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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

#741

Post by tsjq »

syshum wrote: post #264
walshemj wrote: post #257

Earlier quoted context omitted.

Agency or client side? I assure you the big brands CFO's take a huge amount of interest in what is spent on advertising.

In my experience the Sales and Marketing teams of any large company have the loosest restrictions on how they account for their spending. Other dept;s like IT have to justify every penny, but Sales and Marketing not sooo much

Yes. Sales and marketing : "profit centers" . Ever increasing budgets.

Engineering , R&D, Manufacturing, Tech, Testing : "cost centers". Ever tightening budgets.

MBA, Beancouting 101

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

#742

Post by tsjq »

nkozyra wrote: post #527
syshum wrote: post #264

Earlier quoted context omitted.

In my experience the Sales and Marketing teams of any large company have the loosest restrictions on how they account for their spending. Other dept;s like IT have to justify every penny, but Sales and Marketing not sooo much

I think there's a very loose belief that sales is how money is made, while they people that build and test products are pure expense. I've seen it not just in the phenomenon you describe, but also in layoffs and restructurings.

Yes. Cost centre and profit centre.

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

#743

Post by austincheney »

roenxi wrote: post #706
nutanc wrote: post #522

We did a similar kind of experiment some time back and found both FB ads and Google ads were doing jack shit for us. Google was better. FB ads were absolutely useless. So we stopped our ad spend. We observed no change in our customer acquisition. Another way these ad engines extract money out of you is by allowing competitors to bid for your brand name keyword. Try searching for Ozonetel on Google. There will be six…

Prefacing this with an acceptance both that HN culturally has US management principles and that I've got no idea how to run a business... Why is it an initial assumption that customer acquisition and ad spend are linked short or even medium term? That doesn't seem right. When I see an ad for washing machines it doesn't make me run out and buy a washing machine. It gets me familiar with Samsung the brand so in 6-12 mo…

In online marketing/merchandising online advertising is very alluring for two reasons: immediate feedback and the few key players are well known. Essentially online advertising makes a marketing team’s life much easier even though it could be a net negative for the business revenue.

When I was doing some work in this space for Travelocity many years ago the biggest problem was cannibalism of data and traffic. Yes, the traffic coming in from ads was shitty and generally costs more than it returned, but even still cannibalism was the bigger problem. We would have been better off taking all the ads off the site and spending money in other offline venues. It was so apparent that ad spend was a drug addiction. I still don’t understand how this was a mystery to anybody in management considering the strength of the brand and the success of their television ads.

Eventually the business imploded and the partner/affiliate segment became more valuable than the core business partially because it was absent online ad spend.

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

#745

Post by diarrhea »

This is now at 700 comments, and no one is talking about the math in the Twitter "thread". Found no mention in the Twitter replies either. Is it just me or is the math hilariously off?

[0]: "10% of $150M is $15M". Correct, but do we need a screenshot of a calculator for that, let alone Google? (why do people rely on an internet connection and Google for this?)

[1]: Talking about "2/3", but putting in "0.75". So which is it?

[2]: We are at $50M now. "Knock off" $20M, leaving us at $30M. Yet she puts in $20M into her Google calculator, gets 13.3% and calls it "a little over 1/10". Fair enough, but the real number is 30/150, so 1/5, 20%, double of "1/10".

Come on, this was not rocket science math! Should have double-checked before publishing, especially if you're a business consultant [3].

0: https://twitter.com/nandoodles/status/1345786303263219712

1: https://twitter.com/nandoodles/status/1345792380184760321

2: https://twitter.com/nandoodles/status/1345794089825021963, https://twitter.com/nandoodles/status/1345795168105066496

3: https://twitter.com/nandoodles/status/1345853158279565313

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

#746

Post by manigandham »

roenxi wrote: post #706
nutanc wrote: post #522

We did a similar kind of experiment some time back and found both FB ads and Google ads were doing jack shit for us. Google was better. FB ads were absolutely useless. So we stopped our ad spend. We observed no change in our customer acquisition. Another way these ad engines extract money out of you is by allowing competitors to bid for your brand name keyword. Try searching for Ozonetel on Google. There will be six…

Prefacing this with an acceptance both that HN culturally has US management principles and that I've got no idea how to run a business... Why is it an initial assumption that customer acquisition and ad spend are linked short or even medium term? That doesn't seem right. When I see an ad for washing machines it doesn't make me run out and buy a washing machine. It gets me familiar with Samsung the brand so in 6-12 mo…

You're correct on that. Large scale ad spend is divided into "branding" (creating awareness about the company and products) and "performance" (leading directly to a sale). The performance category has many factors including the path to the actual conversion/sale and how many steps are in the way and how long it takes. It can be instant (clicking a buy button in the ad itself) or many months.

Optimization is part of the process to ensure wasteful spending is reduced as analytics and sales data is generated but unfortunately the biggest issue is the people who actually run these campaigns. Lots of politics, perverse incentives, lack of skills, and general apathy.

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

#747

Post by gspr »

accountofme wrote: post #532
coliveira wrote: post #89

Earlier quoted context omitted.

Not really, scientists for example also have their whole careers based on the truth of some theories that they use. However, they're willing to put them to proof in different ways. The reason they do so is that they have a high degree of confidence that these theories are true. This cannot be said of people doing advertisement.

Truth is relative. Sampling can skew results. Scientists are people too. We all have flaws.

> Truth is relative.

This is a dangerous misconception to be spreading. It is not at all related to your other claims, namely:

> Sampling can skew results. Scientists are people too. We all have flaws.

These are of course correct statements. But they do not influence truth. They may well influence people's understanding of what the truth is, but that's different.

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

#748

Post by modin »

edgyquant wrote: post #738
hn_throwaway_99 wrote: post #612

Earlier quoted context omitted.

If anything, FB ads were worse than useless for my business, all they attracted was 90% fraud. Looking at what business Ozonetel is in (i.e. sales are directed towards business owners), I'm not suprised FB ads were also worthless for you. I get the sense FB ads are really only good for things a consumer might impulse buy (e.g. clothing, games, small gifts, etc.) but anything where the user is probably going to do som…

Facebook ads are the worst from a users perspective. I bought a floor mat through them once and for the next week all the ads were for floor mats. I just bought one I’m not interested in buying another. I bought a PC chair recently with my credit card, now I see a bunch of ads for PC chairs, again, I don’t need another one.

Same thing with kitchen appliances, but not limited to Facebook. I'm not going to buy another refrigerator for at least 10 years, but still I'm treated as Mr Fridge.

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

#749

Post by mathw »

edgyquant wrote: post #738
hn_throwaway_99 wrote: post #612

Earlier quoted context omitted.

If anything, FB ads were worse than useless for my business, all they attracted was 90% fraud. Looking at what business Ozonetel is in (i.e. sales are directed towards business owners), I'm not suprised FB ads were also worthless for you. I get the sense FB ads are really only good for things a consumer might impulse buy (e.g. clothing, games, small gifts, etc.) but anything where the user is probably going to do som…

Facebook ads are the worst from a users perspective. I bought a floor mat through them once and for the next week all the ads were for floor mats. I just bought one I’m not interested in buying another. I bought a PC chair recently with my credit card, now I see a bunch of ads for PC chairs, again, I don’t need another one.

Amazon enjoy that kind of thing too. Look at a product page, Amazon ads become for that product or similar ones. Buy it, and... they still want me to buy another one. And they wonder why people use ad blockers...

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

#750

Post by adwww »

walshemj wrote: post #257
adwww wrote: post #168

Earlier quoted context omitted.

I used to work in this industry. A small tech team investigated fraud on our platform and developed a system that was pretty robust at detecting and potentially shutting it down. But literally nobody was interested - even the people advertising don't want to know. The people spending money are typically networks, media buyers, ad agencies, etc, far removed from the actual brand. There are so many parties who want a s…

Agency or client side? I assure you the big brands CFO's take a huge amount of interest in what is spent on advertising.

That's the issue - the CFO might care, but the staff actually delegated to spend the budget don't.
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