[HN Gopher] How can we know if paid search advertising works?
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How can we know if paid search advertising works?
Author : ubac
Score : 80 points
Date : 2022-03-08 18:36 UTC (4 hours ago)
(HTM) web link (causalinf.substack.com)
(TXT) w3m dump (causalinf.substack.com)
| skilled wrote:
| Substack prefetching my email address based on historical data is
| kind gross.
|
| I appreciate the downvotes, but it is a clear dark pattern.
| Unless I have accepted their terms and didn't read through them.
| It is the only site that does it, and they do it for everyone who
| is a Substack customer.
| ghostly_s wrote:
| Unfortunately with the technical jargon compounded by numerous
| typos I utterly failed to comprehend what points this article was
| making.
| VHRanger wrote:
| FWIW this is a blog aimed at statisticians and economists, so
| intermediate undergraduate statistics is more or less assumed
| in the authors language
| austincheney wrote:
| Google does make money from ads, but that is not their primary
| business. Yes they have AdWords and they bought DoubleClick
| around 2007. They also have YouTube that took them forever to
| figure out how to monetize. They bought Urchin (Google Analytics)
| specifically to monetize AdWords.
|
| Google's primary business is search. They monetize search in a
| couple different ways. The primary revenue model for search is
| micro auctions to determine ranking of product placement on
| search results.
|
| I don't have numbers but I suspect Google ads get far more
| eyeballs than do their search results. The distinction though is
| margin not quantity. Ads aren't worth very much. Google ads
| generate a higher margin than Facebook ads but still tiny, like
| maybe fractions of a penny. When I was at Travelocity a million
| years ago I remember hotels bidding up to $18 per click for
| placement on searches related to Las Vegas. Not only is that
| click-through worth a fortune it is also relevant and thus far
| more likely to be clicked.
|
| EDIT
|
| Death by a thousand paper cuts.
|
| Somebody provided a source below, they clearly did not read,
| which explains all of this:
|
| https://www.cnbc.com/2021/05/18/how-does-google-make-money-a...
|
| > Search is Google's most lucrative unit. In 2020, the company
| generated $104 billion in "search and other" revenues, making up
| 71% of Google's ad revenue and 57% of Alphabet's total revenue.
|
| This section of the article further details how the auctions
| differ from online advertisement products.
|
| I don't have the source but Google's chief economist has been
| very clear about how the micro auctions work and generate revenue
| separately from display ads.
| xenomachina wrote:
| > The primary revenue model for search is micro auctions to
| determine ranking of product placement on search results.
|
| Google monetizes search with ads. The micro auctions are for
| those ads. They even say "Ad" on each of them.
|
| If you have evidence that they're doing paid placement in the
| actual search results, I'd love to see it.
|
| FWIW, I do wish Google's ads were more obviously visually
| distinct from search results (and fewer in number).
| kevin_thibedeau wrote:
| They don't have to do paid placement. They know which sites
| are running their ads and can prioritize them to maximize
| impressions based on their pervasive tracking.
| austincheney wrote:
| > Google monetizes search with ads.
|
| Google monetizes search but not with Google ads. This is the
| primary distinguisher. Its an auction selling space on page
| for a supplier to provide their own textual content. Google's
| online advertisement businesses don't sell space on Google
| pages, but online ad products for other peoples' pages.
|
| Google considers all of this as ad revenue, but distinguishes
| search from their advertisement products in their revenue
| filings.
| colinmhayes wrote:
| >auction selling space on page for a supplier to provide
| their own textual content
|
| This is an ad.
| serial_dev wrote:
| I don't understand what you are getting at. In both your
| comments, it sounds like you find the most convoluted way
| to describe "Ads", and then claim that because you didn't
| use the word "Ad" in your comment, we should pretend that
| what you described is something completely different (but
| totally not ads?)
| yjftsjthsd-h wrote:
| https://www.investopedia.com/articles/markets/030416/googles...
| and https://www.cnbc.com/2021/05/18/how-does-google-make-
| money-a... (first results I could find) both say 80% of
| Alphabet's revenue comes from Google ads; unless you have
| numbers to say otherwise, I think it's pretty reasonable to
| call that their primary business
| austincheney wrote:
| > Search is Google's most lucrative unit. In 2020, the
| company generated $104 billion in "search and other"
| revenues, making up 71% of Google's ad revenue and 57% of
| Alphabet's total revenue.
|
| From your second source. I guess you were conflating ad
| revenue to online advertisements. Its all ad revenue, but its
| not all online advertisements.
| [deleted]
| _jal wrote:
| > Google does make money from ads, but that is not their
| primary business.
|
| Per their 10K, ads are >80% of their revenue.
|
| I'm sorry, carry on.
| tsimionescu wrote:
| Your point is completely unclear. The vast majority of Google's
| money is coming from selling advertising. The have multiple
| ways of selling advertising - advertising on Google Search
| itself, advertising on other people's pages, advertising in
| YouTube videos etc. But it's ultimately all money from
| advertising.
| tkluck wrote:
| > Ads aren't worth very much. Google ads generate [...] maybe
| fractions of a penny.
|
| Suppose someone types "hotel Paris" into a search engine. Then
| the ads auction is the search engine turning around and saying
| "here's someone that's (probably) about to spend a thousand
| euros on _some_ website. How much if I send them to yours?" You
| can't buy that kind of intent-to-buy for only pennies -- that's
| 2-3 orders of magnitude off.
|
| There's definitely ads that are sold by the kilo-impressions,
| but search ads generally do not fall in that category.
|
| Disclosure: I work for Google, but have no relevant inside
| information. A public resource for this is
| https://brandastic.com/blog/how-much-do-google-ads-cost/:
|
| > In 2022, the average Google AdWords cost per click is about
| $1 to $2 on the Google Search network. Some newer niches may
| still see lower costs, while more established businesses, might
| see higher cost-per-click averages.
| toast0 wrote:
| > Google's primary business is search. They monetize search in
| a couple different ways. The primary revenue model for search
| is micro auctions to determine ranking of product placement on
| search results.
|
| You're going to have to explain how product placement in search
| isn't ads.
|
| I worked at Yahoo! Travel in the before times, so hello from a
| fellow Travel industry person, I've got a Travelocity gnome in
| my _stuff_ from work area. :) We had lots of advertising on our
| pages too, but it was always clearly marked (for some value of
| clearly); Yahoo! had done some pay for search ranking deals
| long before I joined, but they were clearly frowned upon by the
| time I was there; organic results had to be organic, although
| certainly if an advertiser is pushing a hotel that 's going to
| get traffic which could boost rankings (I don't think Y! Travel
| included traffic in hotel rankings, but we didn't have a super
| thorough data pipeline)
| tantalor wrote:
| > Google's search results are independent of Google's
| advertising programs.
|
| https://support.google.com/google-ads/answer/1722080?hl=en
| noasaservice wrote:
| eBay did me a whole different dirty:
|
| I went to sell a few things 2mo ago. Sold them. And when the
| buyers paid, it went to an ebay escrow.
|
| Only after I sold them, and money was sent, ebay DEMANDED
| unfettered access to my checking/savings account. They would not
| cut a check, pay to paypal, or any other method. One of their
| managers said the only way I could get my money was to wait 1-3
| years and would send the money to federal unclaimed money (!).
|
| Obviously, I never sent them. I could never get the money. I
| messaged to all the buyers that I could not fulfill any sales
| BECAUSE ebay refused to send me my money in an appropriate
| manner.
|
| All the sales fell through... And then ebay tried to lay on me
| $50 in "sold fees". Talk about a double-whammy. I get if I got
| paid, that they get their cut. But this whole checking acct
| demand wasnt listed anywhere UNTIL the sales closed.
|
| After this, I'm done with the ever-closing noose around buyers
| and sellers in the ebay ecosystem. I'm not going to get screwed.
| And after talking with others who do buying/selling, everyone's
| getting squeezed. Enough of that for me.
| hollasch wrote:
| Can you explain what you mean by "unfettered access"?
| BizarroLand wrote:
| They were uncomfortable giving ebay the ability to wire their
| money into their checking account out of fear that ebay would
| then later take money directly from their bank account, not
| even considering that if ebay did anything fraudulent their
| banks and the federal government (assuming they are American)
| would have their backs in reclaiming the money.
| Zircom wrote:
| I think you're being incredibly dismissive and a little
| condescending for no reason about his concerns, I'm sure
| they "considered" that while yes there is legal recourse if
| eBay were to take money out they weren't supposed to, the
| process isn't a 100% guarantee by any means, and you're
| still out that money while it's being
| investigated/resolved. Not everyone is in the privileged
| position of being able to float a couple thousand dollars
| while an issue like this is being resolved.
| noasaservice wrote:
| I get that there are external costs for providing things
| like cutting a check, or sending to paypal.
|
| If that's the case, then let me agree to paying 1% or so
| to send via another method. I'm only asking for that
| option.
|
| I don't allow any organization to reach into my bank
| accounts using an ACH. Simply put - I work in IT, and
| know that these systems have errors, and the errors are
| almost always in their favor. And I'm on the hook for a
| whole bunch of sadness waiting for them to "finish their
| investigation 8 weeks from now".
|
| However, the biggest problem isn't that they demand this,
| but they demanded this *after* I had 5 sales go through.
| 6510 wrote:
| You are already at their mercy. If they chose to take
| money out of your account I'm sure they could do it in
| ways legal enough to get away with.
| MaxBarraclough wrote:
| The existence of a means of recourse doesn't undermine the
| point that they don't want eBay to have that power over
| their finances in the first place. Would you want your
| landlord to have unrestricted access (but for the law) to
| your finances? How about your neighbour?
|
| By means of analogy: the utility of Android's fine-grain
| app permissions system is not rendered obsolete by data-
| protection laws.
|
| It's especially galling as eBay could, presumably, just
| offer to wire the money over after enough time had passed
| that the buyer can't complain that the item didn't arrive
| as described. (This would cut out PayPal and card-
| transaction fees, which is presumably the whole point.)
| They choose not to offer this.
| runnerup wrote:
| I can sympathize. I'd rather not fight that legal fight in
| the first place if I can avoid it. Plus I'm not a lawyer,
| and the Terms of Service are a thousand pages long. Am I
| entitled to small claims court or did I sign away that
| right and have to go to their arbitration firm? I'm not
| sure if the agreements I clicked through could say "I
| forfeit my right to any money and every dispute will be
| decided solely by eBay, Inc." and if it does I haven't read
| the thousands of pages of case law necessary to know in
| which situations that's invalid and I do still have some
| rights.
|
| I'd rather just not play ball. Especially given that eBay
| harassed people who inconvenienced their business with
| bloody pig masks, live cockroaches, and death threats
| against the spouse[0].
|
| 0: https://arstechnica.com/tech-policy/2020/06/ebay-execs-
| sent-...
| davchana wrote:
| In US that means routing number and account number. Having
| these two enables anybody to push or pull any amount of money
| (or at least try to pull, based on availability). Its crazy,
| companies promise that they will not pull more than asked,
| but sometimes coding error causes big problems, the one I
| remember etsy pulling thousands instead of 10s, because of a
| decimal point error, so pulling like 1486 instead of 14.86.
| bthrn wrote:
| This information is on the bottom of every paper check.
| While it is probably not advisable to broadcast and post up
| everywhere, it is not supposed to be a secret.
| jazzyjackson wrote:
| Right, its security by deterrence. Besides its not like
| you can anonymously drain someones bank account, someone
| claims fraud on your 10,000$ charge you're getting a
| phone call from your bank.
| runnerup wrote:
| He probably means ACH access which can also be used for
| withdrawals instead of just deposits. Its not like writing
| and accepting a check or money order, which is generally only
| one-way. While there are some limits on this for "direct
| deposit" (can not withdraw more than was deposited, and
| there's a 5 day limit, so its functionally equivalent to
| bouncing a check but without the legal penalties), not all
| access to set to strictly "direct deposit". I don't know what
| eBay is doing but its possible to get authorization for both
| "direct deposits" and "withdrawals". ACH withdrawal is useful
| for things like Coinbase or PayPal where you want to pay
| electronically and trust is too low to risk credit card
| chargebacks.
| bthrn wrote:
| In my experience, the payment system is pretty reasonable. And
| I get the funds faster directly from eBay than going eBay ->
| PayPal -> bank.
|
| PayPal would ultimately require your checking account
| information too, assuming that you want the funds to end up
| there. I'm not sure why eBay having that information poses any
| more of a problem than PayPal having it does.
|
| And this payment delay is likely due to having to wait for
| credit card payments to process and settle. I don't think eBay
| is doing anything nefarious, here.
|
| Lastly -- if you are concerned about banking info being
| disclosed, or eBay maybe messing something up and taking money,
| you could set up a separate checking account that you only use
| to hook up to online places like Coinbase, PayPal, Venmo, eBay,
| etc. that you use as a proxy to transfer into your "real"
| checking account.
| vgeek wrote:
| The article fails to mention that shortly after this made the
| rounds in the marketing communities, eBay suddenly got a very
| large SEO penalty. Conspiracy theories aside, I once inherited a
| large Adwords account with nearly 25% of spend dedicated to
| branded KW bidding. Simply dialing back bids by 90%+ dropped
| impression share from 95% to 80%, but the paid branded clicks
| just shifted to organic branded clicks-- confirmed by lining up
| Google Webmaster Tools click level data (since Google stopped
| providing organic keyword data in GA 10 years ago).
|
| _Brand keyword bidding is simply a rent-seeking behavior._ Sure,
| it can help with new entrants trying to grow their visibility
| (albeit likely ineffectively) as an alternative to an incumbent
| with more brand recognition, but the majority of brands are
| simply paying protection money to keep their own site, that users
| are explicitly seeking, above the fold on search results.
| JustARandomGuy wrote:
| _> that shortly after this made the rounds in the marketing
| communities_
|
| I'd love to read more about this. Do you have any recommended
| "marketing communities" that I should visit?
| vgeek wrote:
| https://searchengineland.com/google-ebay-penalty-cost-197031
|
| This relates to the ebay penalty. I think one of SEland's
| founders actually left to take a job at Google as an
| evangelist. You can probably search for "ebay seo penalty"
| and find more references. Other notable penalties that were
| well documented include RapGenius and GV backed Thumbtack and
| Nest, which quickly had their penalties reversed if I recall
| correctly.
|
| https://seobook.com/blog is the only place I follow any more,
| since it is more critical of the digital marketing ecosystem.
| There are so many snake oil salespeople and clueless
| marketers, so this is a refreshing commentary.
|
| https://seroundtable.com is good for rumors and breaking
| news.
|
| https://www.seobythesea.com/ a more technical blog that
| frequently examines Google's patents.
| JustARandomGuy wrote:
| Very kind of you. Thanks.
| tempestn wrote:
| We've found exactly the same thing. It's extremely important to
| differentiate between branded and non-branded keywords. (And to
| be diligent about filtering out all variations, misspellings,
| etc., of branded searches from non-branded campaigns.) While
| our testing didn't show 100% waste in branded advertising, we
| did find approximately 80-90% of branded clicks would otherwise
| have come through organically. So we do still do a small amount
| of branded search advertising, but with an assumed actual CPC
| of 10x the nominal CPC (and therefore quite a low maximum bid).
| For non-branded ads, we assume the true CPC is much closer to
| the apparent one.
| paulpauper wrote:
| I believe spending money on ads is the only way to get any sort
| of favoritism from a major tech company, and also being a
| famous/important person
| ocdtrekkie wrote:
| Yeah, once you realize the most profitable Google search terms
| are already the top organic result paying to be on top, you
| realize Google's business is the guy who shakes down
| storefronts for "protection" to avoid their windows being
| broken in by the local gang on a global scale.
|
| _" That's a nice brand you built there. Ya know, it'd be a
| shame, a real shame, if one of your competitors was to end up
| above you on the search results page. I could, uh, make sure
| that doesn't happen."_
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