8 ms·

Behavioral Ad Targeting Not Paying Off for Publishers, Study Suggests

220 points by Quanttek 7y ago

Quanttek 7y ago
Crucial quote: But in one of the first empirical studies of the impacts of behaviorally targeted advertising on online publishers’ revenue, researchers at the University of Minnesota, University of California, Irvine, and Carnegie Mellon University suggest publishers only get about 4% more revenue for an ad impression that has a cookie enabled than for one that doesn’t. The study tracked millions of ad transactions at a large U.S. media company over the course of one week. That modest gain for publishers stands in contrast to the vastly larger sums advertisers are willing to pay for behaviorally targeted ads. A 2009 study by Howard Beales, a professor at George Washington University School of Business and a former director of the Bureau of Consumer Protection at the Federal Trade Commission, found advertisers are willing to pay 2.68 times more for a behaviorally targeted ad than one that wasn’t. Much of the premium likely is being eaten up by the so-called “ad tech tax,” the middlemen’s fees that eat up 60 cents of every dollar spent on programmatic ads, according to marketing intelligence firm Warc.
- stingraycharles 7y ago
  It’s important to realize that this way of advertising is definitely important for advertisers, and adds a lot of value to them. It’s just that it’s not visible to publishers. Having said that, 2009 is a long time ago, and I would like to see this study repeated before drawing conclusions about the current ad landscape.
  - Quanttek 7y ago
    That's a typo. It's a 2019 paper. See the link elsewhere in the thread
  - downandout 7y ago
    Exactly. This study completely ignores the fact that retargeting through the Facebook and Google pixels is highly effective for advertisers. I have run retargeting campaigns with ROAS (return on ad spend) as high as 30x. Without the ability to retarget, advertising revenue at both Facebook and Google would plummet. The majority of conversions for advertisers come from retargeting (behavioral) campaigns. Advertisers run cold traffic campaigns (non behavioral) just to be able to cookie a group of users interested in their niche of product or service. They then show a different set of ads to those that clicked on the initial ad and met some behavioral criteria - for example they read to the bottom of the landing page or watched more than 1/2 of a sales video. It is this second set of ads that results in most conversions from new customers. So the entire model falls apart if we lose the ability to run retargeting (behavioral) campaigns. Most advertisers lose money on cold traffic campaigns, and make up for it with behavioral campaigns. When behavioral advertising stops, so does non-behavioral, and the whole Facebook and Google house of cards comes crumbling down in a hurry.
    - sockpuppet999 7y ago
      I'm not sure exactly what I'm reading here but , I'm trying to understand. Please excuse me okay? Im gonna ask you an honest Question and I would like an honest answer okay? How do you feel About using your work to spy on ppl 24 hours a day. How do you feel about that? Do you feel it's okay because of others doing it Do you have Any reservations About this ?? I'm not trying to be An asshole here okay? I'm honestly interested in what you( As an informed person) thinks about these issues?
      - travisjungroth 7y ago
        How can you call showing a group of people who clicked on an ad a second ad “spy[ing] on ppl 24 hours a day?”.
        luckylion 7y ago
        You need to constantly track them to be able to show them ads.
- paulsutter 7y ago
  The average cookie doesn't belong to a high-value segment, explaining why the average benefit is limited. Of course Mercedes wants to reach people shopping for a BMW and will pay substantially more for it. They are paying extra to reach a small subset of users. No conflict here at all
  - zrobotics 7y ago
    But are targeted ads worth more? Yes, if I'm shopping for a BMW then Mercedes definitely wants to advertise to me. However, targeted ads don't seem to work as well as Google/Facebook would like advertisers to think. Mercedes can just advertise if I'm searching duckduckgo for BMW, rather than pay to advertise to me for 2 months after I bought a BMW. Note that this is how targeted advertising currently works, I see ads for products I have already purchased, which is just wasted money.
    - manigandham 7y ago
      They work great for first-party networks like Facebook and Google. They just don't pay out well for 3rd-party publishers.
    - godelski 7y ago
      While I agree with a lot of what you said (Mercedes can just pay for keyword searches on BMW or similar to still target and be effective with cheaper and "old school" methods). But I don't think a lot of the advertisements for already purchased products is wasteful. See Coke (and what follows is overly simplified). Everyone already knows who they are and their opinions on them. You might ask "Why does Coke advertise?" and it'd be a good question. Sriracha doesn't and they are a household name, surely Coke has more standing than them. Coke advertises not only to influence you from a young age (getting new generation of coke drinkers) but to ensure that you associate a good feeling with your purchase. This is apparent in car commercials too (especially in America). That BMW commercial isn't to convince people to buy a new BMW, kinda ridiculous when you think about it and the money that you have to spend on a car like that (consider how often you see commercials for high end cars that the general public can't afford). Luxury car makers sure do want you to feel superior about your decision to buy their car though (which there's connection with "my next car will be X so I'm superior). Compare this to McDonalds, who knows you'll be hungry soon and wants you to visit them for your next meal. These companies have different goals, and of course their advertising will be performed in just as differing ways. Not all advertising is the same. Though I'm not sure this is the best strategy for Amazon when I buy a deck of cards, I don't need 20 more types. But maybe it is effective and that's why they keep doing it.
- manigandham 7y ago
  There is no "ad tech tax". It's called a supply chain. The end product costs more than the raw parts in every industry. The issue for publishers here is lack of scale, no cookies, and 2nd-price auctions, meaning they don't get enough high bids and don't get the full price for those bids when they do happen.
  - mattkrause 7y ago
    More to the point, revenue doesn’t include expenses, so it doesn’t matter that the targeted ads cost more....
  - slips 7y ago
    It seems disingenuous to compare something abstract like advertising to the process of adding value in manufacturing. They are concepts in two different classes.
    - munchbunny 7y ago
      I don't think it's disingenuous. The advertiser is willing to pay a lot more for the ad after the extra tech is added on. That's a pretty clear case that the extra tech makes the same ad impression more valuable. I don't agree that it's value add since the advertiser pays the publisher directly, and the advertiser then slaps on all of the extra bells and whistles, so the impression isn't modified to be more valuable before it gets to the advertiser. However, the comparison is not disingenuous. Even though I disagree with the parent poster, there is a clear perspective where the two are comparable.
  - reallydude 7y ago
    There is some confusion about what a "publisher" means. A publisher is either an SSP (a platform where publishers are aggregated by flat contract fee on a time or traffic basis with guarantees) or a singular site. > There is no "ad tech tax" That is correct. You might get better revenues (as a publisher) dealing with SpotX (an exchange) over say...Viant (a reseller who acts as a publisher to SpotX), but probably won't do better on volume, which directly correlates to payout. Then again, SpotX may not pay you as much for your average demographic and volume as Viant, who wants your business more than SpotX. None of this is supply chain. The chain is not a chain, but more of an amalgam of situations that is affected by the market, as much as personal relationships. Conceptually, an ecosystem where anyone can consume from anyone (as a publisher) and feed from anyone (as an exchange). > The issue for publishers here is lack of scale You don't know that. In 2009, the economy was still recovering and ad-tech had been slapped hard in 2008, leaving banner ads at fractions of the previous years. They have slowly floated down a few more cents to where they are today, primarily due to better targeting, ad fraud, video, mobile browser support, and clickbait (er native) ads. > no cookies This was the comparison that led to the 4% revenue bump. If platforms do not pay forward to the publishers (because why bother, the platforms set their own cookies anyway), it suggests that publishers shouldn't bother with targeting. That's exactly what has happened. No platform consumes publisher targeting data in arbitrage, because it might be faked. Using something like Zvelo for context and your own cookies, you get a much better view of the client. > 2nd-price auctions, meaning they don't get enough high bids and don't get the full price for those bids Whatever "high bids" or "full price" means here, is nebulous. How an exchange decides to run auctions is often negotiated up front but is, ultimately, black box. What this has to do with publishers is confusing. Publishers rarely get paid off what the platform makes. You sign an order for a set period of time or slice of impressions unless you have traffic that is hundreds of thousands per day (an exeedingly small number of sites). In the case where you run a Real Time Bidding auction (header bidding), you might make some variable money. It's rare and wasn't even seen in the wild (ie IAB) till well after 2009. See this more recent breakdown: https://www.emarketer.com/content/why-tech-firms-obtain-most-of-the-money-in-programmatic-purchases https://www.emarketer.com/content/why-tech-firms-obtain-most...
- mobjack 7y ago
  The money could have been eaten up by the advertiser. If the untargeted ads lead to less valuable placements, then it will hurt the revenue of the advertiser. Short term, both the ad network and publisher can get away with bad placement and make the same amount of money. It will take longer for the advertiser to see the loss in conversion and reduce their spend accordingly.
- 4ntonius8lock 7y ago
  I find this quote very odd. I mean, 4% advantage in a winner take all economy can be the difference between boom and bust. How strange would it be for me to write the same article, wondering why elite athletes go through all the trouble they do to get an 'only 4% advantage'.
- SmokeGS 7y ago
  well that's what happens when you launder dark money with the info gathered
  - RandoNetDenizen 7y ago
    Exactly. If the public justification for a behavior doesn't actually make sense and the behavior continues then there's probably another private motivation which is being satisfied.
- sjg007 7y ago
  I think statistics wins here vs collecting and computing everything. Google has search intent so as long as you keep searching for something you are still interested. Same with Amazon. FB is more demographic based. I mean I guess you Google could just retarget you in every search query or in gmail but you might be off put when you get BMW ads when you search for vitamins. I've been retargeted by Amazon on FB but it's been pretty comical. Those ads have largely stopped so my guess is that Amazon did not find a positive ROI.
  - hammock 7y ago
    Search intent (behavioral) and demographic both suck compared to contextual. Contextual advertising is the "premium" ad space sold directly by publishers. An car maker says "I want to be in Car + Driver" and they put their ad there and it's the most expensive type of buy but it outperforms everything else by a wide margin. The reason "targeted" ads exist is not because they work better, but because they create more inventory that would otherwise not have been sold.
    - sjg007 7y ago
      I mean that is obvious. Here you own the market basically. Your competition is other content providers.
atdt 7y ago
Paper: https://weis2019.econinfosec.org/wp-content/uploads/sites/6/2019/05/WEIS_2019_paper_38.pdf https://weis2019.econinfosec.org/wp-content/uploads/sites/6/...
- tag_0 7y ago
  Thank you! It's a really a bummer this isn't hyperlinked in the first few lines of the article.
- sologoub 7y ago
  The methodology disclosed explains why the “lift” is so small: TLDR - they analyzed logs provided from an “ad exchange” in 2016 (as exchanges or SSPs were still “remnant” inventory players at the time and this is pre header-bidding, so lowest quality of the available inventory went there), of the logs they only looked at open auction (lowest quality of the already low quality inventory self-selected by using the SSP logs). RTB Deal ID, private marketplaces and other higher-rate products all use behavioral/audience data and generate the lions share of the revenues. We are talking impressions being boosted to between 10x and 100x in value easily if they qualified for one of these higher-value channels. By focusing on open auction that was preferred for valuable behaviorally targeted impressions, the papers authors basically rigged the results.
  - sologoub 7y ago
    And looks like autocorrect struck again. Last sentence should read s/preferred/prefiltered
ivv 7y ago
Since WSJ didn't bother to link to the study, its title is "Online Tracking and Publishers’ Revenues: An Empirical Analysis," you can see it on Google's Scholar. It's not about whether the cookie is "enabled", but whether the cookie for a particular impression is available for matching. The experiment looked at ad transactions of a single media company.
baybal2 7y ago
There is a long standing misconception regarding the value of "insight" coming from traffic analytics. There is no shortage of companies getting megabytes of data points per person, yet they don't seem to be getting terribly ahead of ones who don't. The a/b testing cult is a prime example. I knew companies who "optimised their websites to death" blindly following the deemed "signal." I knew of a guy who ran Borland's internet marketing and a lot of stories from him how hundred thousands in ad spend were ending up bidden on common sense defying keyword combinations.
- cwyers 7y ago
  Amazon has all of my ebook buying history, and they have shown me hundreds of ads for ebooks on my Kindle lock screen, and they have never once shown me an ebook that I would have interest in buying. It is spectacularly awful.
  - dontbenebby 7y ago
    Maybe because many people still use libraries (which don't share data) so there's no good database of reading habits the way there is for streaming movies. (Which recs seem to work much better for)
    - sjg007 7y ago
      I don't find Netflix recommendations to be that useful. They recommend categories for sure.. but I like a wide range of movies and it is usually on a per movie basis.
      - atomical 7y ago
        I don't find NetFlix compelling because after I watch great movie X the service cannot recommend me another movie that is of the same caliber. Also, there are a lot of independent movies and TV shows on NetFlix. And they suck. Horrible acting and plot but the cover is sometimes good enough to trick you into wasting time taking a look.
neonate 7y ago
http://archive.is/qkfXz http://archive.is/qkfXz
- JumpCrisscross 7y ago
  Thank you.
deleted 7y ago
[deleted]
dontbenebby 7y ago
Do any of these studies factor in the labor costs? If you get 4% from behavioral ads but need to pay hundreds engineers of 300+k to achieve it can you really beat out a company like say, DuckDuckGo that spends less on infrastructure/salary?
- marcell 7y ago
  You don’t need to pay any engineers to get behavioral tracking for your ads. This feature is provided by an ad network like Google, the publisher (like WSJ) just enables it. Google sees 4% across their entire revenue, so it’s definitely worth it for them.
  - godelski 7y ago
    > This feature is provided by an ad network like Google > You don’t need to pay any engineers to get behavioral tracking for your ads. Google doesn't need to pay any engineers?
    - pm90 7y ago
      > Google sees 4% across their entire revenue This is important. Its cost effective for _Google_ to pay big bucks for engineering labor since their network is used so widely. Its not cost effective for WSJ to do so.
    - lern_too_spel 7y ago
      Even the paper says that the adtech companies themselves make way more than 4% more for behaviorally targeted ads. The paper's claim is that publishers get only 4% more revenue per impression, but they don't have to do anything to get that 4% more anyway.
manigandham 7y ago
This article, as usual, has no idea what it's talking about. The first issue is that ad auctions are 2nd price, meaning that if an advertiser bids really high, they still only pay the 2nd-highest bid + $0.01. Of course the publishers wouldn't realize much from this. Second major issue is cookies and scale. You can't get high-value bids if advertisers can't recognize those users. The industry is slowly moving toward quais-first-price but scale is a fundamental problem, which is again why Facebook, Google, and now Amazon get all the money and do really well with behavior targeting while even big publishers struggle. Add in the new privacy regulations and this will only further widen that gap.
- samt 7y ago
  Agree that tfa is clueless. However even second price auctions cannot explain the data they claim to see. Any ad exchange these days has data showing publisher revenue delta of far more than 4% for cookie-able browsers. It's not just oba... much of the non-oba demand running through programmatic requires a "cookie" for frequency capping or just basic anti-fraud. Disclosure: work in industry; am biased.
  - manigandham 7y ago
    Well the data here is also small and suspect. They need to separate mobile browsers and GDPR/EU regions that aren't available for OBA targeting anyway. That's why I said scale (reach + cookies) is the fundamental problem.
    - samt 7y ago
      Agree. It's absurd how many conclusions have been drawn from one flawed study of a single publisher.
    - sjg007 7y ago
      GDPR/EU sounds like a natural control.
- denzil_correa 7y ago
jefftk 7y ago
I'm very skeptical of this methodology, since it's completely correlational. Here's how I would run this study as a publisher if I used an ad network that lets the publisher turn off personalization on a per-pageview level (like Google's ads, which I work on: https://support.google.com/admanager/answer/7678538?hl=en https://support.google.com/admanager/answer/7678538?hl=en). I would run an A/B test of personalized ads vs non-personalized. This is simple, and very robust since it's controlled. My expectation is that if a big US news publisher tried this they would see much more than a 4% difference, but that's speculation on my part.
aussieguy1234 7y ago
The middleman will take 60%, unless the publisher builds their own ad tech system. The incentive to do so for a big publisher would be large. Hire a few ML engineers, build your own ad tech system.
- majani 7y ago
  The biggest publishers already roll their own ad tech systems with white label software such as OpenX, balancing out ads from third party ad networks as well as their own in-house ads.
return1 7y ago
anecdotally ( i turned off ads for my users and switched to contextual-only since GDPR) non-targeted ads bring ~40% less revenue. I suppose it varies widely between publisher type , country etc. I do not believe their data is representative, and i also think it is the wrong kind of data. My hypothesis is that advertisers overpay for targeted ads, but this is not the right way tot test that. They would need to find data or experiment that correlates advertising spend to revenue generated.
sonnyblarney 7y ago
For context, most internet ad spending is very poorly measured, and is money 'thrown into the system' with very little direct oversight in terms of ROI on part of the advertiser. Either they can't measure the real ROI (brand advertising) or it's hard to, or they are kind of lazy. When big companies spend on ads, they often 'allocate' and the money just gets spent. The efficiency of those ads is going to be very low. The world of actionable ads is narrow. Google search ads are generally very specific and actionable, and are fairly well measurable. FB ads similarly (if you want them to be). In those contexts, the 'targeting' will definitely pop out at you and will make or break a campaign, so long as the advertiser is watching the numbers. A lot of what one would think of as 'actually targeted advertising' gets lost in a wash of arbitrary ad spend.
rustoo 7y ago
this is quite interesting... here is the whole paper: https://weis2019.econinfosec.org/wp-content/uploads/sites/6/2019/05/WEIS_2019_paper_38.pdf https://weis2019.econinfosec.org/wp-content/uploads/sites/6/...

220 points by Quanttek 7y ago

Crucial quote: But in one of the first empirical studies of the impacts of behaviorally targeted advertising on online publishers’ revenue, researchers at the University of Minnesota, University of California, Irvine, and Carnegie Mellon University suggest publishers only get about 4% more revenue for an ad impression that has a cookie enabled than for one that doesn’t. The study tracked millions of ad transactions at a large U.S. media company over the course of one week. That modest gain for publishers stands in contrast to the vastly larger sums advertisers are willing to pay for behaviorally targeted ads. A 2009 study by Howard Beales, a professor at George Washington University School of Business and a former director of the Bureau of Consumer Protection at the Federal Trade Commission, found advertisers are willing to pay 2.68 times more for a behaviorally targeted ad than one that wasn’t. Much of the premium likely is being eaten up by the so-called “ad tech tax,” the middlemen’s fees that eat up 60 cents of every dollar spent on programmatic ads, according to marketing intelligence firm Warc.

stingraycharles 7y ago
It’s important to realize that this way of advertising is definitely important for advertisers, and adds a lot of value to them. It’s just that it’s not visible to publishers. Having said that, 2009 is a long time ago, and I would like to see this study repeated before drawing conclusions about the current ad landscape.
- Quanttek 7y ago
  That's a typo. It's a 2019 paper. See the link elsewhere in the thread
- downandout 7y ago
  Exactly. This study completely ignores the fact that retargeting through the Facebook and Google pixels is highly effective for advertisers. I have run retargeting campaigns with ROAS (return on ad spend) as high as 30x. Without the ability to retarget, advertising revenue at both Facebook and Google would plummet. The majority of conversions for advertisers come from retargeting (behavioral) campaigns. Advertisers run cold traffic campaigns (non behavioral) just to be able to cookie a group of users interested in their niche of product or service. They then show a different set of ads to those that clicked on the initial ad and met some behavioral criteria - for example they read to the bottom of the landing page or watched more than 1/2 of a sales video. It is this second set of ads that results in most conversions from new customers. So the entire model falls apart if we lose the ability to run retargeting (behavioral) campaigns. Most advertisers lose money on cold traffic campaigns, and make up for it with behavioral campaigns. When behavioral advertising stops, so does non-behavioral, and the whole Facebook and Google house of cards comes crumbling down in a hurry.
  - sockpuppet999 7y ago
    I'm not sure exactly what I'm reading here but , I'm trying to understand. Please excuse me okay? Im gonna ask you an honest Question and I would like an honest answer okay? How do you feel About using your work to spy on ppl 24 hours a day. How do you feel about that? Do you feel it's okay because of others doing it Do you have Any reservations About this ?? I'm not trying to be An asshole here okay? I'm honestly interested in what you( As an informed person) thinks about these issues?
    - travisjungroth 7y ago
      How can you call showing a group of people who clicked on an ad a second ad “spy[ing] on ppl 24 hours a day?”.
      - luckylion 7y ago
        You need to constantly track them to be able to show them ads.
paulsutter 7y ago
The average cookie doesn't belong to a high-value segment, explaining why the average benefit is limited. Of course Mercedes wants to reach people shopping for a BMW and will pay substantially more for it. They are paying extra to reach a small subset of users. No conflict here at all
- zrobotics 7y ago
  But are targeted ads worth more? Yes, if I'm shopping for a BMW then Mercedes definitely wants to advertise to me. However, targeted ads don't seem to work as well as Google/Facebook would like advertisers to think. Mercedes can just advertise if I'm searching duckduckgo for BMW, rather than pay to advertise to me for 2 months after I bought a BMW. Note that this is how targeted advertising currently works, I see ads for products I have already purchased, which is just wasted money.
  - manigandham 7y ago
    They work great for first-party networks like Facebook and Google. They just don't pay out well for 3rd-party publishers.
  - godelski 7y ago
    While I agree with a lot of what you said (Mercedes can just pay for keyword searches on BMW or similar to still target and be effective with cheaper and "old school" methods). But I don't think a lot of the advertisements for already purchased products is wasteful. See Coke (and what follows is overly simplified). Everyone already knows who they are and their opinions on them. You might ask "Why does Coke advertise?" and it'd be a good question. Sriracha doesn't and they are a household name, surely Coke has more standing than them. Coke advertises not only to influence you from a young age (getting new generation of coke drinkers) but to ensure that you associate a good feeling with your purchase. This is apparent in car commercials too (especially in America). That BMW commercial isn't to convince people to buy a new BMW, kinda ridiculous when you think about it and the money that you have to spend on a car like that (consider how often you see commercials for high end cars that the general public can't afford). Luxury car makers sure do want you to feel superior about your decision to buy their car though (which there's connection with "my next car will be X so I'm superior). Compare this to McDonalds, who knows you'll be hungry soon and wants you to visit them for your next meal. These companies have different goals, and of course their advertising will be performed in just as differing ways. Not all advertising is the same. Though I'm not sure this is the best strategy for Amazon when I buy a deck of cards, I don't need 20 more types. But maybe it is effective and that's why they keep doing it.
manigandham 7y ago
There is no "ad tech tax". It's called a supply chain. The end product costs more than the raw parts in every industry. The issue for publishers here is lack of scale, no cookies, and 2nd-price auctions, meaning they don't get enough high bids and don't get the full price for those bids when they do happen.
- mattkrause 7y ago
  More to the point, revenue doesn’t include expenses, so it doesn’t matter that the targeted ads cost more....
- slips 7y ago
  It seems disingenuous to compare something abstract like advertising to the process of adding value in manufacturing. They are concepts in two different classes.
  - munchbunny 7y ago
    I don't think it's disingenuous. The advertiser is willing to pay a lot more for the ad after the extra tech is added on. That's a pretty clear case that the extra tech makes the same ad impression more valuable. I don't agree that it's value add since the advertiser pays the publisher directly, and the advertiser then slaps on all of the extra bells and whistles, so the impression isn't modified to be more valuable before it gets to the advertiser. However, the comparison is not disingenuous. Even though I disagree with the parent poster, there is a clear perspective where the two are comparable.
- reallydude 7y ago
  There is some confusion about what a "publisher" means. A publisher is either an SSP (a platform where publishers are aggregated by flat contract fee on a time or traffic basis with guarantees) or a singular site. > There is no "ad tech tax" That is correct. You might get better revenues (as a publisher) dealing with SpotX (an exchange) over say...Viant (a reseller who acts as a publisher to SpotX), but probably won't do better on volume, which directly correlates to payout. Then again, SpotX may not pay you as much for your average demographic and volume as Viant, who wants your business more than SpotX. None of this is supply chain. The chain is not a chain, but more of an amalgam of situations that is affected by the market, as much as personal relationships. Conceptually, an ecosystem where anyone can consume from anyone (as a publisher) and feed from anyone (as an exchange). > The issue for publishers here is lack of scale You don't know that. In 2009, the economy was still recovering and ad-tech had been slapped hard in 2008, leaving banner ads at fractions of the previous years. They have slowly floated down a few more cents to where they are today, primarily due to better targeting, ad fraud, video, mobile browser support, and clickbait (er native) ads. > no cookies This was the comparison that led to the 4% revenue bump. If platforms do not pay forward to the publishers (because why bother, the platforms set their own cookies anyway), it suggests that publishers shouldn't bother with targeting. That's exactly what has happened. No platform consumes publisher targeting data in arbitrage, because it might be faked. Using something like Zvelo for context and your own cookies, you get a much better view of the client. > 2nd-price auctions, meaning they don't get enough high bids and don't get the full price for those bids Whatever "high bids" or "full price" means here, is nebulous. How an exchange decides to run auctions is often negotiated up front but is, ultimately, black box. What this has to do with publishers is confusing. Publishers rarely get paid off what the platform makes. You sign an order for a set period of time or slice of impressions unless you have traffic that is hundreds of thousands per day (an exeedingly small number of sites). In the case where you run a Real Time Bidding auction (header bidding), you might make some variable money. It's rare and wasn't even seen in the wild (ie IAB) till well after 2009. See this more recent breakdown: https://www.emarketer.com/content/why-tech-firms-obtain-most-of-the-money-in-programmatic-purchases https://www.emarketer.com/content/why-tech-firms-obtain-most...
mobjack 7y ago
The money could have been eaten up by the advertiser. If the untargeted ads lead to less valuable placements, then it will hurt the revenue of the advertiser. Short term, both the ad network and publisher can get away with bad placement and make the same amount of money. It will take longer for the advertiser to see the loss in conversion and reduce their spend accordingly.
4ntonius8lock 7y ago
I find this quote very odd. I mean, 4% advantage in a winner take all economy can be the difference between boom and bust. How strange would it be for me to write the same article, wondering why elite athletes go through all the trouble they do to get an 'only 4% advantage'.
SmokeGS 7y ago
well that's what happens when you launder dark money with the info gathered
- RandoNetDenizen 7y ago
  Exactly. If the public justification for a behavior doesn't actually make sense and the behavior continues then there's probably another private motivation which is being satisfied.
sjg007 7y ago
I think statistics wins here vs collecting and computing everything. Google has search intent so as long as you keep searching for something you are still interested. Same with Amazon. FB is more demographic based. I mean I guess you Google could just retarget you in every search query or in gmail but you might be off put when you get BMW ads when you search for vitamins. I've been retargeted by Amazon on FB but it's been pretty comical. Those ads have largely stopped so my guess is that Amazon did not find a positive ROI.
- hammock 7y ago
  Search intent (behavioral) and demographic both suck compared to contextual. Contextual advertising is the "premium" ad space sold directly by publishers. An car maker says "I want to be in Car + Driver" and they put their ad there and it's the most expensive type of buy but it outperforms everything else by a wide margin. The reason "targeted" ads exist is not because they work better, but because they create more inventory that would otherwise not have been sold.
  - sjg007 7y ago
    I mean that is obvious. Here you own the market basically. Your competition is other content providers.

atdt 7y ago

Paper: https://weis2019.econinfosec.org/wp-content/uploads/sites/6/2019/05/WEIS_2019_paper_38.pdf https://weis2019.econinfosec.org/wp-content/uploads/sites/6/...

tag_0 7y ago
Thank you! It's a really a bummer this isn't hyperlinked in the first few lines of the article.
sologoub 7y ago
The methodology disclosed explains why the “lift” is so small: TLDR - they analyzed logs provided from an “ad exchange” in 2016 (as exchanges or SSPs were still “remnant” inventory players at the time and this is pre header-bidding, so lowest quality of the available inventory went there), of the logs they only looked at open auction (lowest quality of the already low quality inventory self-selected by using the SSP logs). RTB Deal ID, private marketplaces and other higher-rate products all use behavioral/audience data and generate the lions share of the revenues. We are talking impressions being boosted to between 10x and 100x in value easily if they qualified for one of these higher-value channels. By focusing on open auction that was preferred for valuable behaviorally targeted impressions, the papers authors basically rigged the results.
- sologoub 7y ago
  And looks like autocorrect struck again. Last sentence should read s/preferred/prefiltered

ivv 7y ago

Since WSJ didn't bother to link to the study, its title is "Online Tracking and Publishers’ Revenues: An Empirical Analysis," you can see it on Google's Scholar. It's not about whether the cookie is "enabled", but whether the cookie for a particular impression is available for matching. The experiment looked at ad transactions of a single media company.

baybal2 7y ago

There is a long standing misconception regarding the value of "insight" coming from traffic analytics. There is no shortage of companies getting megabytes of data points per person, yet they don't seem to be getting terribly ahead of ones who don't. The a/b testing cult is a prime example. I knew companies who "optimised their websites to death" blindly following the deemed "signal." I knew of a guy who ran Borland's internet marketing and a lot of stories from him how hundred thousands in ad spend were ending up bidden on common sense defying keyword combinations.

cwyers 7y ago
Amazon has all of my ebook buying history, and they have shown me hundreds of ads for ebooks on my Kindle lock screen, and they have never once shown me an ebook that I would have interest in buying. It is spectacularly awful.
- dontbenebby 7y ago
  Maybe because many people still use libraries (which don't share data) so there's no good database of reading habits the way there is for streaming movies. (Which recs seem to work much better for)
  - sjg007 7y ago
    I don't find Netflix recommendations to be that useful. They recommend categories for sure.. but I like a wide range of movies and it is usually on a per movie basis.
    - atomical 7y ago
      I don't find NetFlix compelling because after I watch great movie X the service cannot recommend me another movie that is of the same caliber. Also, there are a lot of independent movies and TV shows on NetFlix. And they suck. Horrible acting and plot but the cover is sometimes good enough to trick you into wasting time taking a look.

neonate 7y ago

http://archive.is/qkfXz http://archive.is/qkfXz

JumpCrisscross 7y ago
Thank you.

deleted 7y ago

[deleted]

dontbenebby 7y ago

Do any of these studies factor in the labor costs? If you get 4% from behavioral ads but need to pay hundreds engineers of 300+k to achieve it can you really beat out a company like say, DuckDuckGo that spends less on infrastructure/salary?

marcell 7y ago
You don’t need to pay any engineers to get behavioral tracking for your ads. This feature is provided by an ad network like Google, the publisher (like WSJ) just enables it. Google sees 4% across their entire revenue, so it’s definitely worth it for them.
- godelski 7y ago
  > This feature is provided by an ad network like Google > You don’t need to pay any engineers to get behavioral tracking for your ads. Google doesn't need to pay any engineers?
  - pm90 7y ago
    > Google sees 4% across their entire revenue This is important. Its cost effective for _Google_ to pay big bucks for engineering labor since their network is used so widely. Its not cost effective for WSJ to do so.
  - lern_too_spel 7y ago
    Even the paper says that the adtech companies themselves make way more than 4% more for behaviorally targeted ads. The paper's claim is that publishers get only 4% more revenue per impression, but they don't have to do anything to get that 4% more anyway.

manigandham 7y ago

This article, as usual, has no idea what it's talking about. The first issue is that ad auctions are 2nd price, meaning that if an advertiser bids really high, they still only pay the 2nd-highest bid + $0.01. Of course the publishers wouldn't realize much from this. Second major issue is cookies and scale. You can't get high-value bids if advertisers can't recognize those users. The industry is slowly moving toward quais-first-price but scale is a fundamental problem, which is again why Facebook, Google, and now Amazon get all the money and do really well with behavior targeting while even big publishers struggle. Add in the new privacy regulations and this will only further widen that gap.

samt 7y ago
Agree that tfa is clueless. However even second price auctions cannot explain the data they claim to see. Any ad exchange these days has data showing publisher revenue delta of far more than 4% for cookie-able browsers. It's not just oba... much of the non-oba demand running through programmatic requires a "cookie" for frequency capping or just basic anti-fraud. Disclosure: work in industry; am biased.
- manigandham 7y ago
  Well the data here is also small and suspect. They need to separate mobile browsers and GDPR/EU regions that aren't available for OBA targeting anyway. That's why I said scale (reach + cookies) is the fundamental problem.
  - samt 7y ago
    Agree. It's absurd how many conclusions have been drawn from one flawed study of a single publisher.
  - sjg007 7y ago
    GDPR/EU sounds like a natural control.
denzil_correa 7y ago

jefftk 7y ago

I'm very skeptical of this methodology, since it's completely correlational. Here's how I would run this study as a publisher if I used an ad network that lets the publisher turn off personalization on a per-pageview level (like Google's ads, which I work on: https://support.google.com/admanager/answer/7678538?hl=en https://support.google.com/admanager/answer/7678538?hl=en). I would run an A/B test of personalized ads vs non-personalized. This is simple, and very robust since it's controlled. My expectation is that if a big US news publisher tried this they would see much more than a 4% difference, but that's speculation on my part.

aussieguy1234 7y ago

The middleman will take 60%, unless the publisher builds their own ad tech system. The incentive to do so for a big publisher would be large. Hire a few ML engineers, build your own ad tech system.

majani 7y ago
The biggest publishers already roll their own ad tech systems with white label software such as OpenX, balancing out ads from third party ad networks as well as their own in-house ads.

return1 7y ago

anecdotally ( i turned off ads for my users and switched to contextual-only since GDPR) non-targeted ads bring ~40% less revenue. I suppose it varies widely between publisher type , country etc. I do not believe their data is representative, and i also think it is the wrong kind of data. My hypothesis is that advertisers overpay for targeted ads, but this is not the right way tot test that. They would need to find data or experiment that correlates advertising spend to revenue generated.

sonnyblarney 7y ago

For context, most internet ad spending is very poorly measured, and is money 'thrown into the system' with very little direct oversight in terms of ROI on part of the advertiser. Either they can't measure the real ROI (brand advertising) or it's hard to, or they are kind of lazy. When big companies spend on ads, they often 'allocate' and the money just gets spent. The efficiency of those ads is going to be very low. The world of actionable ads is narrow. Google search ads are generally very specific and actionable, and are fairly well measurable. FB ads similarly (if you want them to be). In those contexts, the 'targeting' will definitely pop out at you and will make or break a campaign, so long as the advertiser is watching the numbers. A lot of what one would think of as 'actually targeted advertising' gets lost in a wash of arbitrary ad spend.

rustoo 7y ago

this is quite interesting... here is the whole paper: https://weis2019.econinfosec.org/wp-content/uploads/sites/6/2019/05/WEIS_2019_paper_38.pdf https://weis2019.econinfosec.org/wp-content/uploads/sites/6/...