5 ms·

More detailed discussion of the 4 other datapoints: https://www.gwern.net/Ads#replication https://www.gwern.net/Ads#replication (I added McCoy et al 2007 just l

by gwern 8y ago

More detailed discussion of the 4 other datapoints: https://www.gwern.net/Ads#replication https://www.gwern.net/Ads#replication (I added McCoy et al 2007 just last night, so now it's 5 total: me, Pandora, Mozilla, LinkedIn, and McCoy et al 2007.)

simongr3dal 8y ago
It also lines up pretty well with the fact that a lot of early stage SV-style startups don't monetize before they have a lot of users. You don't want to lose 10% in the early stages of exponential growth. 10% less users later on would not be a big deal however.
- ambicapter 8y ago
  I'd assume that the 10% later on is a relatively larger dollar amount in revenue, no?
  - gwern 8y ago
    But you're not sacrificing growth then. When you sacrifice growth for revenue up front, you're sacrificing not just 1 user but that user and all subsequent users they would've brought in via downstream/compounding effects plus the associated economies of scale (which may well be the only thing that will make you eventually profitable, ads or no ads).
  - jonfw 8y ago
    Assuming that advertising is going to be a primary source of revenue, than you aren't going to have much revenue to lose before you start advertising. The idea is that companies don't advertise at first to take advantage of the exponential growth and user retention when they start getting hot, and once they have market share they start to target profit rather than growth.
  - kemitche 8y ago
    It depends - if you're going from zero revenue, then, losing 10% of your users to go from zero dollars to N dollars is a great deal. If you have existing other revenue sources, then you definitely have to factor that into the equation.
- scarface74 8y ago
  I am so glad that I’ve never worked for a non B2B company. It’s so much easier having 10-20 large companies as customers that pay real six and seven figure amounts for your services than chasing after a few pennies.
mlthoughts2018 8y ago
Some studies you may separately find interesting in connection to this, - https://www.kellogg.northwestern.edu/faculty/gordon_b/files/fb_comparison.pdf https://www.kellogg.northwestern.edu/faculty/gordon_b/files/... - https://marketing.wharton.upenn.edu/wp-content/uploads/2017/08/Johnson-Garrett-PAPER-VERSION-2.pdf https://marketing.wharton.upenn.edu/wp-content/uploads/2017/... - https://academic.oup.com/qje/article-abstract/130/4/1941/1914592?redirectedFrom=PDF https://academic.oup.com/qje/article-abstract/130/4/1941/191...
- gwern 8y ago
  First & third are already linked. Haven't seen #2 before.
hammock 8y ago
Are we controlling for SEO effect? Having ads on your site probably nerfs your Google ranking a bit.
- kornish 8y ago
  Wouldn't the incentives go the other way? I'd imagine Google wants people to get to sites that serve ads from Google so they can collect fees.
  - bduerst 8y ago
    Ads don't affect SEO. It would allow websites to essentially pay for higher search results. There are tools that come with using ads that allow for insights into better SEO though - e.g. Adwords keyword planner.
    - pbhjpbhj 8y ago
      > would allow websites to essentially pay for higher search results. // Isn't this exactly what Google does? Paid placements put you above organic results in the SERPs, presumably other search sites do that too.
      - bduerst 8y ago
        Yes, and they mark them as ads so users know that they're promoted and not organic search results. Allowing websites to buy ads to affect their organic placing would affect the quality of search results.
        lazyjones 8y ago
        > Yes, and they mark them as ads so users know that they're promoted and not organic search results. And over the years they've added more ads on top of the organic results (instead of the sidebar) and made them less distinguishable.
    - mobjack 8y ago
nabla9 8y ago
It's often said that less than 10% of users click ads. If there would be way to identify those users with reasonably low false positive rate, you could annoy only small fraction of users and keep more of them (if you want to have them).
- deleted 8y ago
  [deleted]
- kelnos 8y ago
  Yeah, that's the thing. I will never (except possibly accidentally) click on an ad. Every single time I see an add in my Instagram feed, I mark it as "not relevant". And yet these days I see ads every 5-7 photos in my feed. I use Instagram much less now because of the quantity of ads, and Instagram should clearly be able to tell that I don't interact with ads at all except to get rid of them. I've probably reduced my use of the app by 75% or so (both viewing and posting), solely because of ads.
  - Wordball 8y ago
    What are you trying to accomplish by clicking "not relevant"?
    - kelnos 8y ago
      My (naive) hope was that after a while they'd give up. Is there a better response, you think, that would possibly decrease the number of ads I see?
      - Tenoke 8y ago
        For what is worth, this does work on Twitter (by straight blocking the account which posts the ad). I started seeing noticeably fewer ads after doing that.
      - marcosdumay 8y ago
        The "not relevant" button certainly means "please, show me other kinds of ads".

by gwern 8y ago

simongr3dal 8y ago

It also lines up pretty well with the fact that a lot of early stage SV-style startups don't monetize before they have a lot of users. You don't want to lose 10% in the early stages of exponential growth. 10% less users later on would not be a big deal however.

ambicapter 8y ago
I'd assume that the 10% later on is a relatively larger dollar amount in revenue, no?
- gwern 8y ago
  But you're not sacrificing growth then. When you sacrifice growth for revenue up front, you're sacrificing not just 1 user but that user and all subsequent users they would've brought in via downstream/compounding effects plus the associated economies of scale (which may well be the only thing that will make you eventually profitable, ads or no ads).
- jonfw 8y ago
  Assuming that advertising is going to be a primary source of revenue, than you aren't going to have much revenue to lose before you start advertising. The idea is that companies don't advertise at first to take advantage of the exponential growth and user retention when they start getting hot, and once they have market share they start to target profit rather than growth.
- kemitche 8y ago
  It depends - if you're going from zero revenue, then, losing 10% of your users to go from zero dollars to N dollars is a great deal. If you have existing other revenue sources, then you definitely have to factor that into the equation.
scarface74 8y ago
I am so glad that I’ve never worked for a non B2B company. It’s so much easier having 10-20 large companies as customers that pay real six and seven figure amounts for your services than chasing after a few pennies.

mlthoughts2018 8y ago

Some studies you may separately find interesting in connection to this, - https://www.kellogg.northwestern.edu/faculty/gordon_b/files/fb_comparison.pdf https://www.kellogg.northwestern.edu/faculty/gordon_b/files/... - https://marketing.wharton.upenn.edu/wp-content/uploads/2017/08/Johnson-Garrett-PAPER-VERSION-2.pdf https://marketing.wharton.upenn.edu/wp-content/uploads/2017/... - https://academic.oup.com/qje/article-abstract/130/4/1941/1914592?redirectedFrom=PDF https://academic.oup.com/qje/article-abstract/130/4/1941/191...

gwern 8y ago
First & third are already linked. Haven't seen #2 before.

hammock 8y ago

Are we controlling for SEO effect? Having ads on your site probably nerfs your Google ranking a bit.

kornish 8y ago
Wouldn't the incentives go the other way? I'd imagine Google wants people to get to sites that serve ads from Google so they can collect fees.
- bduerst 8y ago
  Ads don't affect SEO. It would allow websites to essentially pay for higher search results. There are tools that come with using ads that allow for insights into better SEO though - e.g. Adwords keyword planner.
  - pbhjpbhj 8y ago
    > would allow websites to essentially pay for higher search results. // Isn't this exactly what Google does? Paid placements put you above organic results in the SERPs, presumably other search sites do that too.
    - bduerst 8y ago
      Yes, and they mark them as ads so users know that they're promoted and not organic search results. Allowing websites to buy ads to affect their organic placing would affect the quality of search results.
      - lazyjones 8y ago
        > Yes, and they mark them as ads so users know that they're promoted and not organic search results. And over the years they've added more ads on top of the organic results (instead of the sidebar) and made them less distinguishable.
  - mobjack 8y ago

nabla9 8y ago

It's often said that less than 10% of users click ads. If there would be way to identify those users with reasonably low false positive rate, you could annoy only small fraction of users and keep more of them (if you want to have them).

deleted 8y ago
[deleted]
kelnos 8y ago
Yeah, that's the thing. I will never (except possibly accidentally) click on an ad. Every single time I see an add in my Instagram feed, I mark it as "not relevant". And yet these days I see ads every 5-7 photos in my feed. I use Instagram much less now because of the quantity of ads, and Instagram should clearly be able to tell that I don't interact with ads at all except to get rid of them. I've probably reduced my use of the app by 75% or so (both viewing and posting), solely because of ads.
- Wordball 8y ago
  What are you trying to accomplish by clicking "not relevant"?
  - kelnos 8y ago
    My (naive) hope was that after a while they'd give up. Is there a better response, you think, that would possibly decrease the number of ads I see?
    - Tenoke 8y ago
      For what is worth, this does work on Twitter (by straight blocking the account which posts the ad). I started seeing noticeably fewer ads after doing that.
    - marcosdumay 8y ago
      The "not relevant" button certainly means "please, show me other kinds of ads".