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?

#191

Post by viraptor » Wed, Nov 06, 2019, 11:25 PM UTC

kposehn wrote: post #179

josephjrobison wrote: post #170

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.

Reliably someone comes along every few months to question digital ads. I always come back to analyses of incrementality as the real proof. Take an audience of X people. Divide them in two. Show ads to your test group, don't show to control. Watch your business grow and gauge the lift between the two audiences. The companies that know how to advertise at scale do this constantly and can gauge the real effect of their…

How do you separate "people who haven't seen an ad" into a group in Google analytics? I don't believe "organic" source does that, because that means they weren't targeted by the ad in the first place, creating a bias.

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

#192

Post by munchbunny » Wed, Nov 06, 2019, 11:28 PM UTC

JohnFen wrote: post #139

munchbunny wrote: post #91

Earlier quoted context omitted.

> I also have a way to beat adblockers that I'm afraid of bringing to light since I only want it tied to my own companies completely non tracking and ethical ads. Beating ad blockers is not hard. Just serve them from the first party domain. If you’re not tracking users outside of whatever the first party tracks, you don’t need third party cookies either. As a former ad tech guy though... I think the biggest hurdle yo…

> Beating ad blockers is not hard. Just serve them from the first party domain. But I've been seeing an increasing amount of talk and effort in the online marketing community about finding ways to bring this first party data into the existing third party data collection machines. If websites start doing this, all it will do is bring the privacy heat down harder, directly on the publishers themselves. I hope that webs…

> If websites start doing this, all it will do is bring the privacy heat down harder, directly on the publishers themselves. I hope that websites manage to operate without sharing that data with the martech world, but I fear that they won't.

I think this is the crux of the issue. Up until now publishers have been insulated from the problem specifically because third party cookies allow it to be not the publisher's problem. If publishers bring this in-house, then the martech market will push for a standard API to allow advertisers to evaluate metrics on the ads they place, which means we've just kicked the can down the road.

Fortunately this is not a distinction that GDPR cares about.

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

#193

Post by buboard » Wed, Nov 06, 2019, 11:30 PM UTC

josephjrobison wrote: post #170

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.

the article isnt making the point that there is no value in advertising, but that it's highly overstated. One really needs ads - the 're a very effective way to reach users. But after that initial push, does spending more really return more?

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

#194

Post by DoctorOetker » Wed, Nov 06, 2019, 11:30 PM UTC

zwaps wrote: post #122

PetahNZ wrote: post #108

Earlier quoted context omitted.

Well its pretty easy to tell if its because of the advertising. Just turn it off for a while and see if it affects revenue.

Really not that easy, except if you can everything the same, aka go back in time. Otherwise, causal inference is sadly not easy.

thats why seller should modulate buying ads with a random stream of bits, such that the impulse response (of linearized approximation in tangent space for sales / advertising dollar) can be estimated.

of course if the advertisement platform is simultaneously a dominant search engine, they can simply choose to directly modulate your discoverability through the search engine, in which case it is closer to extortion as others point out.

as a potential buyer, I'd much rather have (economical) censorship free decentralized platform where every manufacturer / seller can advertise products / parts with relevant specifications / metrics. Think DigiKey, but without a central arbiter. Obviously a lot of products that are actually superior are superior because they have a better understanding of what people need than what conventional metrics show (say not just the cheapest capacitor, but perhaps the cheapest capacitance divided by electric series resistance or whatever, for a certain niche use). This would result in placing the burden of comparing products among the manufacturers, who will also make up original but useless metric formulas with the sole purpouse of making their product rank highest. So instead of having to browse products, people are browsing metrics, and it's up to both manufacturers and end users to communicate the utility of each end metric.

Something I don't like about the parts selectors like DigiKey et al, is that I can filter and rank according to proposed properties / columns, but I can't enter a formula in terms of properties, to show me the highest ranking. I always end up having to download and scrape the full list of parts so I can perform this ranking in a spreadsheet... If their search fields allowed formulas, and if people were logged in, the manufacturers / resellers could contact you to find out what made you formulate this specific metric or loss function, which gives feedback to the manufacturers what buyers are interested in. It would also give the sellers opportunity to correct the buyer that in his or her design the buyers' metric is faulty, and point out why...

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

#195

Post by JohnFen » Wed, Nov 06, 2019, 11:30 PM UTC

ngngngng wrote: post #185

jklinger410 wrote: post #97

Earlier quoted context omitted.

>advertising platform that topic matches ads off the content of the web pages Is your unique prop breaking ad blockers? Because category/contextual advertising is not new.

Breaking ad blockers, respecting privacy, and the option to essentially white label the service. I see these things coming together to create a unique and value proposition.

How do you define "respecting privacy"?

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

#196

Post by mr_toad » Wed, Nov 06, 2019, 11:30 PM UTC

dontich wrote: post #131

davidedicillo wrote: post #17

Overstated. This article assumes that: - All online advertising is Google search - That brand search advertising is representative of the entire industry There are plenty of companies making double-digit ROAS (return over ad spend), especially direct response advertisers.

If a company has incrementality tested and is really making double digit ROAS they aren't spending enough haha.

Not sure if you’re joking or not, but it makes obvious economic sense to keep investing in something that has a higher rate of return than other investments - and you can’t reliably get a 50% return on any other investment I’m aware of.

And it only takes a moments thought to realise that once everyone starts doing this, the marginal rate of return is going to be driven down to the going rate in the rest of the market.

Like any other investment, if it sounds too good to be true it almost certainly is.

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

#197

Post by buboard » Wed, Nov 06, 2019, 11:33 PM UTC

kposehn wrote: post #179

josephjrobison wrote: post #170

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.

Reliably someone comes along every few months to question digital ads. I always come back to analyses of incrementality as the real proof. Take an audience of X people. Divide them in two. Show ads to your test group, don't show to control. Watch your business grow and gauge the lift between the two audiences. The companies that know how to advertise at scale do this constantly and can gauge the real effect of their…

> Show ads to your test group, don't show to control

Which is the wrong experiment to run. The old adage is that 50% of advertising works, you just don't know which part. You need an experiment to prove that ad spending scales with ROI, as ad agencies claim. That may well be completely false.

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

#198

Post by komali2 » Wed, Nov 06, 2019, 11:34 PM UTC

user5994461 wrote: post #121

FussyZeus wrote: post #103

Earlier quoted context omitted.

This feels like a multi-billion dollar industry in which every entity involved has the ability to sink the entire thing, and simply stated, nobody does because they all make money from it.

Marketing departments are burning money like mad. It's google and other brokers that make a ton of money.

There's twitter and facebook ads in the san francisco bart system and I just don't fucking understand who in SF isn't aware of twitter and facebook or what they're about.

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

#199

Post by DataWorker » Wed, Nov 06, 2019, 11:36 PM UTC

nopriorarrests wrote: post #133

jessefrederik wrote: post #124

Earlier quoted context omitted.

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.

Hey Jesse, I spent 6 years working in ad-tech, and I was researching the incrementality effect of ads, selection bias and stuff like that for last 3 years. I want to let you know that your article is good. Online advertising is not a bubble, but your article perfectly explains why it is much harder than it seems.

The thing about bubbles is that nobody knows they exist. So an insider such as yourself saying, “there is no bubble,” is actually strong evidence of said bubble. Necessary but not sufficient.

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

#200

Post by Gibbon1 » Wed, Nov 06, 2019, 11:36 PM UTC

bryanmgreen wrote: post #74

SaberTail wrote: post #58

From the article: > Marketers are often most successful at marketing their own marketing. I've seen this play out at places I've worked. After raising a funding round, marketing sold the leadership on letting them burn the lion's share of it, even though launching new marketing campaigns was never on the list of reasons we initially went out to raise money.

I think that's a self-preservation tactic for many that often backfires. Most non-marketing management people want immediate and huge results... which are both hard to quantify and impossible to get without overspending or having an insanely lucky idea that goes viral. Naturally this leads to asking for a bigger budget and promising bigger results, then KPIs aren't met for X, Y, Z reasons, then they're forced to just…

In most industries it takes one to two years for people interested in your product to notice you and start trying out your product. And another one to two years for them to decide incorporate your product into their future business. And another year or two to generate strong profits.

So 3-6 years.