Uber discovered they’d been defrauded out of 2/3 of their ad spend • Hacker News Board

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

#221

Post by nobody9999 » Sun, Jan 03, 2021, 9:00 PM UTC

josefx wrote: post #74

birdyrooster wrote: post #23

Yeah I think Google and other advertisers are great at predicting what people will buy and then shows them ads for it. That’s different than showing a person an ad and changing their behavior, but to advertisers they can’t know unless they experiment.

> Yeah I think Google and other advertisers are great at predicting what people will buy and then shows them ads for it. Seems to be entirely subjective. I bought a new blade for a bread cutting machine on amazon, the last one lasted ~25 years. My current recommendations: blades for bread cutting machines. I also checked some Christmas decorations on Amazon, but didn't buy any. So next to the blades I get Christmas d…

>In short I am not really convinced that these platforms are good at predicting what I want. Rather it looks as if they are good at showing me what I already have.

While that's definitely true (I get ads from Amazon for stuff I've already purchased all the time too), in that case Amazon is leveraging their own marketing channels to support their own business -- which has, effectively, zero marginal cost to them.

However, when advertisers buy space from Google or FB, that's not the case. There is a definite external cost to such ad buys.

As such, being able to identify the "value" of such expenditures is (or can/should be) important to the advertisers.

That said, much of advertising is based upon the idea of "top-of-mind awareness."[0]

The idea being that if you are considering a purchase, the brand that comes to mind without prompting when considering that purchase will be preferred over brands of which you aren't immediately aware.

Purchase decisions made on a whim or without any research are usually those which are low cost. Which is why companies like P&G, Coca Cola and like companies focus on "top-of-mind awareness."

If you're going to buy a washing machine or a riding lawn mower, you're much more likely to do research than if you're going to buy a soft drink or a bag of chips.

That said, the same "top-of-mind awareness" can be helpful even for big ticket items, as those brands may well be the first ones about which research may be done.

Identifying how such advertising may impact purchase behavior is a complex topic, and unless you can quantify specific ad-views to actual purchases, doing so is generally speculative and is the subject of a great deal of quantitative market research[1].

[0] https://en.wikipedia.org/wiki/Top-of-mind_awareness

[1] https://en.wikipedia.org/wiki/Quantitative_marketing_researc...

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

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Post by Wowfunhappy » Sun, Jan 03, 2021, 9:01 PM UTC

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'm only about halfway through the first of the podcast episodes you linked (thanks!), but just thinking about this logically for a moment:

I would not be shocked to learn that advertising for a specific product or event is not particularly effective. However, I'm inclined to believe it has a huge effect on overall brand recognition.

Let's say you go to Amazon to buy a roll of toilet paper. How do you choose from the literally hundreds of options? You could spend a day of your life reading reviews, and trying to parse which ones are fake. Or you could buy the toilet paper from Scott because you recognize the brand.

As I see it, buying brand advertising is a lot like buying an expensive suit. It's not that the suit makes you more productive, but it is a sign of professionalism, and—frankly—of wealth. If a brand is advertising everywhere, you know they aren't a fly-by-night company, and their products likely meet some standards of quality.

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

#223

Post by jedberg » Sun, Jan 03, 2021, 9:01 PM UTC

otabdeveloper4 wrote: post #145

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 can actually prove it has any ROI at all. That's a philosophical question of whether you consider statistics to be "proof". > No one is willing to run the experiments necessary. You're nuts if you think this is true. I assure you that companies in traditional industries (i.e., without venture capital) can and do run these experiments. The Uber story is about venture capital and its anti-market incentives, no…

Read the podcast transcript. An economist proposed turning off print ads in one market to find out if they mattered, and the head of marketing said he’d rather not know.

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

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Post by jhawk28 » Sun, Jan 03, 2021, 9:03 PM UTC

wasdfff wrote: post #217

thrav wrote: post #136

Earlier quoted context omitted.

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…

Likewise, I probably haven’t seen an ad for coca cola or kleenex in a while. Once a brand is ubiquitous to the point where soda becomes coke and tissues become kleenex in the lexicon, it feels like ad spend is wasted.

Brand advertising is different. It is there to remind people about the brand. Companies do it because they have the analytics that show that it works.

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

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Post by justapassenger » Sun, Jan 03, 2021, 9:03 PM UTC

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…

It’s like saying that no one who works on reliability of the systems is willing to run experiment to throw 100% errors for a month, because running experiment like that may show that reliability of the systems doesn’t matter.

And then using data from a one system that went down and nothing happened as a proof that systems reliability doesn’t matter at all, and it’s huge scam by engineers.

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

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Post by toast0 » Sun, Jan 03, 2021, 9:03 PM UTC

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…

Telsa is in an enviable position of selling most of their cars before they're produced. In that position, you don't really need to advertise much. They also get a lot of PR to keep up brand awareness.

If Hyundai couldn't keep Genesis vehicles on the dealer lots, they'd advertise them less too. Having a dealer network means dealers that want manufacturer support in advertising to keep dealers happy, even if the new cars sell themselves, dealers need to get people in to sell used cars.

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

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Post by PragmaticPulp » Sun, Jan 03, 2021, 9:03 PM UTC

Snoozus wrote: post #3

I have this suspicion that mobile ads have way weaker effect than claimed. No-one in adtech has any interest in finding out. Marketers don't want to lose budgets or importance either. So a lot of money is wasted on annoying people. How sad.

Engaging random marketing consultants is a good way to waste money on ads.

However, anyone engineering for advertising from the start of your distribution plans should be able to measure these things. It’s not hard to track which signups came from ad clicks versus organic traffic. The problem is that most companies start out focused on their apps and simply assume advertising is a totally independent function that happens elsewhere in the company. Invest some time into including advertising as part of your signup process and it’s really not that difficult to track LTV of customers who signed up via ads.

In fact, that’s how Uber confirmed this fraud. They noticed that some of these fake customers were clicking on the ads and getting signed up within seconds, which is something only bots can pull off. If the customers you’re getting from ad signups aren’t actually spending money in the app, you should know about this from basic analytics.

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

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Post by mgh2 » Sun, Jan 03, 2021, 9:04 PM UTC

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-…

Additional resource discussed in the past:

https://news.ycombinator.com/item?id=21465873

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

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Post by rightbyte » Sun, Jan 03, 2021, 9:05 PM UTC

qwerty456127 wrote: post #19

chrisdinn wrote: post #13

Earlier quoted context omitted.

I think the problem is that the overwhelming majority of digital ad formats just don’t work. Does anyone who works in digital ad tech genuinely believe that these formats work? I have been here for the last ten years and have come to believe they do not, certainly not comparable like traditional linear TV or print in their heydays. There are exceptions. I think Google search ad works so well it’s eating the product.…

> overwhelming majority of digital ad formats just don’t work Doesn't it? It may have miserable conversion rate, limited target audience but it apparently is commercially viable. People would hardly spend money on sending e-mail spam in 2020 if it didn't work.

How do we not know that the spam is sent out by one sucker after the next that go until they realize it is not worth it?

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

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Post by nabla9 » Sun, Jan 03, 2021, 9:07 PM UTC

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…

>but you can also measure against SEO traffic with a high degree of certainty.

None of these benchmarks distinguish between the selection effect (clicks, purchases and downloads that are happening anyway) and the advertising effect (clicks, purchases and downloads that would not have happened without ads).

You can fix this by dividing the target group into two random cohorts in advance: one group sees the ad, the other does not. Designing the experiment thus excludes the effects of selection.

When you do this experiment correctly, you find out that ads have low effect or are not cost effective (as eBay discovered).