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?

#211

Post by mobjack » Wed, Nov 06, 2019, 11:59 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…

Acquiring an audiences to divide into a split test is the hard part.

It is something that could work for retargeting existing users but doesn't work for acquiring new visitors.

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

#212

Post by tomrod » Thu, Nov 07, 2019, 12:00 AM UTC

LocalTrust wrote: post #66

> A former Facebook engineer once said (and he’s been quoted a thousand times over): "The best minds of my generation are thinking about how to make people click on ads." I spoke to some of those best minds: economists employed and formerly employed by the most powerful companies in Silicon Valley... Not to be a jerk, but almost none of the best minds in SV or of my generation are economists.

If you are a millennial or younger, I respectfully disagree. The "best minds" have been sought out to build out the new infrastructure in the service of the new railroad tycoons.

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

#213

Post by hnick » Thu, Nov 07, 2019, 12:01 AM 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…

I'm still reading the article but thought I'd mention some popup infocards (such as Audis and turtles) are cut off near the end since it's too long. At least on my desktop Chrome browser. I can read them via browser inspection but that won't suit a wider audience.

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

#214

Post by usrusr » Thu, Nov 07, 2019, 12:03 AM UTC

ngngngng wrote: post #8

> a Super Bowl ad cost three million dollars. Why? Because that’s how much it cost. What does it yield? Who knows. This article is awesome. In my free time I'm building an advertising platform that topic matches ads off the content of the web pages. No tracking of users. I'm hoping to allow people to host and run their own all inclusive self contained advertising platform for just a licensing fee. I also have a way t…

But the article is wildly exaggerating the "nobody knows" gap of superbowl ads. There's an entire industry specializing in measuring the effect of "write only" ad channels and all the big TV advertisers spend a considerable fraction of their ad budget on commissioning those measurements.

Now the immediate, built-in metrics of online advertising have been eroding the business of that industry for quite a while. Those metrics are far more detailed, they boast low SNR and absolute precision as opposed to the murkyness of extrapolated trendlines in polls. It's very tempting to rely only on the built-in metrics then, and that's exactly where the problems the article is exploring are kicking in. Those old-school pollster methods that start with zero data and only measure the continual development of brand awareness plus the occasional campaign trace have something big going for them, which is that the little data they yield is universally relevant, whereas that ocean of numbers that is produced by built-in metrics can easily be a useless distraction or at worst actively misleading. Perhaps our would be wise for big ad spenders to employ some of that "zero data" brand awareness observation that could measure TV ads even when all the ad-spending is going online, into the realm of built-in metrics.

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

#215

Post by spencey » Thu, Nov 07, 2019, 12:03 AM 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…

It's not the same. It's handing out coupons to people who are hungry and are looking for food; not people in the waiting area.

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

#216

Post by MichaelBurjack » Thu, Nov 07, 2019, 12:05 AM UTC

mobjack wrote: post #211

kposehn wrote: post #179

Earlier quoted context omitted.

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…

Acquiring an audiences to divide into a split test is the hard part. It is something that could work for retargeting existing users but doesn't work for acquiring new visitors.

What makes you believe this to be true?

You define an audience. You split it. You test and measure the result.

What component of that strategy doesn't work for new visitors? Many eyeball vendors (Google, Facebook, heck traditional TV and other media!) are set up precisely to allow for such cases.

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

#217

Post by MichaelBurjack » Thu, Nov 07, 2019, 12:07 AM UTC

viraptor wrote: post #191

kposehn wrote: post #179

Earlier quoted context omitted.

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.

Advertisers have many tools to measure "ghost ads" aka "people who haven't seen an ad but would otherwise have qualified for all your target criteria". See https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2620078 as an example.

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

#218

Post by usrusr » Thu, Nov 07, 2019, 12:10 AM UTC

munchbunny wrote: post #91

ngngngng wrote: post #8

> a Super Bowl ad cost three million dollars. Why? Because that’s how much it cost. What does it yield? Who knows. This article is awesome. In my free time I'm building an advertising platform that topic matches ads off the content of the web pages. No tracking of users. I'm hoping to allow people to host and run their own all inclusive self contained advertising platform for just a licensing fee. I also have a way t…

> 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…

> It’s both problematic for privacy but also crucial for measuring ROI. Worse than that: buyers would have to not only trust the ad-network to not make up impression numbers, but also every single content provider.

But that would easily be solved by edge server ad splicing. Much easier to trust the CDN than a scrappy content provider. I really don't get why that hasn't been a thing for at least a decade. CDN business just going well enough as is?

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

#219

Post by vmurthy » Thu, Nov 07, 2019, 12:10 AM UTC

Somewhere near the very bottom of the article is this gem. Emphasis mine.

"And it wasn't because it was working for them. ... But there was one group of advertisers with a valid reason to purchase own brand name ads. Not that they were any more effective for this group, but because their competitors were "crowding them out" by buying ads that targeted the brand owner's name (so you search for "Bestbuy" but a sponsored ad for "Walmart" tops the list). This can enable Walmart to steal 20% of Bestbuy's organic search traffic"

In other words, even if a lot of people figure out that digital advertising is worthless to increase sales or whatever, they might still buy it for defensive reasons .. It's a win for Google/FB either way

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

#220

Post by rossdavidh » Thu, Nov 07, 2019, 12:11 AM UTC

So, there are a lot of reasons to think ads might not work, and a lot of reasons to think surely market forces would punish companies who spend $$ on ads that don't work. Which to believe?

Well, reality check: do the ads you get shown, work? For me, almost never. It's either: 1) the thing I was google searching for anyway, or 2) the thing I bought online yesterday, which I therefore definitely don't want and won't want for a long time. This even happened with things like cars and house air conditioners, where someone who's recently made a purchase is the LEAST likely to want it.

I can think of a lot of reasons for ad-supported companies (which includes news journalists) to want to claim that ads work better than they do. I can think of reasons why executives want to believe ads will save them, when they won't, because actually improving your product is much harder than spending VC money on ads.