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Uber discovered they’d been defrauded out of 2/3 of their ad spend

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Re: Uber discovered they’d been defrauded out of 2/3 of their ad spend

#131

Post by pas »

Razengan wrote: post #85
jedberg wrote: post #20

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-…

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!

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.

Re: Uber discovered they’d been defrauded out of 2/3 of their ad spend

#132

Post by ghaff »

g42gregory wrote: post #4

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?

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.

Re: Uber discovered they’d been defrauded out of 2/3 of their ad spend

#133

Post by morelisp »

soared wrote: post #99
jedberg wrote: post #20

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-…

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 th…

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.

Re: Uber discovered they’d been defrauded out of 2/3 of their ad spend

#135

Post by Ericson2314 »

jedberg wrote: post #20

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-…

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!

Re: Uber discovered they’d been defrauded out of 2/3 of their ad spend

#136

Post by thrav »

isoprophlex wrote: post #102
onlyrealcuzzo wrote: post #50

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…

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.

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.

Re: Uber discovered they’d been defrauded out of 2/3 of their ad spend

#137

Post by marcinzm »

jedberg wrote: post #20

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-…

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.

Re: Uber discovered they’d been defrauded out of 2/3 of their ad spend

#139

Post by Ericson2314 »

soared wrote: post #99
jedberg wrote: post #20

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-…

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 th…

Fortune 500 is a cesspool of insane inefficiency balanced by equally ~~insane rent seeking~~ insanely secure revenue. The sooner everyone understands this, the better.

Re: Uber discovered they’d been defrauded out of 2/3 of their ad spend

#140

Post by mumblemumble »

soared wrote: post #99
jedberg wrote: post #20

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-…

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 th…

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.

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