[HN Gopher] Uber discovered they'd been defrauded out of 2/3 of ...
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Uber discovered they'd been defrauded out of 2/3 of their ad spend
Author : rbanffy
Score : 735 points
Date : 2021-01-03 18:37 UTC (4 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| gnicholas wrote:
| I recently read Subprime Attention Crisis, [1] which talks about
| the ways in which advertising is opaque and may be leading to a
| bubble. In particular, the author draws parallels to the mortgage
| crisis of 2008. He doesn't say a catastrophic event is
| necessarily imminent or even inevitable (it could slowly deflate,
| either by design or by chance). But it has made me think that at
| some point there will be a tipping point and there will be a mass
| exodus from online advertising.
|
| This will have big impacts on businesses like FB and Google,
| whose businesses have been designed around ad revenue. It would
| be interesting to envision what a social network would look like
| if they weren't incentivized to gather data about you for the
| purpose of advertising.
|
| 1: https://www.amazon.com/dp/0374538654?tag=macmillan-20
|
| 2 [video about same]: https://www.youtube.com/watch?v=X9dlJ4sHfSk
| skinkestek wrote:
| Tell this to the poor scammy-dating-site-slash-mail-order-bride-
| site operator who has been sold 10+ years of impressions on me:
|
| - an extremely happily married man
|
| - with multiple small children
|
| - in a rather conservative church
|
| Sometime during the last two years they finally stopped
| advertising to me. I've always blamed their marketers - or Google
| for being so utterly incompetent as to not pick up any of the
| available, extremely strong signals sent out - including me
| reporting the ads as irrelevant on a number of occasions, but
| maybe I should blame it on incompetent middlemen?
| nkrisc wrote:
| If you take a look at people who have been caught in extra-
| marital affairs I think you'll find those three qualities are
| not immediate disqualifiers.
|
| Maybe the "happily" part, but how does Google know that?
| nautilus12 wrote:
| I've said for a long time that Martech is due for a correction
| due to lack of understanding in attribution. Could this finally
| be the bubble bursting?
| alexeichemenda wrote:
| What's important to highlight here is that marketing teams at
| companies such as Uber are incentivized to pus vendors to drive
| fraud. Specific example: Uber works with vendors A, B, C.
| Marketing team is incentivized to reach a cost per sign-up of $X
| (Let's say $50 for the sake of this example). Vendor A, running
| fraud, delivers sign-ups @ 45$ each. Vendor B, clean, delivers
| them at $55 each. Vendor C @ $65 each. The new baseline from an
| exec standpoint is $45 each, and every vendor that doesn't
| deliver at that level is cut. Repeat with multiple vendors.
|
| The solution to this problem is incrementality measurement at the
| channel level. Every time you _scale_ with a recently onboarded
| vendor, measure baseline of ALL conversions happening on your
| app. If this baseline doesn 't move, cut the vendor. I say
| _scale_ and not _launch_ because upon launh, there won 't be a
| visible impact on the global conversions. To be able to spot this
| spike from baseline, pick a small market than "worldwide". For
| ex, pick "California", let the new vendor scale in California,
| and measure spike in California.
| alexeichemenda wrote:
| I'll also mention: this is a problem that goes up every ladder.
| Marketing individual contributor wants to show good performance
| to their manager, so delivering rides for cheap is good.
| Marketing manager is in the same boat with the CMO. CMO ->
| Board -> VC (VC will be happy to see great efficiency on the
| customer acquisition side). VC -> LPs (LPs will be excited
| about customer acquisition efficiency). A limited number of
| people are actually deeply concerned with this, and that's why
| it's taking so long for the top KPIs to change from "cost per
| action" to "incremental impact and incremental ROI".
| hermitcrab wrote:
| Some time back I kept hearing how effective remarketing (aka
| retargetting / cyberstalking) was. So I did my own (small scale)
| A/B test and it didn't work for my small business. Fair enough.
| But the weird thing was that no-one else seemed to have done the
| same simple A/B test. Or, if they had, I couldn't find it.
|
| https://successfulsoftware.net/2014/12/23/remarketing-does-i...
|
| It is also widely quoted that you "have to see an ad 7 times
| before you buy", or words to that effect. I tried to find out if
| this was true. Turns out there is no real evidence for it:
|
| https://successfulsoftware.net/2010/06/03/do-customers-need-...
|
| It is hard to avoid the conclusion that a lot of marketing is
| based on bullshit.
| hermitcrab wrote:
| I also looked into Twitter demographics back in 2014 and they
| were clearly bullshit as well:
|
| https://successfulsoftware.net/2014/04/03/twitter-demographi...
| ddevault wrote:
| The adtech industry is a _huge_ sham. It 's an open secret that
| ads don't work and that most of the data is fraudulent. There are
| thousands of companies with deliberately complicated
| relationships to pull a giant shell game with advertiser's money.
| All of the data that supports the lie is built out of massive
| internet surveillance dragnets. Ultimately, even casting all of
| this in the best possible light, it's designed to psychologically
| manipulate people. No one wants to see an ad. Adtech is
| despicable.
| cbsmith wrote:
| So, there's some bits of this story that hint at the problem
| here. The big headline is that as they removed Breitbart, their
| spend was reduced. If you're really doing "performance marketing"
| in the sense that people think of it, that doesn't make a lot of
| sense. Of course, it makes total sense in the industry.
|
| If you are properly doing performance marketing, that means
| you're going after the best opportunities to get customers, and
| you're paying as little as you can for those opportunities. If
| you cut out a whole set of opportunities from consideration, that
| should not change your spend. If those were really some of your
| best opportunities, that means now you'll have to show ads where
| you have worst opportunities. Either you'll have a lower chance
| of getting a conversion or you'll have to spend more for each
| ad... either way, your opportunity cost should go up. Basically
| you've constrained your supply without constraining your demand,
| so the price might go up, but demand still gets fulfilled.
|
| Except, this isn't what really happens in the industry. Instead,
| you're given an ad budget and a campaign window, and you're told
| to burn through the budget within the campaign window. Most ad
| networks will try to find the best inventory to give you out of
| that campaign window... except often the "performance" they're
| chasing isn't "performance". It's "impressions" or "unique users"
| or "clicks" or "conversions" (where the goal post on what a
| conversion means is moved to "goes to the landing page" instead
| of "buys the product"). So what they end up doing is finding the
| cheapest (i.e. crummiest and least likely to _actually_ perform)
| of whatever your "performance" goal is. So you'll get
| impressions that are least likely to click, or clicks that are
| least likely to convert, or conversions that are least likely to
| actually buy your product.
|
| This happens, because there is actually a fixed constraint on the
| _quality_ side of the supply.
|
| You're trying to spend $X in a tight time window, and the dirty
| industry secret is the need to spend that money so quickly is the
| real challenge. Ad networks don't get paid the part of the budget
| they don't drain. The ad spend is a big deal. More important than
| performance. Ad execs' comp are tied to that spend.
|
| But when you cut a big chunk of the supply, the expectation is
| you're not going to hit the same spend, so... you cut your budget
| too. Well now that changes everything. Now you don't have to
| spend so much money over so much time. Imagine if you cut your
| budget in half, but because you are performance focused, you want
| to lose the worst performing half. You should expect _better_
| performance. Way better. Because now some other idiot
| "performance" marketer is going to buy up all those crummy bits
| of inventory, and you're going to pay the big money to outbid
| them for the bits of inventory they were going to get that would
| have performed well.
| wdr1 wrote:
| The use of the "fraud" here is curious, as I don't think it's
| what's most advertisers would use. "Waste" would be a better
| word.
|
| Fraud generally indicates a bad actor or something the advertiser
| was unaware of. Claiming to run my ads on the New York Times and
| instead running them small blogs would fraud.
|
| On the other hand, if I chose to run my ads for wedding dresses
| on ESPN.com, they would be very effective (they'd have a lot of
| waste), but that's not really fraud. _I_ made a bad decision.
|
| I read the Uber comments as 2/3rds of their spend was waste, not
| fraud. That still seems a surprisingly high number, although I
| wonder how much of it was upper- or mid-funnel, which is
| notoriously harder to measure.
| SteveGerencser wrote:
| I'm not surprised by this a all. I do PPC for a living and I find
| that a lot of ad spend is totally wasted on paying for clicks
| that you would have gotten anyway, especially on Google and on
| Mobile devices.
|
| A lot of big brands bid on, and pay for, their brand terms
| because someone at some point told then that they should. So when
| a person uses search to find Uber, they get an ad first, then a
| regular listing second. And almost everyone clicks the first
| link. Take away the ad and the free click is first.
| sixothree wrote:
| With google specifically, I've always wondered if the placement
| of the listing itself is related to the ad spend.
| aetherson wrote:
| In fairness, I've worked at several places that engaged in this
| practice, and they're perfectly clear that they're paying for
| clicks that they'd likely get for free.
|
| The theory is that if they don't do this, their competitors buy
| this ad space and steal some of their organic traffic, and/or
| that they're just bidding up the cost of that space to make
| their competitors less efficient.
|
| Now, that theory may not be cost-efficient in practice. But
| it's not like the marketers didn't understand that someone
| searching for the name of our app were going to see it in the
| list anyway.
| arbuge wrote:
| That theory can easily be tested by turning off the ads in
| question and seeing what actually happens. Can always turn
| them on again later if needed.
| chillacy wrote:
| Ebay did this 7 years ago, not sure how it turned out
| though https://hbr.org/2013/03/did-ebay-just-prove-that-
| paid
| sosborn wrote:
| Would you be willing to make that decision knowing full
| well that it could reduce revenue that is 100% traceable to
| that decision? I mean, obviously there are ways to make
| this politically acceptable in your organization, but you
| better be completely confident that it won't bite you in
| the ass.
| arbuge wrote:
| You can just turn the ads off in one small geography
| and/or for a short time. Seems to me the potential
| benefits far outweigh the risks here. If your
| organization can't see that, then you have bigger
| problems.
| austinpena wrote:
| Google Ads also has a built in report for seeing uplift of
| ads + organic and organic only
| arbuge wrote:
| I'd take that report with a big grain of salt and run my
| own tests independently. Google is more than slightly
| biased here.
| austinpena wrote:
| You've got a point. Plus attribution modeling isn't for
| the faint of heart.
|
| One popular method is a geolocation test. Turn off the
| test campaign (usually remarketing) in certain geos and
| see what happens.
| arbuge wrote:
| Exactly what I suggested earlier... see my other comment
| reply.
| spockz wrote:
| The solution to this would be to have a very authoritative
| site for a query show _above_ any ads.
| tpetry wrote:
| If the company ranking results and selling these ad spaces
| are the same every decision will not be in case of
| advertisers/users. Google has long lost it's spirit and is
| only optimizing for money.
| undreren wrote:
| DHH of Basecamp had a long twitter thread about this. Their
| competitors bought "basecamp" as a keyword for google ads,
| effectively forcing basecamp to pay to stay #1 on searches
| for basecamp.
|
| Google has/had no policies restricting this, unless of
| course, you guessed it, the keyword you are squatting is
| "google".
| joaodlf wrote:
| This being allowed shows the sad state Google is in - you
| search for a brand, get ads for a competitor? Search engine,
| my ass. You now effectively need to pay Google to keep your
| product relevant through ads, even when the user is
| specifically looking for you.
| tqi wrote:
| If I search "Kleenex", am I specifically looking for the
| Kimberly Clark product or should Procter & Gamble be
| allowed to bid on ads for that search?
| joaodlf wrote:
| Certain types of product have become directly linked to a
| product name, yes. Google is smart enough to know this,
| though. If I google for my non VC funded product name,
| which is unique, why should the first result be for a
| direct competitor with deep pockets in advertising?
|
| This would be fine if Google embraced their dependance on
| ads, but Google still labels itself as a "search engine".
| friendlybus wrote:
| If I search "Kleenex" on Google, I'm asking Google to
| find me Kleenex, not some ads. If Google is going to
| start listing things in highest-to-lowest bid, then it
| stops being a search engine and starts becoming an
| auction house of links.
| speedgoose wrote:
| Isn't it "take away the ad" and Google will put first a ad link
| to a competitor instead?
| misterbwong wrote:
| Having worked on the publisher side for most of my web dev
| career, I can say with confidence that most ad spend attribution
| is a load of crock. Sure people along the line _claim_ to have
| attribution figured out but, coincidentally, they all attribute
| your spend to their "value add."
|
| The incentives of the current ad system and ad spend attribution
| for everyone along the chain from publisher => advertiser are all
| misaligned and almost no one is doing it properly. It's so bad
| because everyone gets paid to turn a blind eye.
|
| For example, lack of good bot detection. Publishers benefit by
| higher CPC/CPM. Ad networks, ad agencies, and creative agencies
| all benefit because they take a vig off of total # of ads served
| and/or total ad spend. Average individual paid ad buyers benefit
| from the vagaries of the system because it allows them to justify
| spend by correlation, not causation (e.g. I bought this KW and
| traffic went up! Too bad conversions and revenue didn't.....)
|
| Like organic SEO, the gulf between the average and the good is
| huge. If you find a good paid ad manager, hold on to them because
| they can be worth their weight in gold.
| jrpt wrote:
| Most companies either use a neutral third party attribution
| product or build their own system. They're not simply trusting
| the attribution stated by the companies along the line. I agree
| that those are all biased. I also believe many of the neutral
| and home grown attribution systems don't work very well.
| eksabajt wrote:
| This related article is excellent - "The new dot com bubble is
| here: it's called online advertising" by Jesse Frederik and
| Maurits Martijn. https://thecorrespondent.com/100/the-new-dot-
| com-bubble-is-h...
|
| > Marketers are often most successful at marketing their own
| marketing.
| slyrus wrote:
| I'm reminded of the famous quote by George Best: "I spent a lot
| of money on booze, birds, and fast cars. The rest I just
| squandered."
| blntechie wrote:
| Ad tech is a bubble and full of sketchy players. The advertisers
| always get fleeced, the only question is for how much.
| [deleted]
| UShouldBWorking wrote:
| I love watching people realize that online ads do little to
| nothing. It took me a week or two to realize this years ago with
| my own sites.
| kmeisthax wrote:
| I think a lot of this was already obvious to slightly-savvy
| mobile app users. Look at pretty much any free-with-ads app; a
| majority of the ads are going to be ads for other free-with-ads
| apps, many of which you already have installed. The thing is,
| outside of the Internet most ad spend is for marketing ubiquity,
| not direct response. You don't really buy, say, TV advertising
| with the expectation of getting so many clicks or calls out of
| it. And, up until a few years ago, TV was the lion's share of ad
| spend. So who knows if we'll see an actual industry reckoning or
| not. The whole point of advertising is to waste money, after all,
| and plenty of brands were fine with getting nothing but exposure
| out of it.
|
| More interesting to me is the fact that tech companies are
| finding it surprisingly difficult to control where their ad-spend
| goes. I suppose this is an inverse of the problems with supply
| chains, where Apple can take three years to get a connector
| vendor out of their supply chain even when they were using
| literal child/slave labor. It's a market for lemons; bad "money"
| (publishers, suppliers) drives out good. The question is: will
| questionable ad publishing actually harm corporate reputation to
| the point where big ad spenders go away, or will we just see
| periodic Adpocalpse-style waves of spending being decreased and
| then brought back?
| qeternity wrote:
| I suppose this is true in the same sense that the purpose of
| life is to waste oxygen.
| cortesoft wrote:
| The point of traditional advertising IS pretty much to waste
| money, similar to how the point of a peacock's tail feathers
| are to waste resources... it is a signal to potential partners
| (business or romantic) that they are so capable they can waste
| resources. It is a signal of bonafides.
| unethical_ban wrote:
| I'm genuinely shocked at how many people think advertising
| doesn't work.
|
| Just because it doesn't make a person consciously stand up
| and say, "I want a Snickers" does not mean the ad didn't
| work.
|
| Like, honestly, are there people here suggesting viral ads
| don't work? Or don't understand the point of Coke or Mercedes
| Benz ads are for? Coke establishes themselves as the defacto
| soda. There is no other soda, or if they are, wish they were
| coke.
|
| MB ads among other things reinforce to MB owners the wisdom
| and luxury of their brand. To own an MB is to be part of a
| club, one that is advertised across the media spectrum. If MB
| didn't advertise at all, they would either become another
| commodity brand, or have to be so luxury that only word of
| mouth is necessary (Bently, etc).
|
| Now, maybe that's what cortesoft is saying "get you to waste
| money" but if it got you to waste money on their product, it
| worked.
| cortesoft wrote:
| Sorry, I think you misunderstood my point a bit... I think
| I am agreeing with you.
|
| My point was that advertising's purpose (from a consumer
| point of view) is for the ADVERTISER to waste money, to
| signal that they have confidence that their product is good
| enough to recover the cost of wasting money on advertising.
| cbsmith wrote:
| It's also an important signal to consumers.
| cortesoft wrote:
| Yeah, that was who I meant by 'business partners'
| Ma8ee wrote:
| That the products are overpriced?
| Phenomenit wrote:
| That you're paying for these ads.
| cortesoft wrote:
| No, that the product is good enough that it makes enough
| money to afford expensive advertising.
|
| There is a really good essay about this that I re-read
| quite often: https://zgp.org/targeted-advertising-
| considered-harmful/
| neaanopri wrote:
| I can't believe I had to scroll down this far for someone
| to point this out.
| jl2718 wrote:
| 90% of email traffic is spam. 90% of ad clicks are fraudulent.
| 90% of visitors? 90% of tweets? 90% of likes? Some day, 90% of
| YouTube videos. As human-mimicking technology improves, all human
| interactions that can be faked, will be.
| tomaszs wrote:
| I don't know now, but some time ago Google consultants told me
| that I should create an ad that displays when someone searches
| for my brand name. It was very odd because without it, my page
| ranked obviously first for the brand name. It may be the case it
| looks good in ads reports to see paid conversion.
|
| What definitely made me realize what ads are about was when I
| have installed user interaction tracking on my website. I was
| able to see what paid ads users was doing.
|
| 90% of the traffic was generating users that behaved like bots.
|
| But there is a big marketing and a lot of money for everyone. No
| one really cares about results. You can find tons of articles how
| to optimise campaigns that are aimed at SMB.
|
| But no one will mention most of such advice are for companies
| that spend tens of thousands of dollars per month. Otherwise
| there is too little data for ROAS or even CPC and CPM
| optimization. Comparison results for smaller campaigns are just
| not statistically signifant.
|
| I must agree with the article it is all about perfect crime. No
| one , including clients, are not concerned about real results. It
| is like let's throw money into the fireplace and enjoy it is
| warmer.
| jpollock wrote:
| I expect Unilever has some data from their Facebook and Twitter
| ad boycott.
|
| They're restarting their advertising.
|
| https://www.campaignasia.com/article/unilever-to-end-faceboo...
| ryanSrich wrote:
| I'm not sure if this is equivalent to fraud. But I've recently
| discovered that 99.9% of the website visitors to my new startup's
| website are just random @gmail addresses from India and China -
| most of which are coming from Google ads. We don't spend much,
| about $100/m mostly to keep our #1 ranking in Google (which I
| think helps), but it does seem fraudulent. If I turn the ads off,
| the traffic from those IPs drops off a cliff.
| janmo wrote:
| With Google ads you can select the countries where you want the
| ads to run in. If you go worldwide and chose to maximize
| clicks, Google Ads will mainly run them in India and other
| emerging countries because it's much cheaper to get clicks from
| there.
| ishjoh wrote:
| I also had a small Google ad spend ($350 over 3 weeks), that
| I setup to run exclusively in the USA, and had the same
| experience where IP addresses recorded by hotjar were all
| from India, all new signups from the ad spend were '.gmail'
| email addresses and although I had about 100 signups not a
| single one entered a credit card.
| ryanSrich wrote:
| Yeah, same here. We have done some spam mitigation, but we
| still get so many bogus sign ups and form submissions. In
| this instance, who is committing the fraud? Is it Google to
| ensure you spend your entire budget? I don't see anyone
| else benefiting from these bots and click farms. We're so
| small and new that it can't be a competitor.
| nickphx wrote:
| Some "bots" perform searches and click on ads to build a
| "user profile" for the browser.
| SheinhardtWigCo wrote:
| ...so that they can bypass Google's captcha.
| hermitcrab wrote:
| IIRC sometimes bots will click on random ads to try to
| obscure the nefarious other things they are doing. You
| are just collateral.
| [deleted]
| Aldipower wrote:
| Almost the same here. Had an Google Ads budget of $200 a
| month. All I got from this were dubious sign ups, which all
| together never looked around in the application and never
| came back. As my ROI turned to be negative, I turned off
| ads completely. My organic sign-ups even increased since
| that. And those people are staying!
| austinpena wrote:
| Physical location only or location of interest included?
| ryanSrich wrote:
| Yeah so that's the weird part that I didn't mention. These
| ads only run in the US.
| cj wrote:
| This might help you fix the problem:
|
| Google Ads default settings for location targeting is based
| on "Presence or interest" in a location, not whether the
| user is actually in the targeted country. That means even
| if you have "United States" selected as your target, your
| ads will still show mostly to people outside the US who
| "show interest in" the US.
|
| To fix it: Campaign Settings > Location > Location Options,
| and under "Target" select "Presence". Never use the default
| "Presence or interest" option, as it will result in exactly
| the scenario you're describing.
|
| This is my #1 pet peeve with Google Ads. Using the default
| setting is an incredibly common (and expensive) mistake
| people make setting up new campaigns.
| hermitcrab wrote:
| The default Adwords settings are garbage (unless you are
| Google).
| undreren wrote:
| Maybe this is due to chinese and indian click farms running
| through VPN's?
|
| Click farms click on _everything_ in order to dodge fraud
| detection, as far as I know.
| cj wrote:
| I've been suspicious of this in my own campaigns as well.
| Google Ads lets you drill down to specific cities where
| your ads were clicked. Very often, Ashburn Virginia shows
| up very high on the list. Ashburn is where AWS's us-east
| region lives, and presumably also where many VPNs operate
| out of.
|
| I simply ended up excluding Ashburn from our campaigns
| for this reason.
| thekonqueror wrote:
| By default Google will show ads to people in or "intersted
| in" the selected location. You can change this to only show
| ads to people actually present in the specified location,
| from campaign level location targeting. I spend low 5
| figures per month on ads and changing this parameter has
| significantly reduced poor quality clicks.
| wenbin wrote:
| The podcast episode where Kevin Frisch (former Uber head of US/CA
| performance marketing) talked about this issue:
| https://listennotes.com/podcasts/marketing-today/historic-ad...
|
| All podcast interviews of Kevin Frisch:
| https://lnns.co/5UZnQ_FopCb
| 101008 wrote:
| This has already 303 comments so probably no one will see mine,
| but I was planning this year to start doing some online
| advertisement to get more visitors to my website and convert them
| into Patreons. But I think this will not a good idea after all.
| Any other recommendations in how to be more visible to more
| people on the Internet?
| soared wrote:
| There is a thread in r/adops in response to this HN thread for
| some good context.
|
| https://www.reddit.com/r/adops/comments/kprrcd/uber_discover...
| oli5679 wrote:
| This is pretty interesting study at Ebay.
|
| https://www.nber.org/system/files/working_papers/w20171/w201...
|
| They tested the counterintuitive claims by performance marketers
| that 'brand' keywords (containing Ebay) had the highest ROI. They
| did an experiment and found that, contrary to attribution model,
| these Ebay keywords resulted in ZERO incremental sales, although
| they were clicked on by many people that purchased.
|
| This resulted in cut of Ebay marketing budged by $100 mn.
|
| There is now a big literature in economics looking at experiments
| and natural experiments, generally finding much smaller sales
| impact of advertising than claimed by industry participants, and
| genearlly -ive ROI.
|
| https://www.nber.org/system/files/working_papers/w20171/w201...
|
| This Freakonomics episode is a nice overview.
|
| https://freakonomics.com/podcast/advertising-part-2/
| rightbyte wrote:
| Obviously 'brand keywords' has the highest apparent ROI. It is
| users already looking for your site that click those. It is
| probably some internal bonus scam that fuel such nonsense - a
| industry wide marketing department conspiracy.
| addicted wrote:
| Playing devils advocate, couldn't this just be reflective of the
| fact that Ubers brand reach us strong enough that there is very
| little advertising that gives them a marginal benefit?
|
| Uber owns taxi services as a brand as much as Google does search.
| adrianmonk wrote:
| I guess there are 3 reasons why reducing ad spend might not
| show a negative effect:
|
| (1) Due to fraud, the money wasn't actually going to ads.
|
| (2) You didn't need the ads. You were over some saturation
| threshold and the law of diminishing returns kicked in hard.
|
| (3) The ads were valuable to you but not in an easily measured
| way. Maybe you could coast on brand awareness inertia for 6
| months or a year before it affects sales.
|
| This case seems to have decent evidence for at least part of it
| being #1, but not necessarily all of it.
| PragmaticPulp wrote:
| A lot of comments are rushing to dismiss the entire concept of
| advertising as ineffective, but they're missing the point of
| these Tweets.
|
| One of Uber's advertising partners created numerous apps that did
| things like auto-click on their ads and install apps in the
| background, collecting the commission for themselves on customers
| who didn't actually click the ad or intentionally install the
| app.
|
| They discovered it when they turned off those ads and didn't see
| a drop in signups, which is something that normally happens when
| they turn of legitimate ads.
| soupson wrote:
| Right, it seems like the point isn't "Targeted ads don't work,"
| it's "There are ways to fake ad targeting that fooled a major
| company." Uber could benefit from legitimate ad targeting
| (assuming they haven't hit market saturation), we just don't
| know.
| ErikVandeWater wrote:
| Why is no one discussing that the term "defrauded" is not
| substantiated by the tweet?
| soared wrote:
| This is really just Uber failing to effectively manage their ad
| spend. Somebody at Uber is not doing a core function of their job
| if this can happen. A person at Uber is responsible for ad spend,
| moving it between vendors, checking CPAs, etc.
| jariel wrote:
| So Uber has 15B revenue and they only spend 150M globally on
| acquisition ad spend.
|
| It'd seem to me that this is relatively thin, and likely wouldn't
| have any impact for some time.
|
| Uber is already well known - their spend in most cases boils down
| to brand advertising and nothing else.
|
| Marketing is hard, and anyone just throwing money at something
| isn't going to win hard.
|
| For an established brand, user acquisition is going to obviously
| have to be more targeted. Putting ads on 'Breitbart' was never
| going to drive new customers.
|
| In fact - I don't think 'banner ads' will drive any new customers
| for Uber.
| jsnell wrote:
| > So Uber has 15B revenue and they only spend 150M globally on
| acquisition ad spend.
|
| The events described here happened right at the start of 2017,
| so you wouldn't want to look at their current revenue. Their
| 2016 revenue was $4 billion, 2017 revenue was $8 billion.
| zuhayeer wrote:
| "For ex, one ad network launched 'battery saver' style apps in
| Google Play, giving them root access to your phone.
|
| When you type the word 'Uber' into your Google Play, it auto-
| fires a click to make it look like you clicked on an Uber ad and
| attribute the install to themselves "
|
| The things you can do on Android devices are insane. Also ads
| aren't necessarily for conversion, they're for permeating brand.
| notional wrote:
| I like that this story references the #deleteUber tag on Twitter
| because it helps organize the timeline of events going on at
| Uber.
|
| There was another twitter thread on here recently about the
| chaotic and disastrous (though successful) Swift rewrite they did
| which happened during the same time frame.
| https://twitter.com/StanTwinB/status/1336890442768547845
|
| During those time frames is also when all of the execs were
| quitting or being fired, along with their internal harassment
| problems.
|
| It feels like Uber has really succeeded in spite of itself.
| dschuetz wrote:
| Welcome to the Advertising Tech Bubble.
| ghaff wrote:
| Maybe. A lot of people have been saying this for over 10 years.
| If it's a bubble that's real though, the effects are going to
| be pretty widespread. Not only do two of the biggest (and best-
| paying) tech employers get slammed, but so do all the inter-
| related companies. And, also BTW there will also be a lot fewer
| fat exits for startups if Google and Facebook acquisitions get
| turned off.
| dschuetz wrote:
| First signs of bubbles are fraud and wrong valuation.
| Gibbon1 wrote:
| First sign to me that the dot bomb was imminent was a two
| inch article in the WSJ summarizing a finding that
| something like 2/3rds of startups had board members or
| upper managers that had been sanctioned or investigated
| previously for securities fraud.
|
| It's telling that all the FAANG companies are basically in
| open violation of a number of laws.
| jonplackett wrote:
| I remember reading a while back that if you pay for likes from a
| like farm VS genuine, you get about the same quality of likes
| because the like farms have to like EVERYTHING to cover their
| tracks. How is anyone supposed to know they're really getting
| what they paid for?
| icedistilled wrote:
| Uber instructs ad buys to block all ads on breitbart, but ads
| still appear regularly. Uber identifies agencies that are
| responsible and stops all advertising buys with them. It amounts
| to 10% of their ad budget, no change in new users is detected
| despite 10% drop in ad spend, about 15M.
|
| Edit: oops didn't finish the whole thread.
|
| Next uber turns of 2/3 of the ads. 100M. Still no effect.
| liminal wrote:
| I know someone who worked at a marketing "machine learning"
| company. The ML really needs to be in quotes, because if you
| looked under the hood you'd see the people behind the curtain
| (literally -- Amazon Turk workers). But VCs loved them, customers
| loved them. The blind selling to the blind... Marketers had money
| to spend, ML is the hotness, everyone makes money! (My friend no
| longer works there)
| dorkwood wrote:
| I read a news article yesterday that had the same ad repeated
| roughly 20 times. Would the metrics show a separate impression
| for every one of those ads I scrolled past?
|
| Also, despite the repetition, I don't remember what it was for. I
| think it had a photo of a woman outdoors.
| janmo wrote:
| I think Uber is to blame here, reading the story it is obvious
| that they bought ads from very shady sources/networks, probably
| they went for the cheapest CPC. You get what you pay for.
| justin_oaks wrote:
| In reality, you get AT MOST what you pay for. There are plenty
| of cases where you get much less, or nothing at all, for what
| you pay for.
|
| This story goes to show that.
| onion2k wrote:
| "You get what you pay for" doesn't mean you deserve to be
| defrauded for choosing the cheap option.
| the_pwner224 wrote:
| On the other hand, if you pay someone $20 to buy a brand new
| ApplePhone 12 XS Max, you should expect to not get the phone.
| The Twitter didn't mention anything about price; and it is
| possible that the fraudsters were actually charging a normal
| market rate; and nobody _deserves_ to be defrauded for trying
| to get something for cheap; but if Uber was taking the
| cheapest option then it 's hard to feel sympathetic towards
| them - they're a big company with lots of marketing people
| and they should know better.
| kerng wrote:
| Might be a possibility to disrupt the ad business. FB and Google
| might be paid tons of money for providing little value or maybe
| even toxic value.
| asah wrote:
| A lot of ad spend isn't about positive ROI but "being in the
| game," i.e. if you _don 't_ advertise then customers, suppliers
| and partners all perceive you as a market laggard. That
| perception has major consequences. For example, the top technical
| and managerial talent goes to your competitors.
|
| But there are companies that do little advertising - they have
| other ways of building and sustaining their brands.
| hugoromano wrote:
| Got a call from our Google Ads account manager to better match
| conversion analytics with Google Ads, after 90 days we found that
| the ads didn't convert at all, no change in sales. End result was
| to suspend our Google Ads budget. The best phone call I got from
| Google staff.
| TameAntelope wrote:
| I hate to be that guy, but is there a source beyond a tweet that
| I could read about this? Not to say the author isn't believable,
| I just prefer the trust I already have in Reuters over
| establishing trust for this new person all over again...
| greenyoda wrote:
| Related article posted earlier today:
| https://news.ycombinator.com/item?id=25620707
|
| It mentions that other big companies, such as P&G and Chase, also
| noticed that cutting ad spending had no result on their business
| outcomes.
| cbsmith wrote:
| Yup, the problem is advertisers want big numbers more than they
| want ad performance.
| sn_master wrote:
| Can someone explain the tweet for me please? I am really confused
| on what she's trying to say.
| DanBC wrote:
| Uber were running ads, and some of them were appearing on
| Breitbart.
|
| There's a campaign called "sleeping giants" that looks at a
| company's corporate values, and looks at where that company is
| advertising, and asks whether that ad placement is compatible
| with the values. Breitbart has freedom to say what they like,
| but customers of Uber don't have to buy the megaphone.
|
| Uber tried to pull the ads from Breitbart.
|
| But the ads kept appearing.
|
| So Uber looked closer, and they realised some of the data
| reporting was fraudulent. One ad company had a "battery saver"
| ap on Google Play. That ap had strong permissions, and it was
| scanning for people typing "uber" into the Google Play store.
| When they did that the ap made it look like the user had
| clicked on an ad and then installed the Uber app when they'd
| just organically found the uber app themself.
|
| Uber closed off a lot more of their ad spend and they found no
| difference in user signup.
| [deleted]
| misiti3780 wrote:
| How were the ads "slipping thru"?
| joeblau wrote:
| The podcast[1] does a lot better job of explaining what is
| going on than Twitter.
|
| [1] https://www.marketingtodaypodcast.com/194-historic-ad-
| fraud-...
| misiti3780 wrote:
| thanks
| renewiltord wrote:
| Some vendors weren't respecting the Breitbart ban.
| MobileVet wrote:
| Digital ad spend feels like an 'emperor has no clothes'
| situation. No one wants to admit it, but it is highly inefficient
| and fraught with fraudulent clicks / views.
| rm999 wrote:
| Back in the early 2010s I worked in ad tech on a data science
| team, and one of the things we were pushing for was causal A/B
| testing; basically turn off a campaign's advertising to a % of
| people and correlate it with sales to measure ROI.
|
| As we were kicking this off I was at a conference chatting with
| an executive at another ad tech company. His response: "oh yeah I
| know a guy who tried that, he's not in the industry anymore."
|
| We almost immediately came to realize our launch clients were
| getting negative ROI, sometimes severely so. AFAIK our efforts
| fizzled out, and I believe none of the people on my team are in
| the industry anymore.
| saganus wrote:
| I might be misunderstanding... but, negarive ROI? I.e, the more
| they spent on ads, the less sales they got?
|
| Feels like a missed something, as that sounds...
| counterintuivie.
|
| (Not in any way related to the ad industry so pardon my
| ignorance)
| jmfisch wrote:
| As I read it, the amount they were spending on the ads
| themselves was more than the converted revenue from ad
| clicks. While the decline was probably (guessing) not linear,
| spending more on ads led to less than proportionally more
| revenue. If that had happened I can imagine calling that
| negative ROI.
| saganus wrote:
| That makes more sense!
|
| Thanks
| qeternity wrote:
| No. A negative ROI just implies that the ratio of
| benefit/cost is less than one. If I incur a cost/investment
| of $100 but it creates value of $200 then I have an ROI of
| 100%. If this same expenditure instead only produced $80
| value then I would have -20% ROI as in the value I'm
| realizing from my investment is 20% less than the cost of the
| investment.
| alacombe wrote:
| Ratio can't be negative, they can either be above of below
| 1. What you are talking about is "$benefit - $cost", not
| "$benefit / cost".
| [deleted]
| ddulaney wrote:
| ROI is (net benefit)/(cost), where net benefit is (gross
| benefit - cost). Net benefit can be negative, making ROI
| negative if cost exceeds benefit. GP was using benefit as
| a shorthand for net benefit, which can certainly be
| negative.
| loeg wrote:
| Even gross benefit could conceivably be negative, if the
| ads are bad enough! (I.e., a terrible ad might prevent a
| sale.)
| cmrdporcupine wrote:
| Similar time frame for me, worked at an ad-tech startup, when
| retargeting was first becoming a big thing and we were pivoting
| the startup from the bad business idea it started to to doing
| retargeting as a demand"-side-platform" (DSP) on ad various
| exchanges. Tried myself to confirm whether any of it had any
| positive effect, I couldn't really discern any increase in the
| click-through-rate (CTR) for various approaches, but I'm not a
| stats expert, etc. so talked to the founder about how we should
| employ someone with a stats background. That convo went
| nowhere, and for that and other reasons I was out the door
| within a couple months.
|
| That was the era of the ad-exchange DSP bubble. After that I
| went to work at another company that was on the other side of
| the exchange pipeline and I could see all these DSPs just
| plugging away doing their thing and none of it looked (to me)
| like it was accomplishing much. It was all bottomfeeding off of
| lower quality inventory but I suspect making big promises to
| investors.
|
| That startup eventually pivoted a couple more times and sold to
| a bigger player a few years later, making some money for the
| founder but I suspect no value to the buyer.
| dmix wrote:
| Reading about startups that pivot dramatically multiple times
| make me cringe so hard.
|
| The goal of pivoting isn't throwing spaghetti at the wall
| until you hit something before running out of VC or angel
| money. That just shows terrible product/marketing leadership.
|
| Your prior story is unsurprising combined with that.
| syndacks wrote:
| What do you mean by the two references to not being in the ad
| industry anymore? Quit? Fired? Why?
| karaterobot wrote:
| Did they leave the industry because they realized their product
| wasn't providing a positive ROI, or were they fired for
| pointing that out to other people? I think the former is
| probably what you mean, I just want to be sure.
| rm999 wrote:
| Good question. In the first case it was left vague but I
| understood it as being fired and then not trying to find a
| new ad tech job. In the case of my team it was finding better
| industries to work in.
| ben509 wrote:
| Yeah, it could be that many startups try to do advertising
| ethically, realize that it doesn't work, and drop out. That's
| necessarily going to leave all the firms willing to sell
| snake oil behind.
|
| You can get firms selling stuff that doesn't work that are
| "trusted" simply because they've been around for years; there
| are plenty of distinguished brands selling homeopathic
| remedies, audiophile speaker cables, timeshares and MLM
| schemes.
| polote wrote:
| That's what happen when you have too much money to spend and you
| don't take time to evaluate if money is well spent.
| Nextgrid wrote:
| That's what happens when your own job is to waste oxygen, pull
| numbers out of thin air and take credit for "conversions" that
| were organic in reality; in this case you have no incentive to
| optimize things because you'd inevitably show the company your
| own position and maybe entire department is irrelevant and a
| waste of money.
| cbsmith wrote:
| No, it's what happens when the objective is something
| different. The objective is often to get big ad views &
| audiences, not to drive performance.
| ozim wrote:
| ... or deliver value to customers ...
| johnrgrace wrote:
| I work at a fortune 50 company, a top 10 advertizer. We have a
| universal holdout poplation that NEVER recieves any
| directed/targeted marketing that serves as a control group for
| many marketing programs. Further in more mass areas there are
| direct A/B tests that go on. There is a very strong awareness of
| campaigns that are measurable with ROI's and other programs that
| are general branding that you can see the impacts in gneral
| customer awareness surveys', favorability ratings etc.
| PragmaticPulp wrote:
| Measuring as spend ROI is standard practice on any large scale
| ad campaign. The trick about having a holdout population is a
| neat twist.
|
| It boggles my mind when HN commenters start claiming that
| measuring ad campaigns is impossible or that ads are
| universally ineffective. Anyone who has spent time working with
| large ad campaigns should know the tools and methods used to
| measure these things.
|
| I suspect the HN sentiment comes from a common feeling among
| techies that they are somehow immune to influence from
| advertising, combined with a high adoption rate of ad blockers.
| HN commenters tend to assume that other consumers are just like
| themselves, which is far from the truth. In the real world,
| advertising (when done right) is not only very effective but
| not that difficult to measure using modern technology.
| Judgmentality wrote:
| > I suspect the HN sentiment comes from a common feeling
| among techies that they are somehow immune to influence from
| advertising, combined with a high adoption rate of ad
| blockers.
|
| I don't believe this at all. The reason I am skeptical of the
| effectiveness of advertising is despite engaging with dozens
| of people over the years, I have never had a single person
| provide me with convincing evidence that it works. Instead,
| they simply repeat "but of course it works!" similar to your
| comment.
|
| So, where is the evidence?
| thu2111 wrote:
| Google's yearly revenue
| schappim wrote:
| Your Fortune 50 company owns a heap of brands (at least 16+
| active) that span multiple demographics, geographies and maybe
| more importantly self-identities.
|
| Does the "universal holdout population" span across all the
| brands, or do you have a "universal holdout population" for
| each brand?
| Nextgrid wrote:
| I really can't feel bad for someone who wants to pay 100M to
| annoy people and waste their time. The "fraudsters" here have
| done a service to society: Uber wasn't satisfied with the free,
| organic growth they were getting and wanted to be more greedy and
| pay 100M to litter the web with ads; the fraudsters took the 100M
| and cleaned up their littering by "consuming" these ads with
| fraudulent clicks while giving Uber the outcome they wanted,
| albeit one they would've gotten anyway had they not been greedy.
| [deleted]
| franze wrote:
| I was VP Growth for a fintech for a while. And the one thing I
| learned that Paid Ads are a Trap. Here my open the read medium
| article about this https://medium.com/@franz.enzenhofer/ads-are-
| a-trap-80df01d2...
|
| Tl;dr: money is at best a halfway decent accelerator. And as long
| as you don't massive positive retention just a sinkhole of fake
| growth. And if you have this massive retention there are better
| ways to invest your money.
| lavp wrote:
| I think all of us know deep down that something about online
| advertising doesn't seem right. I'm still surprised at how big of
| an industry it is given how ineffective it can be. To me it seems
| overvalued.
| ggm wrote:
| For research we made ads which were grey, flat field, and
| basically said "please don't click on me" and we got astronomical
| numbers of clicks sometimes. Hmm...
| netsharc wrote:
| But... reverse psychology works? Wouldn't people be curious
| what's behind the "curtain"?
| ggm wrote:
| Yea, there's some of that.
| jedberg wrote:
| There was a freakonomics podcast recently about advertising
| (online and traditional).
|
| No one can actually prove it has any ROI at all. No one is
| willing to run the experiments necessary. In the few cases of
| natural experiments, where ads got turned off for some people by
| accident, there was no change in buying behavior.
|
| https://freakonomics.com/podcast/advertising-part-1/
|
| https://freakonomics.com/podcast/advertising-part-2/
| soared wrote:
| I don't understand this line of reasoning. P&G, Unilever,
| Cocacola, etc have never, not once in history, had a gung-ho C
| level exec who said "Screw it, I'm going to find out if our
| advertising works". And then either found it works and kept
| spending, or found out it doesn't work and saved literally
| billions of dollars.
|
| There is so much money at stake that could be either saved or
| generated, its simply not possible that no one has looked at
| it. I used to help Pepsi/Fritolay set up tracking to tie
| advertising on youtube to in-store sales. They spent millions
| of dollars to measure their ads, Google had a clean-room data
| center specifically for pepsi/frito. The idea that no one
| actually checked if this system works is simply not possible.
| SheinhardtWigCo wrote:
| > Google had a clean-room data center specifically for
| pepsi/frito.
|
| Why?
| morelisp wrote:
| For brands that large the majority of their spend isn't
| campaigns specific to new products, but overall brand
| management. The experiments would need to run for years or
| decades and if the prevailing belief that these are Red
| Queen's Races is correct, the cost if they're wrong could be
| the whole company.
| Ericson2314 wrote:
| Fortune 500 is a cesspool of insane inefficiency balanced by
| equally ~~insane rent seeking~~ insanely secure revenue. The
| sooner everyone understands this, the better.
| xpe wrote:
| First, care to define your terms?
|
| Second, inefficient relative to what?
|
| Third, so far, what you've written here looks like a rant,
| not a predictive theory nor a powerful explanatory theory.
|
| Would you like to quantify your claim? Or at least make it
| more precise? As it is, I don't think it advances your
| argument.
|
| I'm interested in strong logic, data, explanations, and
| persuasion. I see none yet.
| Ericson2314 wrote:
| > Second, inefficient relative to what?
|
| The sad thing is it's not inefficiency relative
| comparable things. But anyone that has worked at these
| places or sold B2B to them just knows it on intuitive
| level that they are garbage, and need a heavy sedative to
| think there are no alternative.
|
| > not a predictive theory nor a powerful explanatory
| theory
|
| It's not. It's about letting go of some efficient market
| ideal and _then_ finding new ideas.
|
| We can look at Fortune 500 case-by-case to learn new
| things
|
| > Cola cola
|
| Sugar drug cartel. Despicable business with very stable
| revenue despite being a net drag on society. (At least
| "regular" drugs have a lot more upside!)
|
| > Proctor and Gamble
|
| Just as restaurants are reaching down market, and the
| inefficiency of everyone cooking and cleaning is starting
| to have market implications, we should see their reign
| finally dwindle. Wash-and-Fold should follow laundromats.
| The specialization means that stupid differentiation
| between products for uninformative consumers (c.f.
| https://en.wikipedia.org/wiki/Monopolistic_competition)
| should go away and restaurants and laundromats optimize.
|
| Personal soaps and cosmetics (of course many soaps _are_
| cosmetics) however will stay as cultural reasons ensure
| people will continue to clean themselves and not contract
| that out for the foreseeable future.
| kortilla wrote:
| How is Coca Cola rent seeking? How about Apple? I suspect
| you aren't using that term correctly but maybe I'm missing
| something.
| TheOtherHobbes wrote:
| Coca Cola sells water with flavouring and quite
| astonishing amounts of sugar. Apple sells nice devices
| made by what might as well be slave labour.
|
| Both are propped up - actually maintained - by huge and
| vastly expensive brand management strategies.
|
| The criticisms of individual campaigns here are missing
| the point. It's not about micro ad spend, but the
| _perception of value and manipulation of behaviour_
| created by the combined effect of multiple PR and
| advertising efforts - which include traditional print and
| TV /radio ad campaigns, guided advertorials disguised as
| news in the MSM, interviews with prominent figures,
| political campaigns of more or less obvious relevance to
| the core business activity, state, national, and
| international political lobbying, direct political
| campaign donations, advertorials masquerading as
| "freelance" journalism and blogging, managed astroturfing
| on social media, shareholder relationship management,
| product placements in movies and music promo videos,
| articles about commercial visual design elements in trade
| journals. And on and on.
|
| That perception of value is - unsurprisingly - extremely
| valuable. And it's very much a US way of doing business.
| Instead of producing products that are inherently
| superior, produce something that is functional but
| glossily packaged, brand it as a premium lifestyle
| commodity, and charge exorbitant prices for it.,
|
| The prices are traditionally far out of proportion to its
| actual utility. In fact real utility may well be negative
| - see also diabetes and any number of other health
| issues, depression associated with social media use,
| debt-driven spending on lifestyle products. Etc.
|
| So the rent seeking comes from a kind of cultural
| squatting. There is value in dominating discourse in all
| of these different ways, because discourse and narrative
| define markets and ultimately control behaviour. And
| while this is happening other kinds of discourse - which
| may well have more real utility - are diminished at best
| and crowded out at worst.
|
| So in this case it doesn't matter if Uber "wasted" their
| money. Uber have their own branding thing going, and
| explicit ad spend is a tiny part of that.
|
| And even if all online ad spending ended tomorrow, a
| small number of corporations would have a difficult time
| for a while, but the marketing industry as a whole would
| inevitably interpret the change as minor damage and route
| around it.
| Ericson2314 wrote:
| Because the ideology of capitalism is "cooridation
| failure, whatever", It sure would be nice to find a way
| for one of those companies to freeload off the culture-
| shaping the others do, and bring the whole enterprise
| crashing down!
| TeMPOraL wrote:
| Trademark laws exist to prevent such freeloading. In this
| context, they ensure only the ones paying for the
| culture-shaping can benefit from it.
| treis wrote:
| Effectively every restaurant in the US has to pay either
| PepsiCo or Coca Cola. Similarly, if you want to buy a
| non-alcoholic beverage at the grocery store it's mostly
| down to those two (with Dr. Pepper having a much smaller
| but still significant stake). Any competitor that emerges
| just gets bought up by one of the three.
|
| Apple's half of the phone Duopoly. Either you pay them or
| pay Google if you want a phone and want to buy software
| for it.
| ABeeSea wrote:
| Restaurants only pay because consumers demand it and
| would not visit the restaurant otherwise. That's not rent
| seeking. That's market forces. And what they pay
| correlates with how much their customers demand
| coke/Pepsi.
| [deleted]
| [deleted]
| Ericson2314 wrote:
| Yes. But in fairness I retracted rent sneaking as a
| combination of monopolization, bonafied rents, addiction,
| and just shear damn inertia contributes to the malaise.
|
| Calling it all "rent seeking" is not a hill I want to die
| one.
| throwaway201103 wrote:
| "Rent sneaking" is an interesting typo. Going to have to
| give some thought to how to use that term in appropriate
| context.
| mumblemumble wrote:
| The trick isn't figuring out whether advertising in general
| influences people's behavior. The trick is in figuring out if
| any particular advertising campaign generated more profit
| than it cost to run.
|
| Also, there's one alternative that's often forgotten in these
| discussions: Perhaps game theory is at play. It may be, for
| example, that, across entire industries, advertising costs
| more money than it's worth. But that everyone has to do it
| anyway, because anyone who chooses not to will start losing
| ground to everyone else. IOW, just like in the standard
| prisoner's dilemma, choosing to act is less about increasing
| your potential gains than it is about limiting your potential
| losses.
|
| There is an interesting long-running natural experiment in
| the pharmaceutical industry that suggests, albeit
| inconclusively, that this is the case.
| doopy1 wrote:
| Distilling it down into "any particular advertising
| campaign" is pretty myopic in this world. It's about
| strategy as a whole over decades. Not every ad campaign is
| to drive immediate sales or signups (direct response).
| Branding and awareness campaigns can take years to run, and
| these are ALL diligently measured at every stage. Losses do
| occur do to negligence, malice, and poor execution all the
| time, but the brands should take some blame as well as they
| often feel compelled to spend. They have huge budgets that
| they NEED to spend regardless of they perform - sometimes
| due to accounting shenanigans, sometimes because they don't
| know any better, etc.
| ghaff wrote:
| I suspect that a similar dynamic can be in effect with many
| industry events. Everyone would collectively perhaps be
| better off with pulling out of or at least scaling back on
| big industry shows. But that doesn't mean it makes sense
| for _just you_ to pull out. (And, certainly, your events
| team probably isn 't going to push for scaling back.)
|
| There's also a huge mutual back-scatching thing going on. I
| remember in a former life we wanted to pass on a big
| software vendor's user group show because, while we sort of
| needed their software for some important customers, we got
| _very_ little traffic at this expensive event. Their CEO
| called our CEO and basically said to him "Be a pity if
| something happened to our partnership."
| likpok wrote:
| Part of the claim is that the people who are checking are ad
| execs who, if PepsiCo stopped buying ads, would shortly be
| out of a job (or have their budget and influence slashed). A
| counter to this might be that different advertising channels
| are likely not identically effective, and a TV ad exec has a
| big incentive to poke holes in non-TV ads.
| soared wrote:
| Yeah that is what is usually given as the reason so I was
| getting at a gung-ho CEO, CFO, CRO, Consultant, etc.
| toast0 wrote:
| See the Pepsi Refresh Project of 2010. Where Pepsi
| redirected a sizable amount of ad budget (including super
| bowl ads) to community projects. They abandonded this
| strategy after a while because they lost market share.
|
| This is the biggest large scale test of advertising I'm
| aware of. But it probably doesn't apply to all products.
| amelius wrote:
| They only lost market share because everybody else was
| still using advertising. Therefore, this is not a test in
| favor of advertising (only in the prisoner's dilemma
| sense).
| pkalinowski wrote:
| So advertising works? If it didn't, those buying ads
| would not take the pepsi market share
| otabdeveloper4 wrote:
| PepsiCo has third-party auditors that they employ to check
| the checkers.
| adkadskhj wrote:
| How do you look into it though? I don't know, so i'm asking -
| but my immediate thought is that you treat it like science.
| You isolate an environment, advertise, and see if it has an
| affect. But the implication there is that if it doesn't have
| an affect, money is on the table.
|
| If this is even remotely close to reality then it makes sense
| to me. Companies are more concerned with constant growth than
| strict efficiency, imo. They're throw as much money around as
| possible, and every cent lost or left on the table is panic
| inducing.
|
| I also imagine different types or products and/or markets
| behave quite differently. Eg a new product might very well
| benefit from advertising - since no one can buy your product
| or visit your store if they don't know it exists.
| [deleted]
| rriepe wrote:
| "Half the money I spend on advertising is wasted; the trouble
| is I don't know which half." - John Wanamaker
|
| Half was true in his time (a century ago) but I think our
| numbers are way worse.
| Ericson2314 wrote:
| Yes, the advertising industry is just obfuscated basic income
| for the twitter class.
| karaterobot wrote:
| There was a good piece of reportage on this subject last year:
|
| https://thecorrespondent.com/100/the-new-dot-com-bubble-is-h...
| mgraczyk wrote:
| This is completely false. Large advertising platforms have many
| A/B tests that show significant differences in consumer
| behavior between groups that receive different ad treatments.
|
| Ads might be less efficient than some believe, but it's super
| easy to see that they "work", and advertising platforms do it
| constantly.
| mgh2 wrote:
| Back in 2017, Uber sued Dentsu for ad fraud
|
| https://www.japantimes.co.jp/news/2017/09/19/business/corpor...
| jefftk wrote:
| _> No one can actually prove it has any ROI at all. No one is
| willing to run the experiments necessary._
|
| Depends enormously what sort of business you're in. I used to
| work for a company where all of our sales came from ads, 100%.
| It was trivially true that if we stopped advertising we would
| have no sales. We were also committed to running experiments:
| we knew how well all of our many advertising channels
| performed, and we ran A/B tests for every change.
| megablast wrote:
| Yes of course they can. They can run trials in different areas,
| and see if there's an increase in spend. They run tests all the
| time.
| spoonjim wrote:
| This is nonsense. I had a startup completely powered by Google
| Ads. Ads brought in nearly 100% of the traffic. When my billing
| information with Google got mixed up and the ads stopped, the
| traffic went to 0 immediately.
| Mountain_Skies wrote:
| Though not an intentional test, we found out what happens when
| a movie gets a wide release but does not advertise. In 2008,
| the movie 'Delgo' was released on over 2000 screens with nearly
| no advertising. Because the production company could not find a
| distributor, they spent their ad money on renting the screens
| for a week, with the hope that some people would randomly see
| it and word of mouth would spread, leading to the theaters
| wanting to keep it for additional weeks. It became the lowest
| earning wide release movie up to that point in time. Each
| screening averaged two people per screening. More people saw
| Conan O'Brien making fun of the movie in his monologue than
| actually saw it in the theater.
|
| The reviews for the movie were poor but it had lots of
| household names as its voice talent, including Anne Bancroft in
| her final film. Good or bad, advertising likely would have lead
| to more people seeing it than two per screening. Of course
| there's no way to know for sure how many more would have been
| enticed by the ads but we do know that going with zero
| advertising resulted in a huge disaster.
| mlthoughts2018 wrote:
| This is really, really not true. Advertising lift has been well
| studied, especially in metastudies spanning hundreds of digital
| campaigns across Facebook and Google. These are independent
| academic metastudies, with hundreds of millions of impression
| data samples.
|
| Positive lift in the range of 0-20% is very common, and many
| statistical aspects of causal inference on ad impacts are well
| understood.
|
| Negative lift and flat campaigns are real phenomena too, and it
| does deserve more widespread publicity that negative lift
| happens in an appreciable number of campaigns, but that doesn't
| take away from the overwhelming evidence that digital
| advertising works and that the mechanics of positive lift are
| well studied.
|
| Here are two of the foundational papers in this area:
|
| -
| https://www.kellogg.northwestern.edu/faculty/gordon_b/files/...
|
| -
| https://www8.gsb.columbia.edu/media/sites/media/files/Garret...
|
| Particularly Figure 1 (page 26) in the second link. That figure
| alone utterly refutes any nonsense claim that digital
| advertising doesn't have provably positive ROI.
| jedberg wrote:
| Did you read the transcript the for episode and the
| associated links and notes?
|
| They back up their claims with studies of their own as well
| as metanalysis.
| newbie2020 wrote:
| Maybe not for companies of uber's size/current reach, but small
| businesses definitely do benefit from ads. They see an
| immediate uptick in sales when they start advertising on
| various platforms.
| onlyrealcuzzo wrote:
| You can A/B test ads pretty easily, and this is quite common.
| With some degree of statistical certainty, you can tell how one
| ad performs to another.
|
| You don't have control over your SEO results as well - but you
| can also measure against SEO traffic with a high degree of
| certainty.
|
| All big companies do this.
|
| Sure, you're never going to know exactly how many people you
| advertised to would have organically, eventually found your
| product and bought it.
|
| But that honestly doesn't seem that important compared to the
| other metrics - which most functioning large companies have
| decent data on.
|
| You're also never going to know how many of your customers ate
| Green Eggs and Ham for breakfast. It's irrelevant. You have
| decent insight into your direct-online ROAS, and that's unique
| to direct online advertising, and it's important!!
|
| Yes, you're never going to know if that million dollars you
| invested in online ads was the best use of that million
| dollars. But that's not much different than building a new
| factory, either.
|
| Edit:
|
| Specifically to Uber's case - they did NOT turn off 66% of ALL
| ads randomly to no adverse effect (implying that all ads are
| worthless).
|
| They DISCOVERED that a certain type of ad (paying for installs
| on dubious ad networks) was mostly fraud. After turning off
| 100% of this type of ad - they found no adverse effect.
|
| This is a fail on their analytics team. They should've been
| measuring this type of ad better - especially given how big a
| portion of the total spend it was - and had insight into
| something not being right. They should have been able to do
| this - and if they couldn't, because the network somehow didn't
| give them enough data to do it, they probably shouldn't have
| been spending this much money for exactly these reasons!
| isoprophlex wrote:
| Did you actually read the linked tweets?!
|
| Uber turns off a shitload of ad spending, nothing bad happens
| to new user acquisitions.
|
| I'd say there are about a million better uses of a million
| dollars than just pissing them away on a scam.
| walshemj wrote:
| Paying for crappy app installs on shady sites is not really
| advertising.
|
| What they should have done was a proper hyperlocal SEO
| campaign like Firestone Gieco, and Mc Donalds do.
| m00x wrote:
| There's a huge difference between a company that is widely
| known for being the app for ride hailing and a small
| company trying to get eyes on their new product.
| coldtea wrote:
| Well, Uber is known to everybody by now. To the effect that
| "to Uber" is even kind of a vern/noun.
|
| Also people either need a hired transportation or not. If
| they don't have a car or don't want to mess with the
| traffic and need to go somewhere, it's either Uber or Taxi
| usually.
|
| It's not like Coca Cola, which is well known, but people
| could do without it (unless addicted), so needs to
| constantly nag people.
|
| And it's not like some new product, which without
| advertising nobody would even know it existed.
|
| In fact most of Uber's existance its operation has been
| 100% advertising (spending VS money to offer cheap rides
| and expand and gather "eyeballs" and "customers" without a
| profit). In my book, customer acquisition without profit is
| another name for advertising.
|
| So it doesn't sound strange that it could do without
| advertising today.
|
| But what if there were 3-4 strong players in the same, each
| eating in Uber's market share? You'll see how fast they'd
| found advertising indispensable again...
| thrav wrote:
| There's an interesting question there about when this form
| of advertising becomes obsolete.
|
| Uber is in a very different position than many other
| companies. Anyone who browses the internet with regularity
| is already aware of their existence and probably just needs
| the right set of circumstances to come together to make
| Uber useful to them.
|
| I suspect the results would be different if Uber were
| earlier in their adoption curve, but maybe that's not true
| either. Maybe they'd be ignored for different reasons at
| that time.
| wasdfff wrote:
| Likewise, I probably haven't seen an ad for coca cola or
| kleenex in a while. Once a brand is ubiquitous to the
| point where soda becomes coke and tissues become kleenex
| in the lexicon, it feels like ad spend is wasted.
| DanBC wrote:
| Coca Cola spends billions on ads.
|
| 8 million views:
| https://www.youtube.com/watch?v=yg4Mq5EAEzw
| coldtea wrote:
| > _8 million views_
|
| So, less than a viral cat video?
| ajsnigrutin wrote:
| Is it really christmas time, if there are no cocacola-
| trucks-driving-to-town ads on tv?
| jhawk28 wrote:
| Brand advertising is different. It is there to remind
| people about the brand. Companies do it because they have
| the analytics that show that it works.
| Retric wrote:
| They mostly do it from inertia, how well it works is a
| separate question. Historically you can find many
| examples of hugely successful advertising campaigns, it's
| much harder to quantify the negative.
| LoSboccacc wrote:
| > You can A/B test ads pretty easily
|
| A/B testing ads is a complex matter. you can A/B traffic and
| conversion easily, but a lot of established companies with
| fierce competition fight for mind share, not direct
| conversion; for that, you have both awareness effects (user
| won't forget about coca cola if they don't run ads for a
| month, and an ad that doesn't directly convert but increase
| awareness still has value) and coverage synergies (the number
| of repetitions in a day will increase coverage non linearly
| and the amount of channel repetitions will increase awareness
| more than a single channel view, even if it doesn't convert
| immediately)
| azornathogron wrote:
| > All big companies do this.
|
| Except Uber, apparently? Or would the method you're talking
| about not have discovered that something fishy was going on?
| (I don't work with ads so I don't know the limitations of the
| type of experiment that you're talking about)
| onlyrealcuzzo wrote:
| It would work for some of Uber's ads. From the article, it
| looks like they were frauded mostly by in-app ads. And they
| were paying for installs - not actual trips.
|
| So, no, Uber's advertising here is a little different than
| (I think) the majority of companies. They are mostly paying
| for installs rather than sales / conversions. A lot of
| newer "app" companies could be in similar situations.
|
| Though, honestly, this seems like a massive fail on their
| analytics team for not figuring this out earlier. They
| should have been able to see that all of these "installs"
| from certain advertisers were not leading to trips.
|
| In fact, it says they turned off 66% of ads. They didn't
| randomly turn of 66% of ALL ads. They turned off this TYPE
| of ad, which they failed to earlier recognize was
| ineffective.
|
| Step 1) assume your ads won't work.
|
| Step 2) have enough analytics / logging in place to
| convince yourself the ads do work.
|
| Step 3) if they don't work, turn them off.
|
| Looks like they skipped step 2 - which honestly, is not
| uncommon for a fast growing business - even if they are
| huge and already make a lot of money.
|
| What they found isn't even what people are discussing. They
| found that certain networks they were buying ads from were
| almost 100% fraud (which is pretty well known).
|
| Instead, people here seem to be discussing that most online
| advertising is fraud, and/or that there's no way to prove
| it's effective. That is absurd.
| lincolnq wrote:
| Hang on though, in the linked thread they said that the
| fraud was incurred at the point of _real users_ signing
| up for uber -- when they type uber into the app store
| search (e.g. an organic install), the ad network
| fraudulently takes credit for it at that point. So
| "enough analytics/logging" would not do the trick here -
| I think they would have noticed if a certain type of ad
| wasn't leading to trips, as you are pointing at.
| nojito wrote:
| This is all discussed in the podcast.
|
| There's no revenue change even after testing (when you tack
| on costs of ad delivery).
| adrusi wrote:
| It can happen that an almost certainly bogus scientific field
| persists for decades using state of the art research methods
| and no bad faith on the part of the researchers (any bias
| they introduce is probably not conscious).
| https://slatestarcodex.com/2014/04/28/the-control-group-
| is-o...
|
| A/B testing is... not a state of the art scientific research
| technique. Moreover the companies that provide the tools to
| do A/B testing are the same companies that sell you access to
| advertising space. I'm not saying that it's a common practice
| to defraud A/B tests, I'm saying that the fact that adtech
| companies have chosen to enable that research methodology out
| of the set of all methodologies they could offer suggests
| that we should expect, before seeing the results of any A/B
| trial, that the results will tend to favor the adtech
| narrative.
|
| I don't think that people in the adtech space believe they're
| selling a bogus product, but I do think they wouldn't want to
| know if they were -- they have a good thing going.
|
| If you're employed in adtech you're mostly fine, skills
| transfer. If you're invested in adtech, do what you can to
| diversify away. Advertising is overvalued to some extent and
| that bubble will burst at some point or other. The question
| is just how much actual value advertising provides, how much
| will remain when the bubble bursts.
| oli5679 wrote:
| > Sure, you're never going to know exactly how many people
| you advertised to would have organically, eventually found
| your product and bought it.
|
| This is typically an order of magnitude less than the
| attribution figures stated by digital marketing experts. A/B
| test is the right method to use, but the crucial thing is you
| need an earmarked population to see zero adds over your
| attribution window, since what you care about is impact on
| incremental sales, rather than incremental click likelihood.
|
| There is a long econometrics literature on this and it is not
| a fussy technicality, the figures typically differ by 10x +.
| gregoryl wrote:
| Instagram definitely does this. I'm part of the magic
| cohort who never see any ads :)
| maxerickson wrote:
| So how much ad spending is going to 'dubious ad networks'?
|
| Are they easy to categorize? Or is it a big secret what's
| dubious and what isn't?
| nabla9 wrote:
| >but you can also measure against SEO traffic with a high
| degree of certainty.
|
| None of these benchmarks distinguish between the selection
| effect (clicks, purchases and downloads that are happening
| anyway) and the advertising effect (clicks, purchases and
| downloads that would not have happened without ads).
|
| You can fix this by dividing the target group into two random
| cohorts in advance: one group sees the ad, the other does
| not. Designing the experiment thus excludes the effects of
| selection.
|
| When you do this experiment correctly, you find out that ads
| have low effect or are not cost effective (as eBay
| discovered).
| st1x7 wrote:
| > Sure, you're never going to know exactly how many people
| you advertised to would have organically, eventually found
| your product and bought it. But that honestly doesn't seem
| that important compared to the other metrics...
|
| Wait, why wouldn't that be important? It seems like the most
| important question since it asks whether advertising has any
| significant impact at all.
| megablast wrote:
| Does advertising create an increase in buying your product.
| That's the most important question.
| monkeybutton wrote:
| At least with ecommerce one can track users that have
| seen and/or clicked on ads with what they have purchased
| and return on ad spend can be calculated.
|
| But yes, the question still is: does it raise intent or
| did the user already want the thing, googled it, and
| clicked on the first result (which is your ad, above the
| organic results that also lead to your online store)?
| dlp211 wrote:
| The fundamental problem with this is that if I bought
| your product, it's because I was looking for your product
| after doing a decent amount of research which meant I was
| on a bunch of retargeting lists and you've wasted money
| on me. I have never to my recollection purchased anything
| because of an ad. If I have clicked through an ad, it was
| simply because it was the quickest way to get to the
| website/product.
|
| There is a role for advertising because Google polluted
| their organic search results with Ads making it harder
| for you to find what you want and forcing you to compete
| for the top Ad spot. I realize that I can only speak for
| myself, but I have never seen any evidence that
| advertising works and I've worked in ad tech.
| ipsum2 wrote:
| It's pretty clear to see direct causation when using ads
| to promote your product. Promote your product using ads
| for 1 month, then turn off ads and see how many sales you
| get. For a majority of e-commerce, you'll see a
| substantial drop.
| Aeolun wrote:
| If you are sinking $100M in, I sure hope it's having some
| effect.
| asdfasgasdgasdg wrote:
| Maybe the person is referencing how difficult it is to
| determine the value of the counterfactual? If it were
| possible to determine I imagine people would really want to
| know.
| wonnage wrote:
| There's still value in getting people to buy _now_ instead
| of maybe buying later.
| joe_the_user wrote:
| The thing about the "advertising doesn't matter" argument
| is that there are situations where advertising absolutely
| matters - when a company is just starting out and there's
| no way they can get organic referrals, when the public is
| unaware of their existence, etc.
|
| Moreover, most companies started small at some point so
| advertising and maintaining advertising made sense up to a
| point.
|
| And if we look at those companies where maybe advertising
| actually doesn't help, companies that have reached a level
| of success where organic referrals and public awareness
| drive most of their business. And they're ongoing
| businesses that probably reached that level through
| advertising and have money now to use for that.
|
| But not only are they already advertising but they don't if
| their word-of-mouth/public-knowledge presence will last
| indefinitely, they don't know if just word-of-mouth would
| let them control their image, would stand-up against future
| competitors ads and so-forth. So, even supposing you could
| show advertising didn't offer any immediate increase in
| customers, continuing to spend on it doesn't seem to me as
| irrational as it sounds.
| raverbashing wrote:
| This is the point that a lot of people are missing
|
| Uber shows up in the news and in conversation every day.
| Most people have heard about it by now. Very few people
| are going to install it because they saw an ad.
|
| Not the case for your neighborhood "Bob's Burgers" or
| "Uber Competitor" or some other new company. Or for
| specific marketing actions of known companies
| (promotions, new services, etc)
| ghaff wrote:
| Furthermore, many of the people who say they hate
| advertising also hate PR and other sort of marketing
| campaigns. So presumably their theory is that people
| should build something and just hope people will discover
| them somehow.
| mumblemumble wrote:
| It's critically important for adtech companies' customers,
| since it's an essential part of determining return on
| investment.
|
| But it's also critically important for both adtech
| companies and data scientists who work in the space to
| direct people's attention away from those sorts of metrics.
| You generally don't want to call the attention of the
| person who signs your paycheck toward the fact that it's
| all but impossible to really know for sure if your service
| has delivered them any net benefit.
| pnw_hazor wrote:
| This is creeping pretty close to the legal definition of
| fraud.
|
| But advertising has had a fair amount of safe-harbor
| carve-outs for over a 100 years or so that are not
| available to other industries. So it is no surprise it
| continues today.
|
| edit: I hate to say it but the auto-downvoters here on HN
| are approaching reddit levels. Everything I said above is
| true.
| [deleted]
| [deleted]
| jodrellblank wrote:
| > " _edit: I hate to say it but the auto-downvoters here
| on HN are approaching reddit levels. Everything I said
| above is true._ "
|
| It's not that you're wrong, it's that you're boring.
|
| "I knew this years ago, look how my cynicism is superior
| to your naievite" is a boring comment to read. You could
| explain why you think this is any closer to fraud
| compared to selling anything else and claiming it's the
| best in its class, or what safe-harbor carve outs by
| whom, or why they matter more than other effects, or what
| you think should be done to change them, or _anything_
| more substantial than "I'm not surprised". Oh aren't
| you? Great, cool story bro. Except it's not /even/ a cool
| story.
|
| It's old man "get off my lawn". It's every tech forum's
| old-man status grabbing which is now approaching Reddit
| /r/SysAdmin levels on HN. The only question is whether
| aggressive downvoting can curb its growth here before it
| gets a choke-hold.
| imdsm wrote:
| It's sad to see the downvote culture come here.
| Downvoting is meant for removing contributions that don't
| add much to a discussion, not for indicating whether
| someone agrees or disagrees with you. It seems to be a
| norm that is spreading though, sadly.
|
| It would appear jodrellblank is perfectly demonstrating
| how to misuse the feature, by calling you boring. Not
| exactly the kind of attitude that we want to have around
| here.
| TeMPOraL wrote:
| This is the industry whose job is to manipulate and
| deceive people. It should surprise no one that, if they
| do that to others, they'll do that to themselves as well.
| posedge wrote:
| Listening to the podcast just a minute ago as I found this
| post... What a coincidence. I second that recommendation.
| guerby wrote:
| "No one is willing to run the experiments necessary."
|
| Tesla is one natural experiment about not spending money on
| advertising in the mass media compared to traditional car
| companies that spend HUGE amount of money advertising.
|
| https://www.motorbiscuit.com/gm-spends-an-embarrassing-amoun...
|
| "Hyundai spent $4,006 per Genesis vehicle sold in 2018. Ford's
| Lincoln brand came in second with $2,106 per vehicle sold.
| After Jaguar and Alfa Romeo, GM's Cadillac brand came in fifth
| with $1,242 spent per vehicle sold. Tesla was the lowest at
| just $3 spent per vehicle sold."
| toast0 wrote:
| Telsa is in an enviable position of selling most of their
| cars before they're produced. In that position, you don't
| really need to advertise much. They also get a lot of PR to
| keep up brand awareness.
|
| If Hyundai couldn't keep Genesis vehicles on the dealer lots,
| they'd advertise them less too. Having a dealer network means
| dealers that want manufacturer support in advertising to keep
| dealers happy, even if the new cars sell themselves, dealers
| need to get people in to sell used cars.
| morelisp wrote:
| Tesla's marketing spend is whatever it costs them in legal
| fees and fines to keep the mouthy celebrity CEO - and their
| high-profile campaigns in 2018 seemed pretty effective.
| specialist wrote:
| I get downvoted whenever I propose digital advertising bubble
| will pop once people wise up to the fraud.
| lern_too_spel wrote:
| The ad buyers aren't smart enough to measure the actual
| effectiveness of their ads, and the ad sellers are not
| incentivized to teach them how to do it. This can go on for
| an arbitrarily long time.
| Wowfunhappy wrote:
| I'm only about halfway through the first of the podcast
| episodes you linked (thanks!), but just thinking about this
| logically for a moment:
|
| I would not be shocked to learn that advertising for a specific
| product or event is not particularly effective. However, I'm
| inclined to believe it has a huge effect on overall brand
| recognition.
|
| Let's say you go to Amazon to buy a roll of toilet paper. How
| do you choose from the literally hundreds of options? You could
| spend a day of your life reading reviews, and trying to parse
| which ones are fake. Or you could buy the toilet paper from
| Scott because you recognize the brand.
|
| As I see it, buying brand advertising is a lot like buying an
| expensive suit. It's not that the suit makes you more
| productive, but it is a sign of professionalism, and--frankly--
| of wealth. If a brand is advertising everywhere, you know they
| aren't a fly-by-night company, and their products likely meet
| some standards of quality.
| dehrmann wrote:
| There's also the bit about luxury (mostly) car commercials.
| Half their purpose is to remind you that you made a good
| decision buying your <brand> car, and maybe your next car
| should be the same brand.
| mumblemumble wrote:
| > No one is willing to run the experiments necessary.
|
| Not without reason. Even without the conflict of interest that
| Nextgrid points out in a sibling post, there's still a
| significant financial barrier to attempting to measure this
| stuff. According to a former professor of mine who spent a
| large chunk of his career studying this stuff, the size of
| study you need to conduct in order to get any kind of
| statistical power at all on an ROI study is just absurd. See,
| for example, the treatment starting on page 15 of:
| http://www.davidreiley.com/papers/OnlineAdsOfflineSales.pdf
| mgh2 wrote:
| Additional resource discussed in the past:
|
| https://news.ycombinator.com/item?id=21465873
| im_down_w_otp wrote:
| Gabriel Leydon of Machine Zone spoke to the general topic at
| Code/Media back in 2016. Basically discussing that they'd gone
| through the trouble of building internal expertise and tools
| for optimizing their ad spend to better ensure specific
| outcomes they desired/required in a way that would inevitably
| lead to more sophisticated ad buyers and putting a nail in the
| coffin of traditional media advertising.
|
| https://www.youtube.com/watch?v=oXBqzpExvrk
| disgruntledphd2 wrote:
| Alternatively, they dumped hundreds of millions of dollars
| into ads based on a wildly unrealistic notion of a customer
| lifetime (much like the rest of Silicon Valley).
| im_down_w_otp wrote:
| I didn't say they achieved their goal. Though I do think it
| was/is an admirable one. It would be nice if marketing
| budgets weren't a near limitless accountability-free money
| pit.
| zamalek wrote:
| > there was no change in buying behavior.
|
| I suspect that if our browser isn't blocking ads then our brain
| is. It's complete conjecture, but I assume that adblockers
| eliminate this cognitive load explaining a portion of why they
| became successful before they were necessary for
| security/malvertising.
| indymike wrote:
| Beware extremes like "no one can actually prove". One
| difference between internet ads and their more ethereal tv and
| radio predecessors is that adviews, clicks and purchases can be
| tracked. Also, there are techniques that can make even TV,
| radio, print and even digital to physical world ad performance
| more visible: coupons, response codes and campaign-specific
| phone numbers and URLS. That Uber was buying hundreds of
| millions in ads and could not attribute performance (sales, for
| example) speaks more to poorly designed campaigns and
| potentially very bad actors in the supply chain.
| tempsy wrote:
| it's funny how trillions of dollars in market cap are built on
| top of some service with unprovable and questionable value.
| tiahura wrote:
| > No one is willing to run the experiments necessary.
|
| Or, no one is willing to share the results of the experiments.
| legitster wrote:
| I work in digital marketing and this episode made me want to
| tear my ears off.
|
| First of all, they didn't differentiate between display or PPC
| advertising. PPC you only pay if the user actually engaged with
| the ad. Nearly all of the anecdotes they used where about
| online display advertising - a known crock.
|
| And we absolutely run experiments all the time! In fact, we tie
| our ad spend directly to conversions. If anything, the market
| is _too_ efficient - it 's really hard to get more than what
| you are paying for.
| jedberg wrote:
| But the experiments you run pit one ad type or channel
| against another. Have you ever run any experiments comparing
| ads to no ads?
| Ericson2314 wrote:
| Great subject matter, but boy does reading the transcription
| remind me why I hate podcasts. Stop infantilizing the audience
| with these coo-coo-ing sounds bites and get to the damn point
| already!
| lumost wrote:
| It's unclear how this experiment would be done. In the case of
| brand advertising, it's likely that brand awareness would decay
| over some period of time and in turn purchase behavior would
| change.
|
| It's not currently possible to run an A/B experiment with a
| hold out group of potential customers across all channels, let
| alone for any longer duration experiment. So how can we
| separate cause and effect? (although pay per conversion
| channels do get gamed left and right)
| marcinzm wrote:
| Traditional brand advertising testing (TV, newspaper, etc.)
| would be geography segmented as I understand it. So half the
| cities got the campaign and half didn't. You can mimic that
| with IP based geo-location although you'd get more leakage
| than pre-internet.
| pas wrote:
| Come up with some new product that requires some personal
| data for usage (eg. age, gender/sex, address). Start to
| advertise this in just one country to one demographics, and
| look how many out-of-target orders you get.
|
| Maybe it's even enough if you simply just sell it via mail
| order, you can then look at the addresses.
|
| There's probably a natural information spread in any market
| (word of mouth, trade magazines), and there's probably a
| physical dispersion of the target group of people too (people
| move, visitors/tourists saw the ad/product and order it at
| home), but it still should be a valuable to see how much
| effect just one campaign has.
|
| Maybe one of the best products for this could be a car. They
| are pretty standard, really not much difference between them,
| they are in all price ranges, and regularly new models come
| out. Advertise one in a few major US cities but don't in
| others.
| marcinzm wrote:
| These experiments are run all the time even before the
| internet. I remember reading about how for broad brand
| advertising they used to segment by city. Half the cities got
| an ad for Coca Cola and half didn't. Then you compare sales of
| Coca Cola. No one will publicly publish numbers because it's a
| mix of sensitive sales data and competitive advantage (ie:
| otherwise your competitors don't have to burn money running
| their own tests). Also, smaller shops turn their online
| advertising campaigns on and off all the time to test impact.
| notional wrote:
| Why does reddit have ads if all ads are a money pit?
|
| I understand you no longer work there, but ads started in 2009
| I believe, so you perhaps had some input on this?
| mattkrause wrote:
| Owning the pit into which other people throw their money
| seems like it would be pretty lucrative.
| ABeeSea wrote:
| This is incorrect. Companies do the experiments. They just
| don't publish the results. Why would they? The idea that Amazon
| doesn't know the ROI on their ad/marketing spend is laughable.
| otabdeveloper4 wrote:
| > No one can actually prove it has any ROI at all.
|
| That's a philosophical question of whether you consider
| statistics to be "proof".
|
| > No one is willing to run the experiments necessary.
|
| You're nuts if you think this is true. I assure you that
| companies in traditional industries (i.e., without venture
| capital) can and do run these experiments.
|
| The Uber story is about venture capital and its anti-market
| incentives, not about the ad industry.
| jedberg wrote:
| Read the podcast transcript. An economist proposed turning
| off print ads in one market to find out if they mattered, and
| the head of marketing said he'd rather not know.
| Razengan wrote:
| I've thought and said so before: The ads racket is be a case of
| the emperor with no clothes, at best.
|
| At worst, it's a front for building "profiles" of everyone.
|
| I can't recall the last time I bought anything _-because-_ of
| an ad.
|
| If anything, ads have sometimes actually _put me OFF_ from
| buying something!
| pas wrote:
| But someone did. "Brand awareness" is a thing.
|
| For example we can probably agree that for completely new
| companies spending on ads makes sense. Or giving out free
| samples, etc.
|
| Similarly for big companies doing media campaigns to keep the
| new ones at bay makes some sense.
|
| Even if word of mouth is a thing, even if there are organic
| searches, and even if it seems like a race to the bottom if
| everyone just tries to outspend each other.
|
| It'd be great to make experiments about how to sensible
| prevent/regulate this ad arms-race. But first better data
| privacy laws.
| paulsutter wrote:
| Ecommerce sites have very fine grained measurement of their
| advertising spend and know exactly the ROI (which is why they
| focus so much on retargeting)
| birdyrooster wrote:
| Yeah I think Google and other advertisers are great at
| predicting what people will buy and then shows them ads for it.
| That's different than showing a person an ad and changing their
| behavior, but to advertisers they can't know unless they
| experiment.
| [deleted]
| carlmr wrote:
| But that would still make their ad spend useful. Even if not
| in the traditional marketing sense.
|
| But if you can't see any change in business from 2/3 of ad
| spend at all it must be fraudulent.
| josefx wrote:
| > Yeah I think Google and other advertisers are great at
| predicting what people will buy and then shows them ads for
| it.
|
| Seems to be entirely subjective.
|
| I bought a new blade for a bread cutting machine on amazon,
| the last one lasted ~25 years. My current recommendations:
| blades for bread cutting machines.
|
| I also checked some Christmas decorations on Amazon, but
| didn't buy any. So next to the blades I get Christmas
| decorations recommended. January is a bit late for that,
| isn't it?
|
| I also bought a single server rack on eBay. Now I regularly
| get spam emails from eBay reminding me of new offers for
| server racks. Even the company I work for doesn't have that
| many, so why?
|
| In short I am not really convinced that these platforms are
| good at predicting what I want. Rather it looks as if they
| are good at showing me what I already have.
| spatley wrote:
| The answer to your confusion is that un sophisticated
| remarketing (showing ads for searched or purchased items)
| has in nearly all cases a measurable improvement on ROI.
| Improvements to filter out useless ad views are much more
| complicated and expensive. Advertisers actually don't care
| about any individual case, but buy on aggregate results.
| nobody9999 wrote:
| >In short I am not really convinced that these platforms
| are good at predicting what I want. Rather it looks as if
| they are good at showing me what I already have.
|
| While that's definitely true (I get ads from Amazon for
| stuff I've already purchased all the time too), in that
| case Amazon is leveraging their own marketing channels to
| support their own business -- which has, effectively, zero
| marginal cost to them.
|
| However, when advertisers buy space from Google or FB,
| that's not the case. There is a definite external cost to
| such ad buys.
|
| As such, being able to identify the "value" of such
| expenditures is (or can/should be) important to the
| advertisers.
|
| That said, much of advertising is based upon the idea of
| "top-of-mind awareness."[0]
|
| The idea being that if you are considering a purchase, the
| brand that comes to mind without prompting when considering
| that purchase will be preferred over brands of which you
| aren't immediately aware.
|
| Purchase decisions made on a whim or without any research
| are usually those which are low cost. Which is why
| companies like P&G, Coca Cola and like companies focus on
| "top-of-mind awareness."
|
| If you're going to buy a washing machine or a riding lawn
| mower, you're much more likely to do research than if
| you're going to buy a soft drink or a bag of chips.
|
| That said, the same "top-of-mind awareness" can be helpful
| even for big ticket items, as those brands may well be the
| first ones about which research may be done.
|
| Identifying how such advertising may impact purchase
| behavior is a complex topic, and unless you can quantify
| specific ad-views to actual purchases, doing so is
| generally speculative and is the subject of a great deal of
| quantitative market research[1].
|
| [0] https://en.wikipedia.org/wiki/Top-of-mind_awareness
|
| [1] https://en.wikipedia.org/wiki/Quantitative_marketing_re
| searc...
| panda888888 wrote:
| Agreed. Companies often don't understand the
| "directionality" of purchasing behavior.
|
| For instance, I recently bought a new iPhone directly from
| Apple, and I bought a case for it on Amazon. Now two months
| later, Amazon is recommending that I buy an iPhone
| (...which I bought two months ago from Apple).
|
| Buying a case an then waiting two months to buy the actual
| phone would be a very strange thing to do, but Amazon seems
| to think I should do this.
| eitland wrote:
| Remember this is the same Amazon that files C# and
| Javascript books under "Law books" etc, I have documented
| it: https://erik.itland.no/fun-with-amazons-ai-machine-
| learning
|
| And Amazon is definitely not alone: Google has been
| troubled with "AI" running rampant in search results for
| years, seemingly with no or very little QA.
| ghaff wrote:
| I would guess it's fairly hard to encode a lot of rules
| that are obvious to most people algorithmically. Amazon
| does encode a likelihood of repeat purchases to some
| degree; they offer a coffee subscription but not a weed
| whacker subscription.
|
| But besides doing something like "purchases >$100 are not
| likely to be repeat purchases," I would think it would be
| difficult.
| pas wrote:
| The usual reply to this is that Amazon shows you that
| because you might return it and then buy a new one, gift
| it to someone, etc.
|
| They show it because it "works" for them, not because
| it's wrong and they just can't somehow make sure they
| don't show something.
|
| Because even if 99% of people don't buy anything twice,
| 1% probably does for some reason, and that signal just
| trumps all the noise. (And that's why most of ad spending
| is bullshit, but since Amazon's cost [even with
| opportunity cost] is basically 0 on their own site,
| they'll continue to do this.)
| alibrarydweller wrote:
| I'm a fan of the podcast but one argument they cited seemed to
| have a pretty glaring error - they looked at the case where
| eBay was comparing incremental gain on search ads over no ads.
| It's methodologically hairy because eBay is a very major player
| with significant brand recognition.
|
| "When Tadelis was working for eBay, the company was in the
| practice of buying brand-keyword ads. Which meant that if you
| did an online search for "eBay," the top result -- before all
| the organic-search results -- was a paid ad for eBay."
|
| This doesn't show that advertising doesn't work per se, it
| shows that eBay didn't hire a competent ad buyer. Whether or
| not you can prove the efficacy of advertising as a whole, this
| is not a valid approach.
| Nextgrid wrote:
| > No one is willing to run the experiments necessary
|
| The people that would have the power to run this experiment
| have their entire careers depending on things staying as-is.
| Running the experiment carries a significant risk of exposing
| that the advertising operations they're responsible for provide
| much less ROI than they pretend it does.
|
| The unwillingness of anyone to run such an experiment is
| already an answer. Why wouldn't someone jump at an opportunity
| to prove the thing/service they provide actually works, unless
| they were unsure about it themselves?
| jedberg wrote:
| Exactly. That's what the episode says too. The only people
| who could run the experiments hinge their entire career and
| industry on the results.
| [deleted]
| adwww wrote:
| I used to work in this industry.
|
| A small tech team investigated fraud on our platform and
| developed a system that was pretty robust at detecting and
| potentially shutting it down. But literally nobody was
| interested - even the people advertising don't want to know.
|
| The people spending money are typically networks, media
| buyers, ad agencies, etc, far removed from the actual brand.
|
| There are so many parties who want a slice of the brand's
| cash that they are all long past caring about whether the ad
| is being viewed by a human or not.
| walshemj wrote:
| Agency or client side?
|
| I assure you the big brands CFO's take a huge amount of
| interest in what is spent on advertising.
| syshum wrote:
| In my experience the Sales and Marketing teams of any
| large company have the loosest restrictions on how they
| account for their spending.
|
| Other dept;s like IT have to justify every penny, but
| Sales and Marketing not sooo much
| garciasn wrote:
| I work in the field. Incrementality testing is a big part of
| marketing measurement at any reputable agency. Any claims to
| the contrary are FUD.
|
| That said, companies like P&G, Airbnb, and Uber, which are
| oft-cited as examples of digital not being worth it, fail to
| understand their own brand recognition and organic power,
| built through prior marketing efforts, as key to their
| current standing.
|
| Sure, TODAY, it doesn't have the impact they'd like it to
| have but the investments PRIOR were key to ensuring their
| success.
| quacked wrote:
| Quit and do something that isn't fundamentally detrimental
| to everyone's quality of life.
|
| http://jacek.zlydach.pl/blog/2019-07-31-ads-as-cancer.html
| dasil003 wrote:
| Brand is a lot more than marketing spend, and not all
| brands are equal. Google and Facebook have companies that
| depend primarily on performance marketing spend over a
| barrel.
| TeMPOraL wrote:
| How do you determine a reputable agency though?
|
| I worked next desk to people running a small ad agency.
| Because we shared office (and I found them an intern), I
| got a very good look at how they're working. What I've seen
| can be summarized as: people who have zero clue or interest
| in statistics writing "reports", with "graphs" they don't
| even understand beyond "pointing up = good", proving
| positive ROI to customers - who also have zero clue or
| interest in understanding the numbers in the report, and
| not enough visibility into the whole funnel to
| independently check attribution. Both the agency and the
| clients were engaging in a shared and completely
| unjustified fiction of positive advertising return - and as
| long as both sides were happy, the money kept flowing.
|
| I've been long since suspecting a lot of advertising on-
| line looks like that. Every now and then, I see evidence in
| favor. Like that good ol' Optimizely debacle, where it
| turned out Optimizely was structurally optimized to help
| people make invalid A/B tests, that erred on the side of
| concluding the interventions were working[0]. And sure, big
| brands with some superstar ad teams probably do this right.
| But I think there's enough slack in most businesses that
| advertising spend can get quite far detached from actual
| ROI without anyone noticing (and with plenty of people
| happily riding the gravy train).
|
| --
|
| [0] - https://news.ycombinator.com/item?id=10872359
| nicbou wrote:
| "It is difficult to get a man to understand something, when
| his salary depends upon his not understanding it!"
| Kyro38 wrote:
| ~ Upton Sinclair
| fortran77 wrote:
| And, unlike most Internet Quotes, this one is apparently
| real!
|
| https://quoteinvestigator.com/2017/11/30/salary/
| dllthomas wrote:
| > Why wouldn't someone jump at an opportunity to prove the
| thing/service they provide actually works, unless they were
| unsure about it themselves?
|
| Because everyone is already acting like they know it works,
| so the only way that experiment can change things is in a way
| that's bad for the person in question. In that situation,
| they should (from a local, selfish perspective) be resisting
| even if they're awfully sure it _does_ work (and perhaps even
| if they 're right!).
|
| Given that, I don't think the behavior has already given us
| an answer.
| disgruntledphd2 wrote:
| Facebook's ad research team have run a lot of experiments.
|
| The goal was to demonstrate an impact of in-store sales
| from internet advertising. They did the first studies in
| about 2008-10, and have continued running these studies
| ever since.
|
| They even built a tool so that advertisers can run these
| studies, and get a sense for the incremental impact of
| their ad.
|
| Google have a similar (less full-featured) system.
|
| Really, it's the rest of the ecosystem that has much of the
| fraud, and I think that a lot of people in the industry are
| aware of this.
| pessimizer wrote:
| > The goal was to demonstrate an impact of in-store sales
| from internet advertising.
|
| So the goal was to advertise advertising. A more
| scientific goal would be to see if there was an increase
| of in-store sales from internet advertising. Instead they
| were looking to design experiments that would show a
| positive effect, with the goal of giving advertisers a
| dashboard so they could run those experiments themselves.
| coliveira wrote:
| Not really, scientists for example also have their whole
| careers based on the truth of some theories that they use.
| However, they're willing to put them to proof in different
| ways. The reason they do so is that they have a high degree
| of confidence that these theories are true. This cannot be
| said of people doing advertisement.
| ssss11 wrote:
| I'm not exactly sure what you're trying to say.
| Scientists' whole careers are based on running hypotheses
| to prove or disprove their theories. That IS their
| career.
| mkr-hn wrote:
| And disproving a theory with lots of research backing it
| would be great. Imagine if someone found a huge hole in
| general relativity. There would be a boom in the grant
| writing industry.
| ACow_Adonis wrote:
| The reproduction crisis in sciences suggest the self-
| interest is pretty wide spread.
|
| And the social stigma in science of being someone who
| tries to take down, discredit, or disprove your
| colleagues/superiors/ competitors theories is pretty
| substantial: IME there has historically almost been a
| taboo against attacking our speaking negatively about
| publications and your own sciences + faculties practices.
|
| The saying of sciences advancing one funeral at a time
| doesn't exist because they're all such great skeptics and
| falsifiers, and current scientific practice is heavily
| biased towards positive findings and contains general
| publication biases.
|
| indeed there's actually a LOT of common ground with
| advertising self-interest, since a lot of publication in
| science is effectively just advertising your brand...
| justapassenger wrote:
| It's like saying that no one who works on reliability of the
| systems is willing to run experiment to throw 100% errors for
| a month, because running experiment like that may show that
| reliability of the systems doesn't matter.
|
| And then using data from a one system that went down and
| nothing happened as a proof that systems reliability doesn't
| matter at all, and it's huge scam by engineers.
| johnrgrace wrote:
| The experments are run. Why don't you look at the work that
| comes out of the Advertizing research foundation.
| x0x0 wrote:
| Uber was just incredibly incompetent to not audit their ad
| spend at all.
|
| I worked at an ad company. It was an absolutely standard
| metric to eg geo-fence ads out of a state or two for 3 months
| to demonstrate the impact of ads. This isn't easily
| externally visible, but tests like this are standard
| practice.
|
| Particularly in the app install space, which is sketchy as
| hell once you stop buying from the top handful of vendors,
| buyers should be auditing by a couple million in annual
| spend. To get to $150m without looking hard at big chunks of
| their spend is just plain arrogance and/or incompetence.
| throwaway201103 wrote:
| > Why wouldn't someone jump at an opportunity to prove the
| thing/service they provide actually works, unless they were
| unsure about it themselves?
|
| Because advertising in some form certainly works. If you can
| determine that approach "A" that everybody is doing is
| actually a waste of money but approach "B" is effective, then
| you can develop services around approach "B" and market them
| based on these findings.
| ecf wrote:
| As someone who believes that ad tech is the primary force driving
| the ever growing consumer distrust of technology, I can't help
| but feel a little giddy reading this story.
| Snoozus wrote:
| I have this suspicion that mobile ads have way weaker effect than
| claimed. No-one in adtech has any interest in finding out.
| Marketers don't want to lose budgets or importance either. So a
| lot of money is wasted on annoying people. How sad.
| wpietri wrote:
| Makes sense to me.
|
| CEO: "We need to do something about growth!"
|
| Marketer: "Mobile ads are something!"
|
| CEO: "I read those are hot. Here's a bucket of money! Do lots
| of something so we have lots of growth!"
|
| [spending ensues]
|
| As the Uber story shows, a lot of money gets spent without
| anybody making sure that it actually works. The actual goal is
| not to have an effect. It's to be seen as taking bold action.
| If the business gets better, bonuses and promotions ensue, no
| matter what the actual cause. Cargo cult management.
|
| It sounds insane, but I'm sure it's rife. Years ago I was
| coaching at a Lean Startup weekend class. One team really
| killed it, rapidly testing product hypotheses through real-
| world testing. Their initial idea was quickly proven worthless,
| but they listened to users and came up with an idea that would
| sell.
|
| I kept in touch with one of those team members. He went back to
| his prominent, well-funded startup, excited to improve his
| company. But nobody wanted improvement. Execs wanted to sit in
| a big room, think big thoughts, and produce specs. The
| engineers were to implement those specs. But nobody would
| measure the effects of anything. Proof that a grand poobah's
| idea didn't actually pan out was deeply unwelcome. It slowly
| drove my pal mad and he quit. The company bumped along for a
| few years to a modest acquisition, but it never really lived up
| to the hopes.
| bastawhiz wrote:
| I've been playing a silly phone game for about a month now.
| Only last week I realized it has ads: I'd become so ad-blind
| that I completely ignored the banner ad they keep at the bottom
| of the window at all times. I only noticed it because it
| flickered when transitioning to another ad.
| jayd16 wrote:
| I'm certain they do want to find out. Adtech still wants to
| know where paying users are even if the total is less than
| they'd like to claim.
| PragmaticPulp wrote:
| Engaging random marketing consultants is a good way to waste
| money on ads.
|
| However, anyone engineering for advertising from the start of
| your distribution plans should be able to measure these things.
| It's not hard to track which signups came from ad clicks versus
| organic traffic. The problem is that most companies start out
| focused on their apps and simply assume advertising is a
| totally independent function that happens elsewhere in the
| company. Invest some time into including advertising as part of
| your signup process and it's really not that difficult to track
| LTV of customers who signed up via ads.
|
| In fact, that's how Uber confirmed this fraud. They noticed
| that some of these fake customers were clicking on the ads and
| getting signed up within seconds, which is something only bots
| can pull off. If the customers you're getting from ad signups
| aren't actually spending money in the app, you should know
| about this from basic analytics.
| chrisdinn wrote:
| I think the problem is that the overwhelming majority of
| digital ad formats just don't work. Does anyone who works in
| digital ad tech genuinely believe that these formats work? I
| have been here for the last ten years and have come to believe
| they do not, certainly not comparable like traditional linear
| TV or print in their heydays.
|
| There are exceptions. I think Google search ad works so well
| it's eating the product. I think YouTube's TrueView is great
| for modern brand advertisers (safety issues aside). But by and
| large, banner ads, forced video pre-rolls, etc don't work. The
| negative message of the format offsets any message you try to
| convey.
|
| Yes, fraud is a part of this. But I think a lot of this
| evidence looks the same as if none of their targeted,
| performance-based advertising was doing anything at all, beside
| really weak branding.
|
| Genuinely interested to hear from people who disagree.
| staticassertion wrote:
| Mobile devices tend not to have adblockers, so exposure might
| be a lot higher.
|
| Also, the only ads I've clicked are mobile ads. I've even
| installed apps via ad before - I've never once purchased an
| item from an ad online (but I've also run an adblocker for a
| decade).
|
| Ads certainly "work" by some metric, and some definition of
| "work", but I think the metric and definition is unclear.
| jackcosgrove wrote:
| The only ads I click on are mobile ads, and that's because
| many times the X to close them is too small. Other times
| the ad is jumping around my screen and it steals my
| fingerpress.
| chrisdinn wrote:
| I think CTD ads (click-to-download) are one of the
| exceptions. It's a great format for some cases, eg games.
| For game devs, trust that yours is addicting enough that
| you can safely show your users a competitor's game knowing
| they'll come back to you. For players, you were looking to
| play a game anyway and maybe you want to try something new.
| Click, download and play that instead.
| wasdfff wrote:
| Instagram ads for millenials are like flies to honey in my
| anecdotal experience. So many of my peers buy their
| furniture, dress shoes, clothing, water bottles, watches, dog
| leashes, pretty much everything in their lives from seeing
| some like-aged person use that thing on an instagram ad (and
| the product usually being pretty cheap). It blows my mind how
| successful these dime a dozen drop shipping companies based
| on instagram are with millenials and gen z, and buying like
| this will only be more normalized in the future as more
| people know someone who got something nice from that
| instagram ad.
| spideymans wrote:
| >It blows my mind how successful these dime a dozen drop
| shipping companies based on instagram are with millenials
| and gen z, and buying like this will only be more
| normalized in the future as more people know someone who
| got something nice from that instagram ad.
|
| Especially with stay-at-home orders due to the pandemic,
| everyone (well, not everyone... but hyperbole) now has
| their own drop shipping brand operated out of their
| business, all selling the same cheap products off of
| AliExpress. Will consumers catch on to what is going on? Do
| they even care?
| MivLives wrote:
| Yeah I've noticed I've even been drawn to something because
| of the mindless scroll to that's pretty neat, the button to
| buy it is right in front of me.
|
| I suspect this really only works for more novelty things
| like clothing that are cheap enough to enough to impulse
| buy and of interest to image conscious people.
| qwerty456127 wrote:
| > overwhelming majority of digital ad formats just don't work
|
| Doesn't it? It may have miserable conversion rate, limited
| target audience but it apparently is commercially viable.
| People would hardly spend money on sending e-mail spam in
| 2020 if it didn't work.
| kbar13 wrote:
| if you read the twitter thread we see that uber was
| spending 10x more money than they should have on ads simply
| because they weren't auditing where their money was going
| towards.
|
| so there's evidence that people (incl uber, a market
| leader) do indeed spend money on ads even when it does
| nothing
| Hnrobert42 wrote:
| I got 0.66x, as in $100M out of $150M. I likely missed
| something. Where did you see 10x?
| chrisdinn wrote:
| $100M was labelled "fraud" in this example, but there was
| more waste uncovered in the remaining $50M that didn't
| get that label.
| rightbyte wrote:
| How do we not know that the spam is sent out by one sucker
| after the next that go until they realize it is not worth
| it?
| redisman wrote:
| Mobile games run on this. They have a target user
| acquisition cost and spend based on that. It seems to work
| for some very profitable companies. People shouldn't try to
| over read into this. Businesses can't run on irrationality
| for very long
| chrisdinn wrote:
| I thought that at first. But like the original post points
| out, Uber was spending a lot of money, not just in absolute
| terms but in percentage terms, and it wasn't working for
| them.
|
| There's an allure to making something measurable and
| setting goals against it. Often, those goals take on a life
| of their own. That's what I am suggesting happened here, I
| guess.
| cm2012 wrote:
| Facebook and IG ads work. I agree that display network ads do
| not.
| chrisdinn wrote:
| Ya for sure. I was a Googler so my examples were biased,
| these aren't the only ad formats that work but there are
| fewer than most people (even in ad tech) realize.
| cm2012 wrote:
| Yep, even FB "audience network" ads suck and are fraud
| ridden. Newsfeed is a fundamentally great format for ads.
| 2sk21 wrote:
| However I have not logged into FB in six months because
| the actual content in my newsfeed is so toxic. I wonder
| if this will cause things to change, although it seems
| unlikely.
| janmo wrote:
| Interestingly mobile ads are typically cheaper to buy than
| desktop ones.
| andrewjl wrote:
| Does this mean that all of the so-called "small business needs
| it" arguments against durable federal privacy legislation are
| totally moot?
| marcus_holmes wrote:
| I learnt an old adage while doing my MBA: "Half the money I spend
| on advertising is wasted; the trouble is I don't know which
| half." - attributed to John Wanamaker.
|
| Online advertising was supposed to fix this. You could never tell
| when a potential customer read a billboard, but you could
| absolutely determine when someone clicked on an ad.
|
| I don't know what happened. I suspect everyone got obsessed by
| tracking user behaviour and remarketing and all the bells and
| whistles.
| g42gregory wrote:
| Wow, that's quite a revelation. Uber turns off 2/3 of ads and
| metrics are the same. Eventually, with optimizations, they got
| down to 10% of previous spend without loss of revenue. I wonder
| if the Uber story is unique or it cuts across all advertisers.
| How would this affect Ad Tech industry?
| mrits wrote:
| The ad industry has always claimed that fraud doesn't matter
| because it is priced in. It's been over a decade since I worked
| in click fraud detection but I believe Google's numbers were
| around < 2-5% of clicks were fraud (someone here might have up
| to date numbers). So this _is_ a huge revelation from my
| perspective.
| ghaff wrote:
| Depending on the content of the ads, I could easily believe
| that anyone who is remotely the market for even the occasional
| Uber ride already has the app on their phone and, if they want
| a ride will either use Uber, whichever ride-share is cheapest,
| Lyft if it's available because they don't like Uber, or a
| taxi/limo in situations where that's more convenient.
|
| I guess you can offer promotions but then you're giving money
| away.
| xyst wrote:
| Impending crash - time to short the entire ad tech industry.
| st1x7 wrote:
| I just don't want to lose the web along with the ad tech
| industry though.
| vb6sp6 wrote:
| The web existed before the adtech industry. It will live
| after it.
| wasdfff wrote:
| As a smoking crater maybe. The web was orders of
| magnitude smaller before the adtech.
| skinkestek wrote:
| yep, but it is mostly those parts I want back. I can
| almldt live fine with:
|
| - programming blogs that doesn't have ads
|
| - Wikipedia
|
| - three or four online newspapers/websites that I pay for
| anyway.
|
| - HN
|
| - all the old stuff: web rings and enthusiast web sites
|
| - I'd probably miss stackoverflow but I use that site
| less and less these days anyways.
|
| Most of the rest can burn and we'd maybe be better off.
| At least search results would be cleaner :-)
| thu2111 wrote:
| Wikipedia is constantly running ads. They're just
| "charity" donation ads so you don't think of them as
| such, but turn on the TV and you'll notice that charities
| advertise themselves to get donations all the time. It
| doesn't make it not advertising.
|
| As for HN, how long have you been using it? Are you aware
| it's ad supported? Some stories are ads, usually for
| hiring.
| idunno246 wrote:
| Working in iPhone games, our biz dev people made us integrate
| with the shadiest of ad publishers. But we required attribution
| and could track how much the users spent, so could stop
| spending on them quickly, which was the normal result. Most of
| the companies were surprised we wanted attribution and had to
| build something custom, which to me means at the time nobody
| else was tracking it so lots of customers must have been
| getting fleeced. From the tweet, it's crazy that they were
| spending 100m without tracking the quality of the users.
|
| Also worked in ad tech. There were some types of customers that
| cared about performance, but the largest were typically
| agencies and all they cared about was spending the budget they
| were given. Everybody knows this is happening, you can
| differentiate yourself slightly by doing better detecting it.
| But at the end of the day people really care about customer
| acquisition cost which includes the fraud, so if you had 0%
| fraud everyone would just raise their prices or margins
| Kalium wrote:
| > Also worked in ad tech. There were some types of customers
| that cared about performance, but the largest were typically
| agencies and all they cared about was spending the budget
| they were given.
|
| Large companies call it "brand" spending. Which is to say
| they're spending to maintain brand awareness. Measuring ROI
| would call the practice into question.
| jsnell wrote:
| > From the tweet, it's crazy that they were spending 100m
| without tracking the quality of the users.
|
| They were high quality users: Uber didn't pay for installs,
| but for installs + first ride. What's being alleged is that
| the ad networks were detecting a user installing the app, and
| fraudulently creating an ad display event to make it look
| like the install happened due to the ad.
| Triv888 wrote:
| Cities discovered they'd been defrauded out of 2/3 of their taxi
| revenues... By Uber.... Looks like money is flowing...
| cm2012 wrote:
| Friends don't let friends do programmatic direct response
| advertising. Do it directly on the platforms yourself.
|
| I run an ad agency with relatively well known clients and I
| consider the word "programmatic" in a resume a negative
| correlation.
| raverbashing wrote:
| Care to elaborate more? What exactly is "programmatic direct
| response advertising"?
| cm2012 wrote:
| So programmatic means using a 3rd party ad tech tool to place
| your ads across all internet ad placements.
|
| Doing it directly means placing ads yourself on the biggest
| platforms (Facebook, google).
|
| Direct response just means "if you actually want
| results/ROI", as opposed to for nebulous brand goals.
| jeffrallen wrote:
| Lay down with dogs, get fleeced.
| htwyford wrote:
| Tim Hwang wrote an excellent short book that deals with this,
| Subprime Attention Crisis:
| https://www.goodreads.com/book/show/50403486-subprime-attent....
| He addresses that most interactive advertising is never seen and
| prices are massively inflated. The attention is subprime, like
| subprime mortgages. One companies realize most of their ad money
| is being wasted, we might see massive recognizing in
| Google/Facebook valuation and in the rest of the economy as a
| result.
| doopy1 wrote:
| This book is the laughing stock of ad tech right now, it's got
| some good ideas, but it's 90% sensationalized and half-baked.
| The mortgage analogy is weak as well. This book is a money grab
| more than anything. It's an attempt at stirring the pot.
| drewwwwww wrote:
| do you know if anyone has written a detailed critical
| response?
|
| people in the industry it is about laughing it off i think is
| to be expected. i doubt most traders in mortgage
| securitization in 2006 would have agreed the sky was about to
| fall.
| doopy1 wrote:
| I saw a nice synopsis from a finance person on reddit on
| why the analogy to the mortgage issue is way off the mark,
| but I doubt I can find it again. My point is that there's a
| whole burgeoning industry in whining about how ad companies
| are evil, but it's not really quite so black and white.
| Balgair wrote:
| What 10% of the book is good?
| doopy1 wrote:
| I think calling attention to issues with ad tech is good,
| that's where my 1/10 score comes from.
| twotimestuesday wrote:
| I've been running on site attribution surveys[1] on a handful of
| brands that I work with and the results have been pretty
| surprising. Word of mouth tends to be overrepresented and FB
| underrepresented though there is probably some sample bias so
| it's far from a sure thing.
|
| [1] https://www.zigpoll.com/examples/attribution-survey
| [deleted]
| ohples wrote:
| I feel like a company like Uber could of been justified put the
| large majority of there ad budget into well placed physical ads
| in cities and airports.
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