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

#381

Post by doopy1 » Sun, Jan 03, 2021, 10:55 PM UTC

drewwwwww wrote: post #369

doopy1 wrote: post #158

Earlier quoted context omitted.

This book is the laughing stock of ad tech right now, it's got some good ideas, but it's 90% sensationalized and half-baked. The mortgage analogy is weak as well. This book is a money grab more than anything. It's an attempt at stirring the pot.

do you know if anyone has written a detailed critical response? people in the industry it is about laughing it off i think is to be expected. i doubt most traders in mortgage securitization in 2006 would have agreed the sky was about to fall.

I saw a nice synopsis from a finance person on reddit on why the analogy to the mortgage issue is way off the mark, but I doubt I can find it again. My point is that there's a whole burgeoning industry in whining about how ad companies are evil, but it's not really quite so black and white.

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

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Post by coldtea » Sun, Jan 03, 2021, 10:55 PM UTC

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.

>it might appear like there's a coordinated takedown of ad tech companies going on.

Or, you know, somebody read the first article on HN, then found the other somewhere, and thought of posting it, as it relates to the same disucssion...

Happens all the time with posting clusters (and the Baader-Mainhoff phenomenon).

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

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Post by andrewjl » Sun, Jan 03, 2021, 10:57 PM UTC

Does this mean that all of the so-called "small business needs it" arguments against durable federal privacy legislation are totally moot?

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

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Post by pkalinowski » Sun, Jan 03, 2021, 10:57 PM UTC

amelius wrote: post #314

toast0 wrote: post #199

Earlier quoted context omitted.

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).

So advertising works? If it didn't, those buying ads would not take the pepsi market share

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

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Post by friendlybus » Sun, Jan 03, 2021, 10:57 PM UTC

tqi wrote: post #122

joaodlf wrote: post #68

Earlier quoted context omitted.

This being allowed shows the sad state Google is in - you search for a brand, get ads for a competitor? Search engine, my ass. You now effectively need to pay Google to keep your product relevant through ads, even when the user is specifically looking for you.

If I search "Kleenex", am I specifically looking for the Kimberly Clark product or should Procter & Gamble be allowed to bid on ads for that search?

If I search "Kleenex" on Google, I'm asking Google to find me Kleenex, not some ads. If Google is going to start listing things in highest-to-lowest bid, then it stops being a search engine and starts becoming an auction house of links.

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

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Post by Anon1096 » Sun, Jan 03, 2021, 10:59 PM UTC

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…

What makes you say advertising is zero-sum? This doesn't seem to be the case at all to me.

Take diamonds for example. Prior to the mid 1900s, diamonds weren't nearly as sought after as they are currently. It took the marketing and advertising efforts (among other efforts, like monopolizing the mining process) of De Beers to convince the public that diamonds should be highly coveted. It was advertising that pushed the public to think spending X months' salary on a diamond ring should be normal. De Beers is obviously highly derided, but this a pretty clear cut case that advertising is NOT zero sum. The value of diamonds went up because of advertising, and nothing else depreciated in value as a result.

I won't even touch on your other points about unbranded goods, except to say that consumers definitely show preference for branded items, and I don't really see why that is a problem.

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, 10:59 PM UTC

jasode wrote: post #259

>Stopped [some] Spending on Digital Ads, Nothing Happened. Why? [Added "some" for clarity.] Let me try to restate the author's article because he presents it in a confusing way. The issue is that both Google and Facebook have "core ad tech" that works decently with proven ROI -- and they both have "additional ad tech inventory" (a.k.a the partners/affiliates) that's much lower quality : Facebook "quality" ad placemen…

It's not about clicks or traffic. The real issue is selection effect vs. advertising effect

SEO traffic benchmarks don't measure the right ting or show real ROI. FB or Google don't want you to measure the right thing.

Traffic to the website has licks, purchases and downloads that are happening anyway (selection effect) and clicks, purchases and downloads that would not have happened without ads (advertising effect) mixed. Only way to differentiate between the two is do real experiment where you divide target groups in two sections and show only the other group the ads.

When you do this experiment correctly, you find out that online ads are usually wasted money for any established brand and lower than expected value for less known brands.

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

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Post by zm262 » Sun, Jan 03, 2021, 11:00 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-…

Ads are somewhat like propaganda. There's no proving it will work or not in short terms, but nobody can deny that persistent propaganda has a long-term effect on the whole population. You have think about a kid/youth who listens to some propaganda for years when growing up. If say you show an ad for a new Apple product. A small part of it is to inform consumers about it, the longer larger part is to enforce the Apple brand which has been happening over many years. You can't say well it is not quite working so let's stop doing Ads.

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

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Post by polyomino » Sun, Jan 03, 2021, 11:02 PM UTC

joe_the_user wrote: post #299

st1x7 wrote: post #73

Earlier quoted context omitted.

> Sure, you're never going to know exactly how many people you advertised to would have organically, eventually found your product and bought it. But that honestly doesn't seem that important compared to the other metrics... Wait, why wouldn't that be important? It seems like the most important question since it asks whether advertising has any significant impact at all.

The thing about the "advertising doesn't matter" argument is that there are situations where advertising absolutely matters - when a company is just starting out and there's no way they can get organic referrals, when the public is unaware of their existence, etc. Moreover, most companies started small at some point so advertising and maintaining advertising made sense up to a point. And if we look at those companies…

Also Uber would benefit from a higher price of advertising for upstart taxi companies.

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

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Post by jackson1442 » Sun, Jan 03, 2021, 11:02 PM UTC

cortesoft wrote: post #60

kmeisthax wrote: post #43

I think a lot of this was already obvious to slightly-savvy mobile app users. Look at pretty much any free-with-ads app; a majority of the ads are going to be ads for other free-with-ads apps, many of which you already have installed. The thing is, outside of the Internet most ad spend is for marketing ubiquity, not direct response. You don't really buy, say, TV advertising with the expectation of getting so many cli…

The point of traditional advertising IS pretty much to waste money, similar to how the point of a peacock's tail feathers are to waste resources... it is a signal to potential partners (business or romantic) that they are so capable they can waste resources. It is a signal of bonafides.

I'm not entirely sure about that, at least not in all cases.

I was recently in the market for a new mattress, so went to a mattress store and tried some out. Even though Tempur Pedic is all the rage with their insane ad spending, I was not all that impressed, and found a considerably cheaper mattress that felt much higher quality.

Now, this may all be sales mumbo-jumbo, but the sales rep noted that a lot of people come there only interested in Tempur Pedic mattresses, which he regards as "literally a piece of foam, total crap mattresses." They sell at such a high price point because they advertise so much, while the mattress I found came from a no-name brand that doesn't advertise at all, and was therefore cheaper.

So I guess in some markets, advertising does work. I've never heard of someone telling me how much they loved a mattress unless it's a Sleep Number or a Tempur Pedic, and those advertise by far the most.