Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

twitter.com

Post reply on HN
Print view View original

311–320 of 933 posts

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

#311

Post by alexeichemenda »

alexeichemenda wrote: post #305

What's important to highlight here is that marketing teams at companies such as Uber are incentivized to pus vendors to drive fraud. Specific example: Uber works with vendors A, B, C. Marketing team is incentivized to reach a cost per sign-up of $X (Let's say $50 for the sake of this example). Vendor A, running fraud, delivers sign-ups @ 45$ each. Vendor B, clean, delivers them at $55 each. Vendor C @ $65 each. The n…

I'll also mention: this is a problem that goes up every ladder. Marketing individual contributor wants to show good performance to their manager, so delivering rides for cheap is good. Marketing manager is in the same boat with the CMO. CMO -> Board -> VC (VC will be happy to see great efficiency on the customer acquisition side). VC -> LPs (LPs will be excited about customer acquisition efficiency). A limited number of people are actually deeply concerned with this, and that's why it's taking so long for the top KPIs to change from "cost per action" to "incremental impact and incremental ROI".

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

#312

Post by MattGaiser »

objclxt wrote: post #304
julienfr112 wrote: post #258

There is also one agent problem : manager status is linked to headcount or/and budget. As a head of marketing, you have no interested at all at reducing your ad budget, quite the opposite !

That’s a rather naive way of looking at how corporations work. If you’re the head of marketing and go to the CFO and say “hey, we found a way to get the exact same results we currently get but at half the cost” you can bet you will be rewarded for it.

Depends. Are you sticking with that company or do you want to shop your resume around?

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

#313

Post by one2know »

objclxt wrote: post #304
julienfr112 wrote: post #258

There is also one agent problem : manager status is linked to headcount or/and budget. As a head of marketing, you have no interested at all at reducing your ad budget, quite the opposite !

That’s a rather naive way of looking at how corporations work. If you’re the head of marketing and go to the CFO and say “hey, we found a way to get the exact same results we currently get but at half the cost” you can bet you will be rewarded for it.

No one is going to half the cost, and executives don't in general do any sort of cost reduction activities for two reasons. First, they would be fighting diminishing returns since there is only so much reduce-able cost. Second, they might in reality only be able to do a small cost reduction, then they are doubly screwed as they will reach diminishing returns faster. If the company mandates cost reduction executives will just fire a few hundred or thousand employees because that is deterministic, easy, and instant savings. They will just restaff when the cost reduction campaign is over.

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

#314

Post by amelius »

toast0 wrote: post #199
likpok wrote: post #141

Earlier quoted context omitted.

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.

They only lost market share because everybody else was still using advertising. Therefore, this is not a test in favor of advertising (only in the prisoner's dilemma sense).

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

#315

Post by [deleted] »

alacombe wrote: post #302
qeternity wrote: post #194

Earlier quoted context omitted.

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.

Ratio can't be negative, they can either be above of below 1. What you are talking about is "$benefit - $cost", not "$benefit / cost".

[deleted]

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

#316

Post by ajsnigrutin »

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.

Is it really christmas time, if there are no cocacola-trucks-driving-to-town ads on tv?

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

#318

Post by strictnein »

Ericson2314 wrote: post #307
bigdict wrote: post #297

Together with https://news.ycombinator.com/item?id=25623858 it might appear like there's a coordinated takedown of ad tech companies going on. Google derives 80% of its revenue from ads, Facebook 99%. Imagine these giants coming down if it turns out that online ads aren't effective? EDIT: Tweaked the wording regarding the alleged "coordinated takedown" as a reaction to a comment.

Good. Advertising is a terrible zero-sum industry that just distorts market activity. It has little place in capitalism or any other system. Exceptions: - New products deserve some advertising. I would handle that like the patent system. Demonstrate your product is sufficiently different, and get access to some attention economy time slice. Some may say, well what about competition with existing products to bring dow…

Centrally planned economy that also controls speech, based on the patent system. This seems like quite the recipe for success.

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

#319

Post by mlthoughts2018 »

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-…

This is really, really not true. Advertising lift has been well studied, especially in metastudies spanning hundreds of digital campaigns across Facebook and Google. These are independent academic metastudies, with hundreds of millions of impression data samples.

Positive lift in the range of 0-20% is very common, and many statistical aspects of causal inference on ad impacts are well understood.

Negative lift and flat campaigns are real phenomena too, and it does deserve more widespread publicity that negative lift happens in an appreciable number of campaigns, but that doesn’t take away from the overwhelming evidence that digital advertising works and that the mechanics of positive lift are well studied.

Here are two of the foundational papers in this area:

- https://www.kellogg.northwestern.edu/faculty/gordon_b/files/...

- https://www8.gsb.columbia.edu/media/sites/media/files/Garret...

Particularly Figure 1 (page 26) in the second link. That figure alone utterly refutes any nonsense claim that digital advertising doesn’t have provably positive ROI.

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

#320

Post by zuhayeer »

"For ex, one ad network launched 'battery saver' style apps in Google Play, giving them root access to your phone.

When you type the word 'Uber' into your Google Play, it auto-fires a click to make it look like you clicked on an Uber ad and attribute the install to themselves "

The things you can do on Android devices are insane. Also ads aren't necessarily for conversion, they're for permeating brand.

Post reply on HN