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Oddly, I think the article underestimates the size of the change coming. I think one side affect of the surge of IT into advertising, is that it has become eas

Oddly, I think the article underestimates the size of the change coming. I think one side affect of the surge of IT into advertising, is that it has become easier to measure exactly how well advertising works. By and large, it doesn't, very well. I am reminded of this, from Paul Graham, about his time at Yahoo: http://www.paulgraham.com/yahoo.html http://www.paulgraham.com/yahoo.html "...The reason Yahoo didn't care about a technique that extracted the full value of traffic was that advertisers were already overpaying for it. If Yahoo merely extracted the actual value, they'd have made less." I'm pretty sure that, the more we learn about how well advertising works, the less money people will be willing to pay for it. What's happening to billboards and newspapers right now is probably coming to several other industries soon.

wool_gather 9y ago
If true, it makes a very amusing reversal from the usual story. Rather than peddling their wares to suckers, the placers of the ads have themselves been suckered into buying a product that doesn't work as advertised!
- rossdavidh 9y ago
  The rumor is that both the Cruz campaign and the Trump campaign found Cambridge Analytics' products to not work as advertised.
  - pjc50 9y ago
    The SNP had an introduction to them, and the delegate reported back exactly that: not trustworthy and not a good idea to work with.
- TeMPOraL 9y ago
  The more you think of it, the more it seems to be totally expected. It's the advertising industry we're talking about. They're not exactly a paragon of honesty. On the contrary, I suspect everyone tries to bullshit everyone else. The few observations I made from working next to people in marketing & advertising supports that viewpoint. EDIT: reminds me of that one story about A/B testing, which pretty much directly told us how adtech companies are bullshitting their own customers. https://news.ycombinator.com/item?id=10872359 https://news.ycombinator.com/item?id=10872359 I highlighted the more interesting parts back then: https://news.ycombinator.com/item?id=10873226 https://news.ycombinator.com/item?id=10873226.
madeofpalk 9y ago
> By and large, it doesn't, very well. I know Twitter isn't known for being the best at advertising, but it was made exceptionally clear to me that online advertising is a massive bunch of lies when I did my GDPR Twitter data export and it included me in a bunch of incorrect, non-sensical and contradictory ad targeting groups. Twitter claims I: * Own a cat, dog and other animal (I don't) * Have between $100k- $999k liquid investible assets (I don't) * Have a net worth between $1 and $1m (cool - I own *something*) * Am highly affluent (/shrug) * Am a high spender (okay...) * Am a frugal spender (...but how can I be both a high spender AND frugal) * Own a house (I don't) * Have multiple families (I don't) I was very disappointed that the Google and Facebook data exports don't contain this data. Maybe it's for their best.
- rebuilder 9y ago
  For the frugal/high spender conflict, I can kind of see how that might happen. I try to buy quality goods because cheap stuff doesn't last. That means spending more up front to spend less in the long run. So frugal, but also maybe high spender? My mom always says: if you're poor, you can't afford to buy cheap.
  - madeofpalk 9y ago
    I guess the 'spoiler' is that I'm fortunate enough to certainly not be a frugal spender. Yet another data point they have about me that they sell, but is completely incorrect.
  - walshemj 9y ago
    I think this might be it eg spending $250 instead of $50 on shoes or boots for longer life and improved comfort.
    - pishpash 9y ago
      $250 shoes do not last 5 times as long as $50 shoes. Improved comfort is the main benefit.
zerostar07 9y ago
underestimates or overestimates? There is advertising that doesn't require tracking. Simple brand-awareness-building and content-based advertising is pretty profitable without requiring tracking. For a website, the lack of personally-targeted ads may be offset by increasing the number of ad slots. I wonder if there is an estimate on how much value tracking adds. There is no reason to expect that ad spending will drop in total, because ads never worked very well in any medium, but they worked well enough that it's worth investing in them. The portion of ad spending in TV has not changed significantly the past decades, what has happened is spending has shifted from newspapers to online. but the overall the volume keeps increasing in all media [1] https://cdn.static-economist.com/sites/default/files/images/print-edition/20170401_WBC308.png https://cdn.static-economist.com/sites/default/files/images/...
wdr1 9y ago
> I'm pretty sure that, the more we learn about how well advertising works, the less money people will be willing to pay for it. That sounds like a statement from someone not very familiar with advertising. Minimally it's contrary to the agency model & its incentives. A lot spend (the majority?) goes through that model, and it's not likely to change any time soon. And if anything GDPR, will increase it. That said, even as measurement & attribution improves, the reality is that the effect will be shift to spend around. The better an advertiser can identify waste, they better they can redeploy that spend. Because that improves the ROI, the less it hurts the margin, and the more it makes sense for them to spend.
skybrian 9y ago
Most ad rates have dropped pretty dramatically since the early dot-com days, though. Are they still overvalued?
raggi 9y ago
> By and large, it doesn't, very well. Compared to what? It may be easy to provide evidence for: * Time and resource intensive prebiased word of mouth has a higher conversion rate. * Conversion rates for mass advertising are very low numbers. It is also easy to provide numbers for: * Conversion rates for targeted advertising are significantly higher than non-targeted advertising. * Having a non-existent marketing strategy for scale markets has a high probability of failure. What is your position exactly? Consider also some of what is implied throughout the article, that changes implied may price smaller companies out of the market. This doesn't bode well for competition, particularly for less funded competition. Small p&l organizations typically need to market to drive revenue, they're rarely in a position to push brand marketing strategies alone. Indeed this is a common huge difference between fine and coarse targeted platforms - when did you last see a small p&l trying to advertise on cable? What about on fine target platforms such as Facebook? Do you want such companies to become competitors to brand giants?
majani 9y ago
The only way to eliminate all waste in advertising is to use an affiliate marketing model and that's the biggest cesspool of them all.
- yazr 9y ago
  We are considering an affiliate model for a new side-product. Can you point out the worst issues we should watch out for ? (Its a virtual-goods product. Not subscription, but usually multiple-return customers. Around 70% gross margin since we have some high upfront provisioning cost.)
  - majani 8y ago
    Pressure sales tactics, spamming and hijacking the last click are the things that really work in affiliate marketing
- manigandham 9y ago
  Affiliate marketing does not magically get rid of waste. It just transfers the risk involved to another downstream party, while buying a shield of deniability of the unethical and scam tactics commonly used by affiliates.
madrox 9y ago
Oddly, I think YOU are underestimating the size of the change coming, too. An upended industry won't go quietly, and I think we're about to see a lot of technology innovation to circumvent the new wave of privacy restrictions.
- fallous 9y ago
  I think you're missing the point that's being made in the parent post. It's not that enhanced privacy will cause advertising to implode, it's that as the industry has gained more knowledge and understanding of advertising it's becoming apparent that advertising isn't worth what they thought it was. I saw a similar up-ending of an ad-dependent industry 15 years ago with newspapers. Advertisers for years assumed a certain value based on the circulation numbers as reported by ABC. There was no real way to directly measure that value other than inferred activity within a geographic region that could arguably be tied to newspaper advertising. With the internet advertisers began to be able to track specific value for ad campaigns based on click-thrus, cost-per-action, etc. Those values were lower than the assumed value of newspaper advertising, which began a shift in where money was spent. Combine that with the fact that ABC numbers started to show that they were far less accurate than originally assumed, due in part to gaming by the papers themselves, and revenue started seriously shrinking. The last firewall that newspaper had was classified, which quickly folded in the face of job and real estate sites and of course craigslist. Internet advertising has been suffering the same game-playing by sites that newspapers pulled with ABC circ numbers, and as advertisers gather more and better performance data about the value of ads and campaigns they're realizing that value is less than they thought and seems to be trending down. Regardless of whether there's more or less privacy for users/consumers, the indications are that advertising is becoming less and less valuable.
ThrustVectoring 9y ago
Yeah, it pretty much doesn't work well. The unit economics is something like "pay 50 cents a click and hope your funnel can monetize that effectively". More if you have more specific/desirable targeting, less if it's broader, but anything you save on the targeting end you lose in funnel effectiveness. If you've got solid data all the way through to conversions and lifetime value, that can either justify dialing ad spend up or down, and it's usually going to be down.
seem_2211 9y ago
There's a well-worn advertising quote "I waste 50% of my advertising budget. The problem is I don't know what half."
dynamicvariable 9y ago
> I think one side affect of the surge of IT into advertising, is that it has become easier to measure exactly how well advertising works. By and large, it doesn't, very well. I just don't understand the anti-social media agenda. The same people who for 2 years have been saying that social media advertising is so effective that it got trump elected are now saying it is ineffective. They demand that political advertising on social media be monitored because it is so effective that it gets presidents elected. Now, it's social media ad spending is so ineffective that these companies won't be around. > What's happening to billboards and newspapers right now is probably coming to several other industries soon. What's happening to billboards and newspapers is that ad money is flooding into digital space ( where the young kids are ). https://www.iab.com/news/digital-ad-spend-increases-23-year-year-first-half-2017-hitting-record-breaking-high-40-1-billion-according-iab-internet-advertising-revenue-report/ https://www.iab.com/news/digital-ad-spend-increases-23-year-... https://www.recode.net/2017/9/14/16294450/mobile-ad-spending-growth-worldwide https://www.recode.net/2017/9/14/16294450/mobile-ad-spending... Why speak so authoritatively about something you obviously know nothing about?
- candiodari 9y ago
  Desperate politicians making absurd rules when: 1) US election went “wrong”. 2) The same is happening to them 3) They’re mostly not hitting their own companies Obviously it’s a lie. The “right” is gaining in Europe like crazy, not because of Facebook, but because the existing governments have seriously underperformed. But politicians faced with the choice of admitting mistakes that they don’t even know how to fix, or to wildly and randomly strike at whoever got blamed ...
- kalleboo 9y ago
  > The same people who Is it really the same people? Do you have any examples of this?
- perl4ever 9y ago
  "The same people who for 2 years have been saying that social media advertising is so effective that it got trump elected are now saying it is ineffective." So does that mean you think that social media advertising is effective as people claim and Russian use of it got Trump elected? Regardless of whether your "same people" is a straw man, the opposite of a set of inconsistent claims tends to also be inconsistent, so I'm not sure what you are trying to say here.
reaperducer 9y ago
>I think one side affect of the surge of IT into advertising, is that it has become easier to measure exactly how well advertising works. By and large, it doesn't, very well. If that was true, Coca-Cola and McDonald's wouldn't exist.
- taeric 9y ago
  Coke's most successful marketing trick was a giant fluke. Even then, most of their success is probably in cornering the market, not just marketing. In large, many (most?) places sell it because they have an exclusive license that provides cups and supplies. McDonald's is a funny one. They really don't seem any worse than most other fast food to me. I suspect they saw more expansion from their franchise methods than anything else, though. Which is not to say the marketing isn't important. I just don't think it deserves the full victory.
  - wastedhours 9y ago
    I think you're doing a disservice to marketing - both of the elements you've mentioned actually fall under the marketing banner: - Coke: their branding, market research, and consumer strategy got them where they are today. All are marketing functions. - McDonald's: franchise go-to-market strategy, branding, consistency of product. All are marketing functions. Whether or not paid advertising helped them is a whole different argument (and one I'd argue, as when 'tis the season, it's always the real thing...)
    - taeric 9y ago
      Then I contend that marketing is expanded to too large a term. And at that point, yes, it is responsible from everything including product strategy, but also worthless as a term. :( Might as well debate that "business" is responsible. Especially if the success is not repeatable. Which, most early practices of large companies today are not repeatable by smaller companies.
      - wastedhours 9y ago
dizzystar 9y ago
Advertising doesn't work that well if you look at the raw numbers. Assume you have a great campaign and awesome conversion funnel, so that you get 1% clicks and 1% conversion. The math is 100 x 100, or one sale for every 10,000 eyes who sees your ad. In a vacuum, those numbers are awful. If your entire marketing strategy is buying ads to convert to sales, then of course, advertising doesn't work, and really, you probably shouldn't be advertising in the first place.
- manigandham 9y ago
  The only thing that matters is ROAS. If you spend $1 and get back > $1 in return, it works. Also about half the market is branding, which is all about exposure rather than direct clicks or conversions.
- chrismorgan 9y ago
  While reading your comment. I imagined 10,000 one-eyed people. :-)
downandout 9y ago
By and large, it doesn't, very well. If that's true, it's not because ad tech doesn't work, it's that most advertisers don't use it properly. A large percentage of my company's revenue comes from performance marketing (running paid traffic to affiliate offers) and it works very well for us. You just have to know what you're doing, make sure you're not getting too much bot/junk traffic, and bid the appropriate amounts. We've written software that handles all of this automatically, and our paid traffic campaigns do amazingly well. Show me another investment in which you can reliably and consistently achieve 30%+ ROI weekly with a fair amount of scalability. Ironically, native ad networks like Taboola and Revcontent will flourish in the new GDPR world. Since they target ads based mostly on nothing more than the topic of the content that the user is viewing, these ads are effective enough for smart performance marketers to make money with, and GDPR doesn't fundamentally change anything about their model. EU advertisers will flock to native and abandon other forms of advertising that were based on more invasive targeting.
- taeric 9y ago
  Is that 30% confirmed by a hold out group? The cynic in me suspects most measures, nowadays. I can't believe nobody is making a profit. I just suspect most of the trick is in generating demand, not finding it. That or diversifying offerings.
  - downandout 9y ago
    Is that 30% confirmed by a hold out group? I’m not sure what you mean by that. But generally we get about a 30-50% ROI on our native ad campaigns once they are optimized, and most affiliate networks pay weekly if you produce significant revenue. We do better than most because I wrote some clever stuff to identify sites that were sending us mostly bots/bad traffic and automatically blacklist them from showing our ads. There are a ton of these in the native ad space. I just suspect most of the trick is in generating demand, not finding it. There are evergreen affiliate niches such as weight loss, hair loss, erectile dysfunction, etc. Aging, bad genetics, and poor lifestyle choices generate the demand for us. Making money in these niches is generally as simple as placing ads on sites where people that belong to certain known demographic groups visit, and reducing fraudulent traffic by as much as possible.
jes5199 9y ago
advertising has never worked, but the delusion that it could work is strong - it seems like there’s probably a neverending supply of businesses who are going to throw some money down the drain, just in case they get lucky. It’s like buying lottery tickets - you don’t do it because of your great ROI, you do it because you’re having a fantasy about results
pishpash 9y ago
I agree that as an aggregate we're probably massively overpaying for ads for little average effect, but there may be a game-theoretic reason why it does not go away. What if out of 100 competitors the top one gains a lot from ads but the 99 others lose? All 100 have to pay to play to try to be that one. If they cooperated as a cartel they could all pay less for ads and consumers could pay less for products but that is unlikely to happen.
dsearls 9y ago
Read The Waste in Advertising is the Part That Works: https://www.researchgate.net/publication/4733724_The_Waste_in_Advertising_Is_the_Part_That_Works https://www.researchgate.net/publication/4733724_The_Waste_i.... In it E. Ann Hollier and Tim Ambler make a strong case for what has been known from the start about branding: that mass media do it best, without performing at the personal levewl. One corollary for their case might be, "Not everything you value can be measured, and not everything you can measure has value." Because digital advertising can be both targeted and measured, the whole advertising business decided that ads perform only when they are targeted and measured. But that's not advertising, really. That's direct marketing, which -- as I say in that post -- is descended from junk mail and a cousin of spam. It's no accident that the $trillion or more spent on adtech hasn't produced a single brand known to the world. The unanswered question is the one raised in The Problem With Targeting (https://www.dotcoma.it/2015/06/22/the-problem-with-targeting.html https://www.dotcoma.it/2015/06/22/the-problem-with-targeting...), and pretty much everything Don Marti and Bof Hoffman (look them up) have been writing as well: is it possible for online advertising to brand products the way offline print and broadcast media could, and still do? I suspect the answer is no. But my mind is open on the matter.
pascalxus 9y ago
but what percentage of ad spend on the internet is actually ROI justified? I'd guess it's pretty low, right? I got the impression it's dominated by big brand advertisers that can't calculate ad spend ROI anyway.
perl4ever 9y ago
There are three main kinds of ads I see: (1) products I just bought, (2) products I would never ever buy, and (3) creepily manipulative clickbait. None of these should be worth the money to the advertiser. I test drove a car and after I got almost a dozen follow up calls while I was busy with other stuff, I blocked the dealership number. They kept calling me from other numbers, which I also blocked (with the new Android spam filter on my phone). But the amusing thing was that I started seeing ads for the dealership online promoting their "low pressure" sales team! I made fun of a company called Salsify for naming their business after oyster plant, a root vegetable I can't stand, and now I see ads for them all the time.
eli 9y ago
> I'm pretty sure that, the more we learn about how well advertising works, the less money people will be willing to pay for it. What's happening to billboards and newspapers right now is probably coming to several other industries soon. I don't see any evidence to support that. Total spending on advertising is increasing every year. Newspaper spending is down, Google & Facebook is way up. Overall it's up.

wool_gather 9y ago

If true, it makes a very amusing reversal from the usual story. Rather than peddling their wares to suckers, the placers of the ads have themselves been suckered into buying a product that doesn't work as advertised!

rossdavidh 9y ago
The rumor is that both the Cruz campaign and the Trump campaign found Cambridge Analytics' products to not work as advertised.
- pjc50 9y ago
  The SNP had an introduction to them, and the delegate reported back exactly that: not trustworthy and not a good idea to work with.
TeMPOraL 9y ago
The more you think of it, the more it seems to be totally expected. It's the advertising industry we're talking about. They're not exactly a paragon of honesty. On the contrary, I suspect everyone tries to bullshit everyone else. The few observations I made from working next to people in marketing & advertising supports that viewpoint. EDIT: reminds me of that one story about A/B testing, which pretty much directly told us how adtech companies are bullshitting their own customers. https://news.ycombinator.com/item?id=10872359 https://news.ycombinator.com/item?id=10872359 I highlighted the more interesting parts back then: https://news.ycombinator.com/item?id=10873226 https://news.ycombinator.com/item?id=10873226.

madeofpalk 9y ago

> By and large, it doesn't, very well. I know Twitter isn't known for being the best at advertising, but it was made exceptionally clear to me that online advertising is a massive bunch of lies when I did my GDPR Twitter data export and it included me in a bunch of incorrect, non-sensical and contradictory ad targeting groups. Twitter claims I: * Own a cat, dog and other animal (I don't) * Have between $100k- $999k liquid investible assets (I don't) * Have a net worth between $1 and $1m (cool - I own *something*) * Am highly affluent (/shrug) * Am a high spender (okay...) * Am a frugal spender (...but how can I be both a high spender AND frugal) * Own a house (I don't) * Have multiple families (I don't) I was very disappointed that the Google and Facebook data exports don't contain this data. Maybe it's for their best.

rebuilder 9y ago
For the frugal/high spender conflict, I can kind of see how that might happen. I try to buy quality goods because cheap stuff doesn't last. That means spending more up front to spend less in the long run. So frugal, but also maybe high spender? My mom always says: if you're poor, you can't afford to buy cheap.
- madeofpalk 9y ago
  I guess the 'spoiler' is that I'm fortunate enough to certainly not be a frugal spender. Yet another data point they have about me that they sell, but is completely incorrect.
- walshemj 9y ago
  I think this might be it eg spending $250 instead of $50 on shoes or boots for longer life and improved comfort.
  - pishpash 9y ago
    $250 shoes do not last 5 times as long as $50 shoes. Improved comfort is the main benefit.

zerostar07 9y ago

underestimates or overestimates? There is advertising that doesn't require tracking. Simple brand-awareness-building and content-based advertising is pretty profitable without requiring tracking. For a website, the lack of personally-targeted ads may be offset by increasing the number of ad slots. I wonder if there is an estimate on how much value tracking adds. There is no reason to expect that ad spending will drop in total, because ads never worked very well in any medium, but they worked well enough that it's worth investing in them. The portion of ad spending in TV has not changed significantly the past decades, what has happened is spending has shifted from newspapers to online. but the overall the volume keeps increasing in all media [1] https://cdn.static-economist.com/sites/default/files/images/print-edition/20170401_WBC308.png https://cdn.static-economist.com/sites/default/files/images/...

wdr1 9y ago

> I'm pretty sure that, the more we learn about how well advertising works, the less money people will be willing to pay for it. That sounds like a statement from someone not very familiar with advertising. Minimally it's contrary to the agency model & its incentives. A lot spend (the majority?) goes through that model, and it's not likely to change any time soon. And if anything GDPR, will increase it. That said, even as measurement & attribution improves, the reality is that the effect will be shift to spend around. The better an advertiser can identify waste, they better they can redeploy that spend. Because that improves the ROI, the less it hurts the margin, and the more it makes sense for them to spend.

skybrian 9y ago

Most ad rates have dropped pretty dramatically since the early dot-com days, though. Are they still overvalued?

raggi 9y ago

> By and large, it doesn't, very well. Compared to what? It may be easy to provide evidence for: * Time and resource intensive prebiased word of mouth has a higher conversion rate. * Conversion rates for mass advertising are very low numbers. It is also easy to provide numbers for: * Conversion rates for targeted advertising are significantly higher than non-targeted advertising. * Having a non-existent marketing strategy for scale markets has a high probability of failure. What is your position exactly? Consider also some of what is implied throughout the article, that changes implied may price smaller companies out of the market. This doesn't bode well for competition, particularly for less funded competition. Small p&l organizations typically need to market to drive revenue, they're rarely in a position to push brand marketing strategies alone. Indeed this is a common huge difference between fine and coarse targeted platforms - when did you last see a small p&l trying to advertise on cable? What about on fine target platforms such as Facebook? Do you want such companies to become competitors to brand giants?

majani 9y ago

The only way to eliminate all waste in advertising is to use an affiliate marketing model and that's the biggest cesspool of them all.

yazr 9y ago
We are considering an affiliate model for a new side-product. Can you point out the worst issues we should watch out for ? (Its a virtual-goods product. Not subscription, but usually multiple-return customers. Around 70% gross margin since we have some high upfront provisioning cost.)
- majani 8y ago
  Pressure sales tactics, spamming and hijacking the last click are the things that really work in affiliate marketing
manigandham 9y ago
Affiliate marketing does not magically get rid of waste. It just transfers the risk involved to another downstream party, while buying a shield of deniability of the unethical and scam tactics commonly used by affiliates.

madrox 9y ago

Oddly, I think YOU are underestimating the size of the change coming, too. An upended industry won't go quietly, and I think we're about to see a lot of technology innovation to circumvent the new wave of privacy restrictions.

fallous 9y ago
I think you're missing the point that's being made in the parent post. It's not that enhanced privacy will cause advertising to implode, it's that as the industry has gained more knowledge and understanding of advertising it's becoming apparent that advertising isn't worth what they thought it was. I saw a similar up-ending of an ad-dependent industry 15 years ago with newspapers. Advertisers for years assumed a certain value based on the circulation numbers as reported by ABC. There was no real way to directly measure that value other than inferred activity within a geographic region that could arguably be tied to newspaper advertising. With the internet advertisers began to be able to track specific value for ad campaigns based on click-thrus, cost-per-action, etc. Those values were lower than the assumed value of newspaper advertising, which began a shift in where money was spent. Combine that with the fact that ABC numbers started to show that they were far less accurate than originally assumed, due in part to gaming by the papers themselves, and revenue started seriously shrinking. The last firewall that newspaper had was classified, which quickly folded in the face of job and real estate sites and of course craigslist. Internet advertising has been suffering the same game-playing by sites that newspapers pulled with ABC circ numbers, and as advertisers gather more and better performance data about the value of ads and campaigns they're realizing that value is less than they thought and seems to be trending down. Regardless of whether there's more or less privacy for users/consumers, the indications are that advertising is becoming less and less valuable.

ThrustVectoring 9y ago

Yeah, it pretty much doesn't work well. The unit economics is something like "pay 50 cents a click and hope your funnel can monetize that effectively". More if you have more specific/desirable targeting, less if it's broader, but anything you save on the targeting end you lose in funnel effectiveness. If you've got solid data all the way through to conversions and lifetime value, that can either justify dialing ad spend up or down, and it's usually going to be down.

seem_2211 9y ago

There's a well-worn advertising quote "I waste 50% of my advertising budget. The problem is I don't know what half."

dynamicvariable 9y ago

> I think one side affect of the surge of IT into advertising, is that it has become easier to measure exactly how well advertising works. By and large, it doesn't, very well. I just don't understand the anti-social media agenda. The same people who for 2 years have been saying that social media advertising is so effective that it got trump elected are now saying it is ineffective. They demand that political advertising on social media be monitored because it is so effective that it gets presidents elected. Now, it's social media ad spending is so ineffective that these companies won't be around. > What's happening to billboards and newspapers right now is probably coming to several other industries soon. What's happening to billboards and newspapers is that ad money is flooding into digital space ( where the young kids are ). https://www.iab.com/news/digital-ad-spend-increases-23-year-year-first-half-2017-hitting-record-breaking-high-40-1-billion-according-iab-internet-advertising-revenue-report/ https://www.iab.com/news/digital-ad-spend-increases-23-year-... https://www.recode.net/2017/9/14/16294450/mobile-ad-spending-growth-worldwide https://www.recode.net/2017/9/14/16294450/mobile-ad-spending... Why speak so authoritatively about something you obviously know nothing about?

candiodari 9y ago
Desperate politicians making absurd rules when: 1) US election went “wrong”. 2) The same is happening to them 3) They’re mostly not hitting their own companies Obviously it’s a lie. The “right” is gaining in Europe like crazy, not because of Facebook, but because the existing governments have seriously underperformed. But politicians faced with the choice of admitting mistakes that they don’t even know how to fix, or to wildly and randomly strike at whoever got blamed ...
kalleboo 9y ago
> The same people who Is it really the same people? Do you have any examples of this?
perl4ever 9y ago
"The same people who for 2 years have been saying that social media advertising is so effective that it got trump elected are now saying it is ineffective." So does that mean you think that social media advertising is effective as people claim and Russian use of it got Trump elected? Regardless of whether your "same people" is a straw man, the opposite of a set of inconsistent claims tends to also be inconsistent, so I'm not sure what you are trying to say here.

reaperducer 9y ago

>I think one side affect of the surge of IT into advertising, is that it has become easier to measure exactly how well advertising works. By and large, it doesn't, very well. If that was true, Coca-Cola and McDonald's wouldn't exist.

taeric 9y ago
Coke's most successful marketing trick was a giant fluke. Even then, most of their success is probably in cornering the market, not just marketing. In large, many (most?) places sell it because they have an exclusive license that provides cups and supplies. McDonald's is a funny one. They really don't seem any worse than most other fast food to me. I suspect they saw more expansion from their franchise methods than anything else, though. Which is not to say the marketing isn't important. I just don't think it deserves the full victory.
- wastedhours 9y ago
  I think you're doing a disservice to marketing - both of the elements you've mentioned actually fall under the marketing banner: - Coke: their branding, market research, and consumer strategy got them where they are today. All are marketing functions. - McDonald's: franchise go-to-market strategy, branding, consistency of product. All are marketing functions. Whether or not paid advertising helped them is a whole different argument (and one I'd argue, as when 'tis the season, it's always the real thing...)
  - taeric 9y ago
    Then I contend that marketing is expanded to too large a term. And at that point, yes, it is responsible from everything including product strategy, but also worthless as a term. :( Might as well debate that "business" is responsible. Especially if the success is not repeatable. Which, most early practices of large companies today are not repeatable by smaller companies.
    - wastedhours 9y ago

dizzystar 9y ago

Advertising doesn't work that well if you look at the raw numbers. Assume you have a great campaign and awesome conversion funnel, so that you get 1% clicks and 1% conversion. The math is 100 x 100, or one sale for every 10,000 eyes who sees your ad. In a vacuum, those numbers are awful. If your entire marketing strategy is buying ads to convert to sales, then of course, advertising doesn't work, and really, you probably shouldn't be advertising in the first place.

manigandham 9y ago
The only thing that matters is ROAS. If you spend $1 and get back > $1 in return, it works. Also about half the market is branding, which is all about exposure rather than direct clicks or conversions.
chrismorgan 9y ago
While reading your comment. I imagined 10,000 one-eyed people. :-)

downandout 9y ago

By and large, it doesn't, very well. If that's true, it's not because ad tech doesn't work, it's that most advertisers don't use it properly. A large percentage of my company's revenue comes from performance marketing (running paid traffic to affiliate offers) and it works very well for us. You just have to know what you're doing, make sure you're not getting too much bot/junk traffic, and bid the appropriate amounts. We've written software that handles all of this automatically, and our paid traffic campaigns do amazingly well. Show me another investment in which you can reliably and consistently achieve 30%+ ROI weekly with a fair amount of scalability. Ironically, native ad networks like Taboola and Revcontent will flourish in the new GDPR world. Since they target ads based mostly on nothing more than the topic of the content that the user is viewing, these ads are effective enough for smart performance marketers to make money with, and GDPR doesn't fundamentally change anything about their model. EU advertisers will flock to native and abandon other forms of advertising that were based on more invasive targeting.

taeric 9y ago
Is that 30% confirmed by a hold out group? The cynic in me suspects most measures, nowadays. I can't believe nobody is making a profit. I just suspect most of the trick is in generating demand, not finding it. That or diversifying offerings.
- downandout 9y ago
  Is that 30% confirmed by a hold out group? I’m not sure what you mean by that. But generally we get about a 30-50% ROI on our native ad campaigns once they are optimized, and most affiliate networks pay weekly if you produce significant revenue. We do better than most because I wrote some clever stuff to identify sites that were sending us mostly bots/bad traffic and automatically blacklist them from showing our ads. There are a ton of these in the native ad space. I just suspect most of the trick is in generating demand, not finding it. There are evergreen affiliate niches such as weight loss, hair loss, erectile dysfunction, etc. Aging, bad genetics, and poor lifestyle choices generate the demand for us. Making money in these niches is generally as simple as placing ads on sites where people that belong to certain known demographic groups visit, and reducing fraudulent traffic by as much as possible.

jes5199 9y ago

advertising has never worked, but the delusion that it could work is strong - it seems like there’s probably a neverending supply of businesses who are going to throw some money down the drain, just in case they get lucky. It’s like buying lottery tickets - you don’t do it because of your great ROI, you do it because you’re having a fantasy about results

pishpash 9y ago

I agree that as an aggregate we're probably massively overpaying for ads for little average effect, but there may be a game-theoretic reason why it does not go away. What if out of 100 competitors the top one gains a lot from ads but the 99 others lose? All 100 have to pay to play to try to be that one. If they cooperated as a cartel they could all pay less for ads and consumers could pay less for products but that is unlikely to happen.

dsearls 9y ago

Read The Waste in Advertising is the Part That Works: https://www.researchgate.net/publication/4733724_The_Waste_in_Advertising_Is_the_Part_That_Works https://www.researchgate.net/publication/4733724_The_Waste_i.... In it E. Ann Hollier and Tim Ambler make a strong case for what has been known from the start about branding: that mass media do it best, without performing at the personal levewl. One corollary for their case might be, "Not everything you value can be measured, and not everything you can measure has value." Because digital advertising can be both targeted and measured, the whole advertising business decided that ads perform only when they are targeted and measured. But that's not advertising, really. That's direct marketing, which -- as I say in that post -- is descended from junk mail and a cousin of spam. It's no accident that the $trillion or more spent on adtech hasn't produced a single brand known to the world. The unanswered question is the one raised in The Problem With Targeting (https://www.dotcoma.it/2015/06/22/the-problem-with-targeting.html https://www.dotcoma.it/2015/06/22/the-problem-with-targeting...), and pretty much everything Don Marti and Bof Hoffman (look them up) have been writing as well: is it possible for online advertising to brand products the way offline print and broadcast media could, and still do? I suspect the answer is no. But my mind is open on the matter.

pascalxus 9y ago

but what percentage of ad spend on the internet is actually ROI justified? I'd guess it's pretty low, right? I got the impression it's dominated by big brand advertisers that can't calculate ad spend ROI anyway.

perl4ever 9y ago

There are three main kinds of ads I see: (1) products I just bought, (2) products I would never ever buy, and (3) creepily manipulative clickbait. None of these should be worth the money to the advertiser. I test drove a car and after I got almost a dozen follow up calls while I was busy with other stuff, I blocked the dealership number. They kept calling me from other numbers, which I also blocked (with the new Android spam filter on my phone). But the amusing thing was that I started seeing ads for the dealership online promoting their "low pressure" sales team! I made fun of a company called Salsify for naming their business after oyster plant, a root vegetable I can't stand, and now I see ads for them all the time.

eli 9y ago

> I'm pretty sure that, the more we learn about how well advertising works, the less money people will be willing to pay for it. What's happening to billboards and newspapers right now is probably coming to several other industries soon. I don't see any evidence to support that. Total spending on advertising is increasing every year. Newspaper spending is down, Google & Facebook is way up. Overall it's up.