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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

#421

Post by phillipcarter »

kabes wrote: post #414

If ads don't work, how did the advertising industry convince people to spend on advertising in the first place?

Many (most?) people high up enough in an org chart to control a significant budget in online advertising are so abstracted away from the actual mechanics of that spending and its impact, coupled with communication chains that get increasingly political (you don't want to say your expensive proposal did nothing, after all!) and you get a recipe for shady ad networks doing basically whatever they want.

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

#422

Post by zymhan »

cortesoft wrote: post #365
unethical_ban wrote: post #350

Earlier quoted context omitted.

I'm genuinely shocked at how many people think advertising doesn't work. Just because it doesn't make a person consciously stand up and say, "I want a Snickers" does not mean the ad didn't work. Like, honestly, are there people here suggesting viral ads don't work? Or don't understand the point of Coke or Mercedes Benz ads are for? Coke establishes themselves as the defacto soda. There is no other soda, or if they ar…

Sorry, I think you misunderstood my point a bit... I think I am agreeing with you. My point was that advertising's purpose (from a consumer point of view) is for the ADVERTISER to waste money, to signal that they have confidence that their product is good enough to recover the cost of wasting money on advertising.

They weren't disagreeing with you in their reply, just emphasizing the same point.

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

#423

Post by f430 »

ineedasername wrote: post #415
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.

No need for a conspiracy: one popular article sparks the submission of something similar, and given there was enough interest to make the first one popular, it's not uncommon for another to become popular.

I see lot of anxious people from the ad industry commenting on these threads trying to convince the rest of us we are wrong.

It's funny how quickly the word conspiracy is used by the party that has most to lose.

It's more likely that people have spend the past 10 years buying into the online ad industry, got burned and finding out it wasn't because they weren't spending enough it was that they were defrauded.

We should see class action lawsuits over the next 10 year horizon that will put a massive hit to the shady ad tech industry.

Millions of small to big businesses were defrauded out of their ad spend and now the industry will simply make way to a whole new scam.

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

#424

Post by andrewjl »

garciasn wrote: post #125
Nextgrid wrote: post #30

Earlier quoted context omitted.

> 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…

I work in the field. Incrementality testing is a big part of marketing measurement at any reputable agency. Any claims to the contrary are FUD. That said, companies like P&G, Airbnb, and Uber, which are oft-cited as examples of digital not being worth it, fail to understand their own brand recognition and organic power, built through prior marketing efforts, as key to their current standing. Sure, TODAY, it doesn’t h…

> as key to their current standing.

It seems like it would be important to measure this standing and turn down spend once it is reached. I can see how there's a lack of incentive to help large advertising spenders understand this.

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

#425

Post by Nextgrid »

throwaway201103 wrote: post #245
Nextgrid wrote: post #30

Earlier quoted context omitted.

> 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…

> Why wouldn't someone jump at an opportunity to prove the thing/service they provide actually works, unless they were unsure about it themselves? Because advertising in some form certainly works. If you can determine that approach "A" that everybody is doing is actually a waste of money but approach "B" is effective, then you can develop services around approach "B" and market them based on these findings.

Nobody is arguing that advertising doesn't work at all, but my argument (which I think a lot of other people agree with) is that the effectiveness of online advertising (and maybe advertising in general) is overblown.

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

#426

Post by TeMPOraL »

kabes wrote: post #414

If ads don't work, how did the advertising industry convince people to spend on advertising in the first place?

They work on the margin, so if your competitor spends on advertising, you have to spend as much yourself just to cancel out the effects of their ad spend.

As for big brands and brand advertising - the same applies, there's just more inertia.

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

#427

Post by treis »

ABeeSea wrote: post #345
treis wrote: post #177

Earlier quoted context omitted.

Effectively every restaurant in the US has to pay either PepsiCo or Coca Cola. Similarly, if you want to buy a non-alcoholic beverage at the grocery store it's mostly down to those two (with Dr. Pepper having a much smaller but still significant stake). Any competitor that emerges just gets bought up by one of the three. Apple's half of the phone Duopoly. Either you pay them or pay Google if you want a phone and want…

Restaurants only pay because consumers demand it and would not visit the restaurant otherwise. That’s not rent seeking. That’s market forces. And what they pay correlates with how much their customers demand coke/Pepsi.

The rent seeking is buying up competitors until its a duopoly and then protecting that through shenanigans like exclusive agreements. It has nothing to do with consumer demand.

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

#428

Post by Anon1096 »

visarga wrote: post #404
Anon1096 wrote: post #386

Earlier quoted context omitted.

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…

> De Beers is obviously highly derided, but this a pretty clear cut case that advertising is NOT zero sum If you take into consideration the money wasted on overpriced stones, it's zero sum. How did people ever get engaged before De Beers?

That is not at all what zero sum means. If you're going to use a widely-used term at the core of an argument, you should be sure you're doing so correctly.

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

#430

Post by TeMPOraL »

johnrgrace wrote: post #420
TeMPOraL wrote: post #300

Earlier quoted context omitted.

How do you determine a reputable agency though? I worked next desk to people running a small ad agency. Because we shared office (and I found them an intern), I got a very good look at how they're working. What I've seen can be summarized as: people who have zero clue or interest in statistics writing "reports", with "graphs" they don't even understand beyond "pointing up = good", proving positive ROI to customers -…

Have you ever engaged with the large advertizing holding companies? They have teams of HIGHLY acomplished data scientists, boutique vendors for specific niches etc. Even if you don't pay for it there will be some people skilled at statistics looking at reports. If you pay for it, there will be data scientists doing analysis. The large ad firms deliver a very good product but it usually isn't cheap.

I haven't, and I don't doubt that's true (at least in many cases; I've learned not to underestimate the chances of big companies ending up running scams either).

I've personally dealt mostly with the other end - the individuals and small agencies - and what I saw revealed total lack of necessary competences for the reports to be corresponding to reality. Perhaps it's understandable - after all, people who have the required knowledge likely end up working for big advertisers, or in entirely different fields. But small business owners don't pick these big advertising companies either.

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