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I'll concede that the analysis isn't completely without merit, but having spent the last few years in ad tech, I sincerely hope that there won't be a revival. I

I'll concede that the analysis isn't completely without merit, but having spent the last few years in ad tech, I sincerely hope that there won't be a revival. It's a race to the bottom. Publishers are struggling and are increasingly willing to accept ever more outrageous ad products. Advertisers are desperate for advertising that actually works, but will mostly only do what agencies tell them, and the agencies are only interested in maximizing their own margins. In the middle we've got any number of middle men scrambling for some pieces of the cake, sometimes but usually not providing some value, leaving the publishers with a pathetic fraction of the advertiser spend. So essentially we've got a whole bunch of companies with no growth desperately vying for the attention of 23-year old media buyers who in turn are mostly interested in getting someone to take them clothes shopping and picking up the bill. These companies are doing it mostly by doing ever more intrusive things, since advertisers can't accept that the reason their ads don't perform is that nobody wants their stuff and keeps looking for a silver bullet. I've come to believe that the only reasonable justification for most advertising is that it's in some sense a way for other industries to subsidize journalism. Since that's going away, I'm looking forward to the inevitable ad tech carnage ahead, and if a potential next wave actually brings higher quality advertising and better end user experiences I'll happily eat my shoes.

vosper 10y ago
All of this, plus the vast amounts of bot traffic that no one wants to look too closely at, because everyone except the advertiser is making money off of it...
- ec109685 10y ago
  Bot traffic is accounted for in the price advertisers pay for ads. Advertisers don't run unprofitable ads.
  - bcoates 10y ago
    Nobody has perfect attribution and direct sales ads are a minority. Traffic quality is big deal.
    - ec109685 10y ago
      It balances out over time. If bots were eliminated tomorrow, marketers would bid more for the impressions because they would suddenly become more effective, thus justifying more spend.
  - edblarney 10y ago
    "Bot traffic is accounted for in the price advertisers pay for ads. Advertisers don't run unprofitable ads" Ha ha, sure they do. Brand advertisers, in particular. You know that 1-inc by 1-inc 'video' ad playing in the corner of your screen, that vaguely has a car, but it's designed for TV and you really don't get to see 'what the product is' until the end of the spot, but by then, you've already scrolled past it? That is 100% a waste of money for the advertiser. There are tons of large companies with 'ad spend' and they just spend a lot of it without really knowing how effective it is. Obviously, a lot of it it is, but many campaigns are a ridiculous waste.
  - ssharp 10y ago
    Attribution tends to be terrible on display ads. Platforms proudly cookie bomb impressions and if you're not really careful, you end up falsely attributing sales. I'd guess most of the big brands doing advertising look at it more from a brand building standpoint than a direct performance standpoint. You certainly can't compare it apples-to-apples against something like search advertising.
  - jgalt212 10y ago
    You say that. But the more sophisticated players can avoid the bots with much better efficacy than that less sophisticated players and those players get adversely selected at an egregious rate.
  - simo7 10y ago
    Advertisers do run unprofitable ads and marketing campaigns all the times. And they are fine with that too. That's the case of VC-backed startups: they accept a negative ROI to get the chance to start making money one day. Then you have the less consciuous ones, which might be big brands who want to experiment a bit with new media/ad formats. In any case, if you think about it, the real losers are...the honest publishers. Because the money on the table is not increased by fraud, it's just shared in a way that takes something away from good publishers to bad/fake ones.
    - ec109685 10y ago
      I agree honest publishers are at a definite disadvantage. Advertisers aren't because the roi calculation they come up with judges their campaigns based on its performance, which incorporates good and bad clicks over time.
rjbwork 10y ago
On that note, HN Community: Thoughts on extreme disintermediation between Advertiser and Publisher?
- bcoates 10y ago
  It's bad. Ending it is necessary and possibly sufficient for Internet ads to stop being awful for both advertiser and publisher. (I've worked in the space buy-side)
  - rjbwork 10y ago
    So, you want MORE middlemen between you as an advertiser/buyer and the publishers? How does that improve the awfulness?
    - bcoates 10y ago
      No I'm just bad at reading. the other way around, current state bad. I don't think you need to disintermediate entirely but you need everyone in the actual chain to have a real business relationship with each other where you have a responsibility to and vouch for the other parties you deal with. That's how non-broken industries function. Outbrain/taboola style indiscriminate dealing doesn't add any value.
imbeau 10y ago
I too used to be in ad tech and I agree. It's a race to the bottom with no real upside. The business model is often broken with ad tech companies. Rather than sacrificing profits for long-term growth, they're essentially selling a dollar for 99 cents. It can never be profitable.
- manigandham 10y ago
  > selling a dollar for 99 cents They are definitely not doing that. The sheer amount of profitable arbitrage proves that point. Ad networks remain one of the best business models around, this is what Facebook is. The main problem is that there are no real barriers to entry or oversight which leads to thousands of poorly run, unscrupulous, spam/malware infested networks which make an outsized impact on both the market and consumers.
bambax 10y ago
The article only mentions Google and FB as "winners", but what about Amazon? For products sold on Amazon, PPC ("Amazon Sponsored Products") are very effective and therefore make a lot of sense. It would be interesting to know what proportion of total advertising spending this represents.

vosper 10y ago

All of this, plus the vast amounts of bot traffic that no one wants to look too closely at, because everyone except the advertiser is making money off of it...

ec109685 10y ago
Bot traffic is accounted for in the price advertisers pay for ads. Advertisers don't run unprofitable ads.
- bcoates 10y ago
  Nobody has perfect attribution and direct sales ads are a minority. Traffic quality is big deal.
  - ec109685 10y ago
    It balances out over time. If bots were eliminated tomorrow, marketers would bid more for the impressions because they would suddenly become more effective, thus justifying more spend.
- edblarney 10y ago
  "Bot traffic is accounted for in the price advertisers pay for ads. Advertisers don't run unprofitable ads" Ha ha, sure they do. Brand advertisers, in particular. You know that 1-inc by 1-inc 'video' ad playing in the corner of your screen, that vaguely has a car, but it's designed for TV and you really don't get to see 'what the product is' until the end of the spot, but by then, you've already scrolled past it? That is 100% a waste of money for the advertiser. There are tons of large companies with 'ad spend' and they just spend a lot of it without really knowing how effective it is. Obviously, a lot of it it is, but many campaigns are a ridiculous waste.
- ssharp 10y ago
  Attribution tends to be terrible on display ads. Platforms proudly cookie bomb impressions and if you're not really careful, you end up falsely attributing sales. I'd guess most of the big brands doing advertising look at it more from a brand building standpoint than a direct performance standpoint. You certainly can't compare it apples-to-apples against something like search advertising.
- jgalt212 10y ago
  You say that. But the more sophisticated players can avoid the bots with much better efficacy than that less sophisticated players and those players get adversely selected at an egregious rate.
- simo7 10y ago
  Advertisers do run unprofitable ads and marketing campaigns all the times. And they are fine with that too. That's the case of VC-backed startups: they accept a negative ROI to get the chance to start making money one day. Then you have the less consciuous ones, which might be big brands who want to experiment a bit with new media/ad formats. In any case, if you think about it, the real losers are...the honest publishers. Because the money on the table is not increased by fraud, it's just shared in a way that takes something away from good publishers to bad/fake ones.
  - ec109685 10y ago
    I agree honest publishers are at a definite disadvantage. Advertisers aren't because the roi calculation they come up with judges their campaigns based on its performance, which incorporates good and bad clicks over time.

rjbwork 10y ago

On that note, HN Community: Thoughts on extreme disintermediation between Advertiser and Publisher?

bcoates 10y ago
It's bad. Ending it is necessary and possibly sufficient for Internet ads to stop being awful for both advertiser and publisher. (I've worked in the space buy-side)
- rjbwork 10y ago
  So, you want MORE middlemen between you as an advertiser/buyer and the publishers? How does that improve the awfulness?
  - bcoates 10y ago
    No I'm just bad at reading. the other way around, current state bad. I don't think you need to disintermediate entirely but you need everyone in the actual chain to have a real business relationship with each other where you have a responsibility to and vouch for the other parties you deal with. That's how non-broken industries function. Outbrain/taboola style indiscriminate dealing doesn't add any value.

imbeau 10y ago

I too used to be in ad tech and I agree. It's a race to the bottom with no real upside. The business model is often broken with ad tech companies. Rather than sacrificing profits for long-term growth, they're essentially selling a dollar for 99 cents. It can never be profitable.

manigandham 10y ago
> selling a dollar for 99 cents They are definitely not doing that. The sheer amount of profitable arbitrage proves that point. Ad networks remain one of the best business models around, this is what Facebook is. The main problem is that there are no real barriers to entry or oversight which leads to thousands of poorly run, unscrupulous, spam/malware infested networks which make an outsized impact on both the market and consumers.

bambax 10y ago

The article only mentions Google and FB as "winners", but what about Amazon? For products sold on Amazon, PPC ("Amazon Sponsored Products") are very effective and therefore make a lot of sense. It would be interesting to know what proportion of total advertising spending this represents.