What do we really know about the effectiveness of digital advertising? • Hacker News Board

Re: What do we really know about the effectiveness of digital advertising?

#161

Post by pizzaparty2 » Wed, Nov 06, 2019, 10:42 PM UTC

cubedrone wrote: post #27

leoedin wrote: post #7

I've always wondered about those adverts for the website I'm searching for. If I type its name into Google, I'm already 100% committed to going there. Sometimes I click the advert (it generally depends how much I like the company). The other aspect of online ads that strikes me as ingenious but probably not sustainable is the way Google inflates the auction system with fake money. Anyone who's run a website will have…

There was a post about this recently. They need to buy the ad to keep their competitor from being the first result. https://www.seroundtable.com/basecamp-google-ad-28161.html

Well, at least there is no law allowing ISPs to serve their site more slowly unless they pay a ransom (I mean business professional tier).

Re: What do we really know about the effectiveness of digital advertising?

#162

Post by Spooky23 » Wed, Nov 06, 2019, 10:44 PM UTC

jessefrederik wrote: post #124

jameslk wrote: post #113

Earlier quoted context omitted.

The effects may be low but what is the alternative? You suggest there's a digital advertising bubble but to have a bubble with the assumption it will burst, you need to show that advertisers can achieve a better return by doing something else. There's no digital marketing bubble more than there is a traditional advertising bubble. There IS however a conflict of interest in advertising that's caused by the agency whic…

I agree that advertising as a whole might be a bubble. In fact, my next piece is about TV advertising which is arguably worse. See: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3273476 I do think it's more accepted in traditional advertising that we just don't know how well it works. In digital advertising there is a grand illusion of measurement.

I disagree.

Most of the people I grew up with today know that it’s Miller time, that sometimes you feel like a nut, sometimes you don’t, or that coke is the real thing. They learned that from TV.

Online ads? They don’t trigger anything for me. They either need to deliver information contextually, deliver preferred placement for something I’m already looking for, or be deceptive.

Re: What do we really know about the effectiveness of digital advertising?

#163

Post by user5994461 » Wed, Nov 06, 2019, 10:45 PM UTC

chokma wrote: post #134

tempestn wrote: post #119

Earlier quoted context omitted.

But doesn't this ignore the selection effect discussed in the article? IE to use your numbers say you get a $100 sale for every $10 spent on ads. And say your profit margin (outside of ads) on that sale is 20%, so you earn $20-$10 = $10 in profit. However, what if 3/4 of the people who clicked on your ads would have found you anyway, through organic search results or other means? Then that $10 spend only actually gen…

True, you could very well cannibalize your own advertising efforts. I think that may be a problem for brands who already advertise themselves. For example, I agree it makes no sense for Ebay to place an ad for the search term "ebay" if they are already the first search result. If you have a well known brand, you will have a lot of people who will search you out directly. In that case it's a matter of running campaign…

Since you're taking the example of Ebay. When Ebay doesn't pay for ads, the top paid result Amazon most of the time. When Amazon also runs out of ad money, it's a less reputable site taking the top site, sometimes a plain scam.

Re: What do we really know about the effectiveness of digital advertising?

#164

Post by user5994461 » Wed, Nov 06, 2019, 10:48 PM UTC

JohnFen wrote: post #145

itronitron wrote: post #9

Just as Google won the search engine wars by helping people find what they are looking for, the e-commerce winners will be the companies that help people find what they want to buy (reliably and with confidence). Retail companies are blind to just what a shit-show their websites are (a lot of them even have ads in their online store). Any company that solves this problem for their sector will win it, and this is good…

> Retail companies are blind to just what a shit-show their websites are shit-show or not, when I'm buying something online I strongly prefer buying directly from the company's website over using sites like Amazon. My purchasing pattern goes like this: I want something, I search (using DDG) the web for what companies offer what I want, then I go through the companies websites to decide on where I'm going to make my p…

That could be hundred of small sites. Don't you mind giving your personal info and card details all over the place?

Re: What do we really know about the effectiveness of digital advertising?

#165

Post by harry8 » Wed, Nov 06, 2019, 10:49 PM UTC

TekMol wrote: post #20

So 16 years ago it has been shown that advertising for your own brand name is worthless? Yet still in 2019, when I google for "Amazon" I see an Amazon ad? Color me skeptical. I doubt the marketing guys at the worlds biggest companies are that out of touch with reality. Would love to know why they do it though.

> So 16 years ago it has been shown that advertising for your own brand name is worthless.

Chanel and every fashion brand that has a reall business in selling stink, Coca Cola, evian, Mercedes, JP Morgan ... We could list them all day. In fact just about all companies that rely on brand perception. All of them Beg to differ with that. And they have market cap that backs that view.

Glossy magazines, television, fancy Cinema ads, Point of Sale, event sponsorship. Nothing online. Ever. At least that I'm aware of and who can miss their advertising without which they have zero business.

Especially consider the stunning success that is Chanel selling $100+ bottles of stink that literally has a manufacturing and delivery cost of cents each. Cost of goods sold is a little higher than that when they include the brand marketing. Without it, not doing much business. Elon Musk has achieved the same, not stupid fashion shows but he is a media event and it reinforces Tesla's brand - that's brand marketing. He's brilliant at it. It's been weeks since a huge Musk media circus, he's hired the onion writers too, must be one worth millions coming up in your favourite news source soon...

Re: What do we really know about the effectiveness of digital advertising?

#166

Post by nostrademons » Wed, Nov 06, 2019, 10:51 PM UTC

jessefrederik wrote: post #100

tacon wrote: post #99

This is a rather unimpressive article. Yes, brand advertising is a disaster, just like it has always been. But to say that all digital advertising has unknown ROI is ridiculous. Digital direct response advertising allows very accurate ROI calculations. (Admittedly, a lot of advertisers are not applying the tools to their advantage. They call that the "Google stupid tax". Ditto these days on Facebook.) And direct resp…

Hi this is the author of the article. You're just making the exact mistake this article is about: you assume people who click on your ad and then buy something, bought something BECAUSE of your ad. From the article: "Suppose Luigi’s Pizzeria hires three teenagers to hand out coupons to passersby. After a few weeks of flyering, one of the three turns out to be a marketing genius. Customers keep showing up with coupons…

If you're using your digital marketing tools correctly you're already correcting for this. Instead of measuring how many people click on ads, measure how many people click on ads and then compare it to how many people click on organic results to the same query. Or run ablation experiments where you stop running the ads and see what that does to your clicks & conversions. If you were making $X + $Y with the ads and then you stop running them, hold everything constant (no new campaigns, no product changes, no seasonality), and you're suddenly making $X with organic traffic remaining constant, it's very likely that you're making $Y from your ads, particularly if $Y was directly attributable to ads-related sessions. If instead your organic traffic is now making $X + $Z, it's likely that your ads cannibalized $Z in organic spending and they are actually making $Y - $Z.

Not saying all advertisers do this, but it's pretty basic data science. You should always have a control for every experiment you run.

Re: What do we really know about the effectiveness of digital advertising?

#167

Post by avip » Wed, Nov 06, 2019, 10:52 PM UTC

jessefrederik wrote: post #100

tacon wrote: post #99

This is a rather unimpressive article. Yes, brand advertising is a disaster, just like it has always been. But to say that all digital advertising has unknown ROI is ridiculous. Digital direct response advertising allows very accurate ROI calculations. (Admittedly, a lot of advertisers are not applying the tools to their advantage. They call that the "Google stupid tax". Ditto these days on Facebook.) And direct resp…

Hi this is the author of the article. You're just making the exact mistake this article is about: you assume people who click on your ad and then buy something, bought something BECAUSE of your ad. From the article: "Suppose Luigi’s Pizzeria hires three teenagers to hand out coupons to passersby. After a few weeks of flyering, one of the three turns out to be a marketing genius. Customers keep showing up with coupons…

You make it sound as if advertisers do not A/B test. My experience says they do. But YMMV I guess.

It's obviously hard to convince an advertiser that her work is meaningless.

Re: What do we really know about the effectiveness of digital advertising?

#168

Post by musicale » Wed, Nov 06, 2019, 10:53 PM UTC

nopriorarrests wrote: post #115

jessefrederik wrote: post #100

Earlier quoted context omitted.

Hi this is the author of the article. You're just making the exact mistake this article is about: you assume people who click on your ad and then buy something, bought something BECAUSE of your ad. From the article: "Suppose Luigi’s Pizzeria hires three teenagers to hand out coupons to passersby. After a few weeks of flyering, one of the three turns out to be a marketing genius. Customers keep showing up with coupons…

>It's the same in online marketing, you often target people who are searching for say a pair of shoes. This is funny, because on HN you often see complaints about online advertising being horrifically bad because "it suggests me the products I have zero interest in", hence "online advertising sucks". But that's the whole point! These people are complaining that they are not getting pizza coupons when they are enterin…

> If it will suggest you something you are interested in already, chances are, you will buy it anyway

For me, the key bits of advertising are a) knowing the product is available b) knowing that its specifications meet my needs and c) knowing the price. Without knowing those things, I'm unlikely to buy the product. If I know (a) and (b) and want the product but haven't bought it, then I'm probably waiting on (c).

Perhaps this is an argument for the "coupons in the pizza lobby" (or at least "coupons in the food court") type of advertising. I actually like the sorts of printed catalogs/advertising circulars that stores like Target or Best Buy provide at the store entrance, because although I may have gone there to get one thing I may end up picking up another if conditions (a,b,c) are favorable.

Magazine advertising seems to work this way; if I pick up a copy of Mac|Life magazine then I'm probably already interested in Apple products as well as compatible hardware, software and accessories. Unfortunately Mac|Life is pretty anemic at the moment (along with most of the remaining computing enthusiast print magazines) so this model seems to be in trouble for print magazines at least.

With Mac|Life the decline of third-party Apple dealers probably hasn't helped, and probably the likes of Amazon and Wal-Mart don't feel they need to advertise there. But I'd like to see more ads for software, because the Mac and iOS app stores are still pretty terrible for discovery.

Re: What do we really know about the effectiveness of digital advertising?

#169

Post by harry8 » Wed, Nov 06, 2019, 10:56 PM UTC

I wonder how much under-the-radar advertising happens here.

Good karma user: meaningful context to the thread "But now I just use $product"

Immediate response: "Yeah $product is amazing - but here's something related and a different to the gist"

The whole thing is an aside but it's in context and make sense in the flow. That kind of advertising is massively more effective than a google/facebrick ad.

Re: What do we really know about the effectiveness of digital advertising?

#170

Post by josephjrobison » Wed, Nov 06, 2019, 10:57 PM UTC

A very easy way to break this argument is to not look at huge known companies like eBay and Amazon, but brand new companies 1-2 years old that have grown almost entirely by online ads. Eventually word of mouth kicks in, but there are plenty of smart operators that built their entire brand and revenue off of ads.

Works best in online direct to consumer brands.