half the cost, and executives don't in
| general do any sort of cost reduction activities for two
| reasons. First, they would be fighting diminishing returns
| since there is only so much reduce-able cost. Second, they
| might in reality only be able to do a small cost reduction,
| then they are doubly screwed as they will reach diminishing
| returns faster. If the company mandates cost reduction
| executives will just fire a few hundred or thousand employees
| because that is deterministic, easy, and instant savings.
| They will just restaff when the cost reduction campaign is
| over.
| strictnein wrote:
| A smart manager won't just let their budget be cut, because
| that won't be good for the company. If they find that marketing
| approach X doesn't work as well as Y or Z, they will simply
| move funds to do more of Y and Z.
|
| By doing so they will increase revenue and profits all the
| while keeping ad spending at the same level.
| jasode wrote:
| _> Stopped [some] Spending on Digital Ads, Nothing Happened.
| Why?_
|
| [Added "some" for clarity.]
|
| Let me try to restate the author's article because he presents it
| in a confusing way.
|
| The issue is that both Google and Facebook have "core ad tech"
| that works decently with proven ROI -- and they both have
| "additional ad tech inventory" (a.k.a the partners/affiliates)
| that's _much lower quality_ :
|
| Facebook "quality" ad placements on their core platforms with
| decent ROI:
|
| - ads in Facebook Newsfeed
|
| - ads in Instagram feed
|
| The "questionable" ad placements with much lower (possibly zero)
| ROI:
|
| - ads in Facebook Audience Network
|
| (Here's an example screenshot in Facebook's Ads Manager to
| visualize the options above:
| https://storage.googleapis.com/website-production/uploads/20...)
|
| Same concept applies to Google AdWords. The adwords clicks on
| "google.com" perform better than the ones coming from partner
| websites. The lower quality ad tech in partner networks has more
| bots, more scam websites, more fraud, more negatives, etc that
| reduce ROI.
|
| Bottom line is... if you're buying digital ads, you need to
| understand _exactly_ what _type_ of clicks you 're buying and how
| it actually performs.
| acfou wrote:
| great summary
| Animats wrote:
| That's more or less accepted. Ads that appear in Google search
| results have some value, since they appear when someone is
| looking for something specific. That's measurable.
|
| Ads that appear on irrelevant web pages have less value. That's
| well known. Apparently so little value that it's near zero for
| known brands, this article says. In the end, they're like
| useless banner ads. Mostly clicked on by bots.
| croes wrote:
| Source?
| cm2012 wrote:
| This all true. Source: My 11 years running ads on these
| platforms.
| Judgmentality wrote:
| Can you please elaborate? Your source is just an appeal to
| authority, but I would really appreciate more evidence to
| help explain your position.
| tehlike wrote:
| It is true. Partner sites make revenue for the partner
| through revshare and partners attempt to create fake clicks
| and even conversions to inflate their revenue. Cobra effect
| in play.
|
| This risk is zero (except for things like ad neuseam) on
| first party / owned and operated placements like
| search/ig/fb.
|
| As with anything you should verify your roi through third
| party measurement providers, just like you would do for
| others.
|
| Disclaimer: current fb ads engineer, former google ads
| engineer.
| offtop5 wrote:
| I actually did find a few products which I used for at least a
| short while, on Facebook.
|
| If I had to guess, hyper targeted digital ad spend is very
| effective, but you'd have to sell very high margin products to
| come out ahead.
| ppeetteerr wrote:
| I believe the article is mainly around third-party websites
| displaying ads, not FB. I agree that Insta, FB, and Google ads
| are effective, but only on their own properties. I ran Google
| ads for an ecomm project and quickly disabled the affiliate
| site ads since they generated garbage traffic.
| earthboundkid wrote:
| The only sane way to do advertising is to do what's done on TV:
| you buy a time slot based on estimated impressions and then a
| third party auditor (Nielsen) uses surveys to get a better after
| the fact number. Doing sales based on server traffic is just
| pointless. You get what you pay for (a server moving bits
| around), and not a damn thing more.
| m3kw9 wrote:
| Depends how much of that is attributed to fraud. There should be
| equivalent of cyber security to ad "security".
| mlazos wrote:
| Honestly though why tf did these companies never try lowering
| spend incrementally to see if it made a difference? Is this why
| engineers are so valued because we understand the simple concept
| of AB testing?
| tempsy wrote:
| big brands have the least to gain from online ads
| gnu_beskar wrote:
| There is this nice book on the subject called Subprime Attention
| Crisis by Tim Hwang, on why the whole ad industry might be a
| bubble.
|
| And this Freakonomics podcast episode on digital advertising
| https://freakonomics.com/podcast/advertising-part-2/
| 6510 wrote:
| In the middle of the night I visited a dutch but and sell website
| searching for something specific. The search results, page after
| page, were filled with advertisements from the same auction
| agency. My single visit, clicking though 20 pages produced well
| over a thousand ad impression. I _had to_ click though them to
| find other peoples ads. The next day they were all gone.
| Apparently the budget ran out.
| g42gregory wrote:
| This looks like a very significant disclosure on the businesses'
| part. Before COVID-19, there was no reason really to turn-off the
| ad spending just to see what happens (with some exceptions, such
| as Uber in the other article). I was surprised to see that the
| small businesses have experienced the same outcome as the large
| ones. It also looks like at least partially this seems to be
| coming from the mobile advertising. I wonder, how should we
| change our Ad placement strategy as a result of this data?
| daniellarusso wrote:
| I had consulted for a gentleman that owns a one-word domain. He
| was using AdWords to direct traffic to his site, without any
| analytics.
|
| I added analytics and began tracking conversion rates (sales).
|
| I was able to reduce his ad-spend by 75% and maintain the
| conversion rates.
| srg0 wrote:
| I wish more companies would try to find out the actual value of
| advertising and targeting. And it probably won't be as good as FB
| and GOOG would like us to believe.
|
| BTW, there was a recent episode of Freakonomics Radio which
| talked about this eBay experiment
|
| https://freakonomics.com/podcast/advertising-part-2/
| tehlike wrote:
| You can use third party measurement providers to validate the
| roi.
| acfou wrote:
| this is a really good episode, worth a listen
| nceqs3 wrote:
| ^agreed
| etempleton wrote:
| Because most advertising is not effective on a 1:1 basis. The
| clean, direct conversion funnel is in most industries and sectors
| a complete myth.
|
| Advertising is about awareness. All good marketing is long-term.
| Digital advertising has been sold (by overzealous marketers) as
| magical 1:1 sales machines. It is almost always not that.
|
| This is the hardest thing to convey to clients. Clients want a
| promise and a guarantee on their investment. The truth is there
| are no gurantees. But that is what clients want so they go with
| whoever promises the most the most confidently. The most
| confident ones are usually either lying or don't know what they
| are talking about.
| Ericson2314 wrote:
| I believe there is some overall culture-rotting efficacy, but
| it's such a depressing conspiracy: complete coordination
| failure with real problems, and yet a cartel of marginally
| negative-ROI ad spending to prop up consumerism?
| TedShiller wrote:
| Ads don't work
| cma wrote:
| Coke doesn't sponsor the Olympics to sell more Coke only during
| the Olympics.
| pugets wrote:
| Could some of this be because the given timelines are too short?
| They gave the example of Chase, which moved from 400,000 digital
| ads to only 5,000, but they declared there was no significant
| difference in business after "only a few days."
|
| As a person who has never used Chase, I'm not going to suddenly
| want to switch to them just because I saw a banner ad. That would
| be ridiculous. It's the sum of all the Chase advertisements I've
| seen in the past decades that have made me believe they're a
| popular and trustworthy bank.
| bigdict wrote:
| Together with https://news.ycombinator.com/item?id=25623858 it
| might appear like there's a coordinated takedown of ad tech
| companies going on.
|
| Google derives 80% of its revenue from ads, Facebook 99%. Imagine
| these giants coming down if it turns out that online ads aren't
| effective?
|
| EDIT: Tweaked the wording regarding the alleged "coordinated
| takedown" as a reaction to a comment.
| Ericson2314 wrote:
| Good. Advertising is a terrible zero-sum industry that just
| distorts market activity. It has little place in capitalism or
| any other system.
|
| Exceptions:
|
| - _New_ products deserve some advertising. I would handle that
| like the patent system. Demonstrate your product is
| sufficiently different, and get access to some attention
| economy time slice.
|
| Some may say, well what about competition with existing
| products to bring down cost? Simple, get rid of stupid
| https://en.wikipedia.org/wiki/Monopolistic_competition and
| start selling things in unmarked tubs with a price tag.
| Cheapest one wins. Of course, there has to be quality control
| and avoiding regulatory capture with that, but stupid brands
| are not a good solution to that problem.
| strictnein wrote:
| Centrally planned economy that also controls speech, based on
| the patent system. This seems like quite the recipe for
| success.
| Ericson2314 wrote:
| Start with https://en.wikipedia.org/wiki/Cidade_Limpa. I
| don't think this will slippery slope if well done:
|
| - I choose the TV channel, website, etc. to visit, but
| public space I might have to walk through because it's the
| only option - In that public space it may be impossible not
| to see the adds - sight lines in public spaces are public
| property
|
| Now, one may ask "what about paying someone to verbally
| advertise in public space". I think that should remain
| legal, because that does seem like a slippery slope. I'm
| willing to risk that society won't collapse so far that
| that highly inefficient form of advertising became cheap
| enough with destitute surplus labor.
| Anon1096 wrote:
| What makes you say advertising is zero-sum? This doesn't seem
| to be the case at all to me.
|
| Take diamonds for example. Prior to the mid 1900s, diamonds
| weren't nearly as sought after as they are currently. It took
| the marketing and advertising efforts (among other efforts,
| like monopolizing the mining process) of De Beers to convince
| the public that diamonds should be highly coveted. It was
| advertising that pushed the public to think spending X
| months' salary on a diamond ring should be normal. De Beers
| is obviously highly derided, but this a pretty clear cut case
| that advertising is NOT zero sum. The value of diamonds went
| up because of advertising, and nothing else depreciated in
| value as a result.
|
| I won't even touch on your other points about unbranded
| goods, except to say that consumers definitely show
| preference for branded items, and I don't really see why that
| is a problem.
| ericol wrote:
| I don't think that's the case. If you browse HN somewhat
| regularly, you'll see that a lot of times when a post makes it
| to the top (Or close enough) it's very likely that a related
| post will make the rounds pretty soon.
|
| I think it's more related to people trying to ride the karma
| wave than "A coordinated takedown of ad tech companies". And it
| is effective, because it happens way too often.
| bigdict wrote:
| I agree, I remember reading an article or a comment
| explaining this phenomenon on HN, with examples.
|
| Nevertheless it would be interesting if the idea of digital
| ads being ineffective snowballed to the point where it became
| like a self-fulfilling prophecy, and led to the demise of
| large companies that we think of as "giants" or "monopolies".
| pydry wrote:
| Or a coordinated "strike" by major ad spenders.
|
| I'll bet that a lot of ad spend is zero sum. They'd
| probably rather share profits than boost google's.
| coldtea wrote:
| > _it might appear like there 's a coordinated takedown of ad
| tech companies going on._
|
| Or, you know, somebody read the first article on HN, then found
| the other somewhere, and thought of posting it, as it relates
| to the same disucssion...
|
| Happens all the time with posting clusters (and the Baader-
| Mainhoff phenomenon).
| mam2 wrote:
| Well people are not going to magically drink less coca because
| there's no ad. Best case is you get the effect 2 years letter.
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