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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

#191

Post by saganus »

jmfisch wrote: post #178
saganus wrote: post #162

Earlier quoted context omitted.

I might be misunderstanding... but, negarive ROI? I.e, the more they spent on ads, the less sales they got? Feels like a missed something, as that sounds... counterintuivie. (Not in any way related to the ad industry so pardon my ignorance)

As I read it, the amount they were spending on the ads themselves was more than the converted revenue from ad clicks. While the decline was probably (guessing) not linear, spending more on ads led to less than proportionally more revenue. If that had happened I can imagine calling that negative ROI.

That makes more sense!

Thanks

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

#192

Post by dschuetz »

ghaff wrote: post #144
dschuetz wrote: post #49

Welcome to the Advertising Tech Bubble.

Maybe. A lot of people have been saying this for over 10 years. If it's a bubble that's real though, the effects are going to be pretty widespread. Not only do two of the biggest (and best-paying) tech employers get slammed, but so do all the inter-related companies. And, also BTW there will also be a lot fewer fat exits for startups if Google and Facebook acquisitions get turned off.

First signs of bubbles are fraud and wrong valuation.

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

#193

Post by morelisp »

guerby wrote: post #175
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-…

"No one is willing to run the experiments necessary." Tesla is one natural experiment about not spending money on advertising in the mass media compared to traditional car companies that spend HUGE amount of money advertising. https://www.motorbiscuit.com/gm-spends-an-embarrassing-amoun... "Hyundai spent $4,006 per Genesis vehicle sold in 2018. Ford’s Lincoln brand came in second with $2,106 per vehicle sold. After J…

Tesla's marketing spend is whatever it costs them in legal fees and fines to keep the mouthy celebrity CEO - and their high-profile campaigns in 2018 seemed pretty effective.

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

#194

Post by qeternity »

saganus wrote: post #162
rm999 wrote: post #71

Back in the early 2010s I worked in ad tech on a data science team, and one of the things we were pushing for was causal A/B testing; basically turn off a campaign's advertising to a % of people and correlate it with sales to measure ROI. As we were kicking this off I was at a conference chatting with an executive at another ad tech company. His response: "oh yeah I know a guy who tried that, he's not in the industry…

I might be misunderstanding... but, negarive ROI? I.e, the more they spent on ads, the less sales they got? Feels like a missed something, as that sounds... counterintuivie. (Not in any way related to the ad industry so pardon my ignorance)

No. A negative ROI just implies that the ratio of benefit/cost is less than one. If I incur a cost/investment of $100 but it creates value of $200 then I have an ROI of 100%. If this same expenditure instead only produced $80 value then I would have -20% ROI as in the value I’m realizing from my investment is 20% less than the cost of the investment.

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

#195

Post by syndacks »

rm999 wrote: post #71

Back in the early 2010s I worked in ad tech on a data science team, and one of the things we were pushing for was causal A/B testing; basically turn off a campaign's advertising to a % of people and correlate it with sales to measure ROI. As we were kicking this off I was at a conference chatting with an executive at another ad tech company. His response: "oh yeah I know a guy who tried that, he's not in the industry…

What do you mean by the two references to not being in the ad industry anymore? Quit? Fired? Why?

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

#196

Post by johnrgrace »

Nextgrid wrote: post #30
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-…

> No one is willing to run the experiments necessary The people that would have the power to run this experiment have their entire careers depending on things staying as-is. Running the experiment carries a significant risk of exposing that the advertising operations they're responsible for provide much less ROI than they pretend it does. The unwillingness of anyone to run such an experiment is already an answer. Why…

The experments are run. Why don't you look at the work that comes out of the Advertizing research foundation.

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

#197

Post by x0x0 »

Nextgrid wrote: post #30
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-…

> No one is willing to run the experiments necessary The people that would have the power to run this experiment have their entire careers depending on things staying as-is. Running the experiment carries a significant risk of exposing that the advertising operations they're responsible for provide much less ROI than they pretend it does. The unwillingness of anyone to run such an experiment is already an answer. Why…

Uber was just incredibly incompetent to not audit their ad spend at all.

I worked at an ad company. It was an absolutely standard metric to eg geo-fence ads out of a state or two for 3 months to demonstrate the impact of ads. This isn't easily externally visible, but tests like this are standard practice.

Particularly in the app install space, which is sketchy as hell once you stop buying from the top handful of vendors, buyers should be auditing by a couple million in annual spend. To get to $150m without looking hard at big chunks of their spend is just plain arrogance and/or incompetence.

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

#198

Post by onlyrealcuzzo »

azornathogron wrote: post #107
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…

> All big companies do this. Except Uber, apparently? Or would the method you're talking about not have discovered that something fishy was going on? (I don't work with ads so I don't know the limitations of the type of experiment that you're talking about)

It would work for some of Uber's ads. From the article, it looks like they were frauded mostly by in-app ads. And they were paying for installs - not actual trips.

So, no, Uber's advertising here is a little different than (I think) the majority of companies. They are mostly paying for installs rather than sales / conversions. A lot of newer "app" companies could be in similar situations.

Though, honestly, this seems like a massive fail on their analytics team for not figuring this out earlier. They should have been able to see that all of these "installs" from certain advertisers were not leading to trips.

In fact, it says they turned off 66% of ads. They didn't randomly turn of 66% of ALL ads. They turned off this TYPE of ad, which they failed to earlier recognize was ineffective.

Step 1) assume your ads won't work.

Step 2) have enough analytics / logging in place to convince yourself the ads do work.

Step 3) if they don't work, turn them off.

Looks like they skipped step 2 - which honestly, is not uncommon for a fast growing business - even if they are huge and already make a lot of money.

What they found isn't even what people are discussing. They found that certain networks they were buying ads from were almost 100% fraud (which is pretty well known).

Instead, people here seem to be discussing that most online advertising is fraud, and/or that there's no way to prove it's effective. That is absurd.

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

#199

Post by toast0 »

likpok wrote: post #141
soared wrote: post #99

Earlier quoted context omitted.

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…

Part of the claim is that the people who are checking are ad execs who, if PepsiCo stopped buying ads, would shortly be out of a job (or have their budget and influence slashed). A counter to this might be that different advertising channels are likely not identically effective, and a TV ad exec has a big incentive to poke holes in non-TV ads.

See the Pepsi Refresh Project of 2010. Where Pepsi redirected a sizable amount of ad budget (including super bowl ads) to community projects. They abandonded this strategy after a while because they lost market share.

This is the biggest large scale test of advertising I'm aware of. But it probably doesn't apply to all products.

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

#200

Post by Gibbon1 »

dschuetz wrote: post #192
ghaff wrote: post #144

Earlier quoted context omitted.

Maybe. A lot of people have been saying this for over 10 years. If it's a bubble that's real though, the effects are going to be pretty widespread. Not only do two of the biggest (and best-paying) tech employers get slammed, but so do all the inter-related companies. And, also BTW there will also be a lot fewer fat exits for startups if Google and Facebook acquisitions get turned off.

First signs of bubbles are fraud and wrong valuation.

First sign to me that the dot bomb was imminent was a two inch article in the WSJ summarizing a finding that something like 2/3rds of startups had board members or upper managers that had been sanctioned or investigated previously for securities fraud.

It's telling that all the FAANG companies are basically in open violation of a number of laws.

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