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The math’s not pretty on digital advertising’s future revenues? (2017)

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Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#171

Post by chiefalchemist »

HillaryBriss wrote: post #110
arthurofbabylon wrote: post #89

Earlier quoted context omitted.

I think you’re fundamentally misinterpreting the value of creativity here. While audience data is valuable for marketing existing shows, it currently has almost no value for creating new shows. Just take a look at YouTube creators. Some guy in Australia who ignores data and makes things with mud and plants produces content more popular than almost anything else. Sure, Google owns the platform, but they remain reliant…

> Some guy in Australia who ignores data and makes things with mud and plants produces content more popular than almost anything else. As a great screenwriter once said: In Hollywood, nobody knows anything. But in Hollywood, they're used to that reality. Disney really does know how to actually create media content that billions want to consume. They know how to play this game. Tech companies are trying to learn too,…

As a side note the book "Creativity Inc" is excellent. Recommended.

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#172

Post by MarkMc »

skywhopper wrote: post #61
MarkMc wrote: post #41

Wow this article is so very wrong - Google and Facebook have enormous advantages over Disney because (a) they have other people producing valuable content for free ; (b) they know much more about each viewer than Disney. Google's revenue today is six times as large as it was a decade ago. And I expect its revenue in a decade to be at least 3 times as large as it is today. The reason is that many of the causes of past…

I think you misread the article, which is not about the segment of the ad market that wants to know so much about its audience. Instead it’s about the ads that are currently on TV. The ads that are about broad brand recognition, not about microtargeting the audience. The point is that Google and Facebook already won the battle for their markets but they have no particular advantage over other media companies in compe…

My point is that even without the brand-recognition TV-style ads, Google has six sources of growth which in aggregate refute the idea that "the math's not pretty on digital advertising's future revenues".

And even in brand advertising I'm skeptical of the idea that detailed knowledge of each viewer is not a significant advantage. When Mercedes advertises its brand, wouldn't it be prepared to pay more to target males older than 30 who last purchased a car more than 3 years ago? When McDonald's does brand advertising, shouldn't it prepared to pay more to show the ad to people who are overweight and pay less to show the ad to people who go to the gym 3 times a week and haven't been in a fast food restaurant in 6 months? And if the sales director of a large company has a wedding anniversary coming up, wouldn't a jeweller be willing to out-bid McDonald's for the right to place an ad in front of that sales director?

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#173

Post by tomrod »

mlthoughts2018 wrote: post #151
tomrod wrote: post #4

This is an open secret among techonomists and others in the arcane space of digital campaign measurement.[0][1- preprint] Digital advertising has a lot of smoke and mirrors. There is _some_ incrementality, but it seems oversold. [0] https://academic.oup.com/qje/article-abstract/130/4/1941/191... [1] https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2498290_cod...

I dispute what you are saying, as someone who has studied that Lewis & Rao paper in detail. Advertising academia is pretty much just as mixed up as advertising in practice. Here is another paper worth reading on it [0] (which cites Lewis & Rao), but provides fairly clear evidence of a distribution of outcomes of digital ad campaigns with a lot of probability mass on the side of positive lift. The place where issues c…

The open secret is that the incremental impact is small, not that it is non-existent. In experience, small enough to be questionable economically.

The more interesting work has been showing where a consumer's offline transactions are impacted by online ads.

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#174

Post by rock_hard »

darkpuma wrote: post #158
rock_hard wrote: post #144

Earlier quoted context omitted.

This is such bullshit! YouTube’s video streaming infra is a masterpiece of engineering and magnitudes of order better than a vanilla streaming setup! You might not notice because you live in a place with great internet...but most people don’t!

To provide people with poor internet connections with effective access to videos, youtube transcodes videos to various qualities. That's not cheap, but neither is it magic.

That’s a simplification of what’s actually happening and how well their implementation works though.

Just travel to a third world country and look at how poorly other video services like Facebook, Vimeo, etc perform in comparison.

There is some good posts from John Harding out there that get into the details

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#175

Post by rock_hard »

bobthepanda wrote: post #165
rock_hard wrote: post #142

Earlier quoted context omitted.

Because that doesn’t scale, that’s why

Do you need it to scale? People don't place ads on every website or every possible search query, why would you want an ad sprayed far and wide when most of your audience can be reached by targeting a few big creators?

Because scaling your ads is the a great way to sell more products!

So every advertiser is incentivized to scale their ad campaigns as much as possible.

And having to find creators yourself and negotiate deals one by one is inefficient in a world where Google and Facebook have build automated products to do so!

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#176

Post by mlthoughts2018 »

tomrod wrote: post #173
mlthoughts2018 wrote: post #151

Earlier quoted context omitted.

I dispute what you are saying, as someone who has studied that Lewis & Rao paper in detail. Advertising academia is pretty much just as mixed up as advertising in practice. Here is another paper worth reading on it [0] (which cites Lewis & Rao), but provides fairly clear evidence of a distribution of outcomes of digital ad campaigns with a lot of probability mass on the side of positive lift. The place where issues c…

The open secret is that the incremental impact is small, not that it is non-existent. In experience, small enough to be questionable economically. The more interesting work has been showing where a consumer's offline transactions are impacted by online ads.

The cited paper above, and even the influential 2018 Facebook paper by Gordon et al that tries to lobby for randomized controlled trials both disagree with your claim.

The observed incremental lift on digital conversion outcomes (particularly account signups and purchases from an online shopping cart) is (median) somewhere around 8% - 17% based on close to 500 different very large field experiments. The distribution is skewed so that the ~30% standard deviation represents mostly outcomes higher and only somewhere between 9% and 22% showed negative lift (which, as the Facebook paper points out, can also be related to the difficulty of observational statistical methods used for post facto causal inference).

8% lift is quite significant. There’s no open secret of “small impact” at all.

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

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