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When companies struggle the first thing they tend to pull is advertising. Need some help making this quarter’s numbers? Pull all the TV adverts for a few weeks.

When companies struggle the first thing they tend to pull is advertising. Need some help making this quarter’s numbers? Pull all the TV adverts for a few weeks. “Go dark” as insiders say. Short term this is all standard. The long term danger for Google and others is when lots of companies realize they probably didn’t need to make all that spend in the first place. That big “reset” is a new normal that advertising dollar driven tech companies will need to adjust to.

bpodgursky 6y ago
The most obvious case of the Dunning–Kruger effect is when random HN commenters think that nobody in marketing is capable of using data-driven metrics. I don't think you appreciate how numerical modern marketing is -- marketers use conversion rates, A/B tests, attribution, and a lot of other techniques to actually calculate the ROI of advertising. What you're describing may have been the case, in a number of companies, five years ago, but it's just not meaningful now-days. Companies spend marketing dollars because marketing dollars work. Any other interpretation is ideology-driven wishful thinking. You might not like marketing, but it's silly for the conclusion to be "thus, the entire field is made of people who don't know what they are doing".
- pyentropy 6y ago
  Marketing dollars work, and bidding for ad placement is competitive. The field is made of clever people that optimize it. However I think it's dangerous to believe that advertising is "numerical" or metrics can fully predict ROI of advertising - the same way subprime mortgages weren't numerical, and the same way a population mortality graph cannot predict coronavirus. A sudden drop in revenue may adjust the economy of bidding and show a potential bubble. The tiny budgets and one click campaigns (with platforms inventing unique metrics & targeting woo) in social media marketing compared to traditional marketing (huge barrier to entry) feel like penny stocks vs traditional stocks. You can easily mislead individuals and tiny businesses.
- exolymph 6y ago
  You're both right, _and_ wrong, because people, firms, and their respective behaviors vary a ton. Some marketing teams are great at measuring the effect of their ad spend. Some are not. It depends on the specific circumstances and the specific humans involved. I'd be interested in an argument over whether more marketers are competent versus not, but any argument that presupposes uniformity among marketers is just silly.
- deanmoriarty 6y ago
  You might be underestimating the number of companies who absolutely don’t know what they are doing budget-wise yet they manage to stay in business, and threw a lot of dollars in ads/marketing without deeply analyzing its effectiveness, just because raising money at stellar valuations was free until a month ago. Anecdotally, I happen to work for a 300 people saas company who just started drastically cutting expenses with the goal of reducing burn rate and delaying the need for another round of financing in this terrible environment: ads were one of the first few things to be dramatically cut (the second one was some super inefficient AWS spending). The ads budget shrank from 6 figures a year to near 0 overnight, and it’s unlikely to return to its former level any time soon. Also, half of the marketing team was laid off. Having 30 people in marketing for such a small company was definitely way too much (just like engineering, sales, ...), and it anecdotally proves GP’s argument. All consequences of the fact that money was free.
  - joshuamorton 6y ago
    No it doesn't prove the claim that the marketing tram and budget won't regrow after the economy improves, nor the claim that marketing and advertising was being done wrong or unnecessary. All we have to go on for that is your opinion about how the company was being run, which isn't backed by any sort of data.
    - deanmoriarty 6y ago
      It is my opinion, but an informed one. A couple executives just plainly admitted how crazy inefficient our spending was, so I just can’t imagine how they could possibly go back to blow nearly a million a year in ads any time soon, or ever, when 90% of our revenues come from traditional enterprise deals that don’t have anything to do with ads, for the most part. They are all just worried that they will have to accept a down round in a year, and are trying to mitigate that. By the way, this is true for engineering as well, where I work: now that we figured out how to remain productive while cutting 40% of our AWS costs (spot instances, killing idle instances more often, ...), will we ever go back to be inefficient and leaving idle AWS clusters up at night just because “money is not an issue”? Very unlikely. And the marketing department wasn’t being run any more efficiently than engineering, budgets were just fat because money was free for nearly a decade.
- CPLX 6y ago
  I've worked in the field and have been closely involved in online advertising spending and you're way overstating this. Confusion, misdirection, dodgy attribution, questionable ROI calculations and outright fraud are rampant. Furthermore I'd say most people with deep knowledge of the field (assuming they don't have a vested interest in arguing otherwise) would agree in a heartbeat.
  - petercooper 6y ago
    Furthermore I'd say most people with deep knowledge of the field (assuming they don't have a vested interest in arguing otherwise) would agree in a heartbeat. I don't know if this rhetorical device has a name, but basically saying "and other smart people would agree with me unless they had a sneaky reason not to" doesn't seem like supportive evidence of your point.. (... and I suspect most people would agree in a heartbeat.. sorry! ;-))
- huac 6y ago
  ah but how do you really know if any of those numbers are causal? marketers need to account for multi-touch attribution, if a customer sees an ad on one platform and converts on another, or if they do it ten minutes outside of your conversion window. there certainly are a lot of numbers in adtech and marketing. whether or not those actually relate to causal impact, across the industry, is not definitively answered. very few players (on the supply and demand side) have the scale and ability to properly do incrementality testing. personally, i think people don't want to know the real results. if the numbers say it's not broken, why risk your job?
  - bluGill 6y ago
    Those are real concerns that I have no insight on if they are accounted for. I know that they can be accounted for and have been. TV and newspaper ads have been doing it for years where for obvious reasons they can't track where or when you saw the ad. McDonald's runs ads on those platforms anyway.
    - huac 6y ago
      yeah you can try, for print/OTT the most common way to estimate lift is with DMA segmentation, compare lift in the DMA's which saw the ad versus the DMA's which didn't. but how do you pick the right DMA's to pair, etc. it's hard and i think most people don't do it right; again, it requires very large n to do correctly, which requires very large budgets. mcdonalds is actually one of the savvier players here, they know that it's hard to quantify brand advertising if you only go off in-store purchases, so they spent very heavily to promote their app and develop a consumer-brand relationship there. now, if you see a mcdonalds ad on youtube, they can (try to) match your youtube ad impression to a purchase done through the app / credit card / other PII.
  - summerlight 6y ago
    > very few players (on the supply and demand side) have the scale and ability to properly do incrementality testing. https://support.google.com/google-ads/answer/6394265 https://support.google.com/google-ads/answer/6394265 Actually Google is preparing it as a product, so I would guess the result was generally positive? FB also has a similar product as well.
- josefresco 6y ago
  "I don't think you appreciate how numerical modern marketing is" Maybe for the Fortune 500 / tech startup crowd, but I work for small / medium businesses and there is still a ton of ad dollars being spent with no attribution / tracking. I will routinely setup clients with tracking tools, which then discourages them as they finally see what their digital ads actually generate in terms of revenue. Many stop their digital campaigns and increase their traditional tv/radio/print budgets or, fall back to running digital campaigns with no tracking. AKA "Brand Awareness".
  - epiphanitus 6y ago
    What is your perspective on the ROI of FB/google/targeted ads vs the traditional mediums? Is the targeting worth the premium?
    - rock_hard 6y ago
      Targeting is def worth the premium for the right categories Not for things like cars and toothpaste but for things like online services/games, fashion, homeware, etc
    - eyegor 6y ago
      When I last worked in a consumer tech startup, our best ROI by far was paying tech youtubers or doing targeted ads to tech categories on youtube. Being in a startup I was vaguely aware of marketing efforts but I was never involved directly, so I can't say why or how that was discovered. All I know is my coworkers dealing with marketing said the roi and conversion rates specifically for youtube far outstripped traditional targeted tech ads through google or facebook. Of course this may have been because we weren't great at advertising, so your mileage may vary.
      - anticsapp 6y ago
        Did you guys try paid YouTube ads? Or simply behind the scenes sponsored content marketing?
      - Nasrudith 6y ago
- lotyrin 6y ago
  I've fought to bring all those things to any marketing effort I've been involved with and have all but literally laughed out of the room. From my vantage point at least, the average marketing effort is "We spent all our budget, good job us."
- tomrod 6y ago
  I worked in the space, tested in the space, and can say returns for non-strategic models for brand aware entities is not meaningful.
- coldtea 6y ago
  >What you're describing may have been the case, in a number of companies, five years ago, but it's just not meaningful now-days. Companies spend marketing dollars because marketing dollars work. Companies do tons of things that don't make financial sense. And metrics can paint 100 pictures, including the picture the advertiser wants to paint. Not to mention it's in the best interest of the marketing department of a company and the advertising liaison within the company to continue spending money in advertising whether it works or not, if they want to have a job...
- ZhuanXia 6y ago
  I have seen a lot of shoddy statistics used by ad people to justify the necessity of ad people. I would trust a random engineer over the ad team for this task purely as a matter of incentives.
- wpietri 6y ago
  I'm deeply suspicious that an entire profession has changed the way they behave in just 5 years. Moreover, I think you're ignoring a few things. | One is that companies can only spend money on marketing they have cash to invest. In a sudden downturn, cash may become scarce. Another other is that in extreme circumstances, panic is a common reaction. Even if the marketing director is perfectly rational, getting an ad budget may not happen if the CEO and the CFO are waking up in the middle of the night trying hard to figure how to keep the company from bankruptcy. And a third, and possibly the biggest, is that it may be perfectly rational to pull ads now. There are whole classes of things that people can't really consume right now. All travel. All entertainment. For many, anything they have to leave the house to get, including big-ticket items like cars. And consumer psychology in a recession drives people to minimize discretionary purchasing, stick with familiar brands, and be more skeptical of anything new or unfamiliar. It's also important to realize that advertising is an arms race. A lot of advertising spending is only required because other people are also spending. E.g., everybody in the world already knows what Coca Cola is; they advertise not to inform, but to maintain dominance. So it's perfectly plausible that a lot of places will cut spending and see nothing change because their competitors cut spending too.
  - anticsapp 6y ago
    The other thing you have to remember is ego. I see plenty of ads for WeWork office clones still running! Is it total neglect? I think it's hubris and Marketing Director's fighting to keep their ad spend, because if their entire budget is cut, guess who gets cut next?
- manigandham 6y ago
  You're both right. Marketing dollars work, but there's also a lot of wasted spend. Many big campaigns are just brand awareness, or are poorly implemented with lots of supply-chain and measurement overhead competing for the cheapest impressions. Video content is increasing and leading to an oversupply of inventory. There's competition from connected TV and streaming services. Privacy regulations are affecting targeting and measurement. A lot of budgets are also just paused in response to consumer demand, with uncertainty around the economy and shifting strategies to conserve cash and move to more efficient ads.
- mrlatinos 6y ago
  Just left a data engineering job in adtech. Speaking from personal experience, marketers make terrible ROI analysts because they always want to spend the same or more. Agencies are especially bad. Most incremental lift studies I've seen are valid, looking at CTR and A/B testing as you mentioned. But as soon as you start looking at revenue and brand lift, all studies seem to come to the same conclusion - the higher the spend, the better. Don't get me started on multi-channel attribution... garbage. Marketing is still very much spray and pray with diminishing returns. And in most cases, marketers will claim otherwise. I got tired of drinking the koolaid. Modern marketing is just as fraudulent as ever. Agencies are just getting better at lying.
  - anticsapp 6y ago
    Agencies are thieves. At WPP Google wouldn't play ball with kickbacks, but you can't be a credible digital agency and not do search. So Google got their taste, just no GDN. Facebook wouldn't do kickbacks, so they were heavily discouraged. Any DSP that could advance client goals but wasn't part of the inner circle would be overruled by senior management. Total gaslighting. Everything goes to AppNexus or AppNexus partners. Because the parent company owns 20% or so of AppNexus. I got downvoted yesterday for this but I'll say it again, the mafia is in the tech, the tech is in the mafia. I have so many stories. edit: The funniest bit was when I would take thoughtful, younger clients out to dinner who understood the business model. They would laugh and say "don't tell me too much, just hit the artificial KPIs and make me look good for my Christmas bonus.".
  - orangecat 6y ago
    Speaking from personal experience, marketers make terrible ROI analysts because they always want to spend the same or more. Yeah, principal-agent problem. At a previous job there was a case where we sent partial refunds to advertisers because we noticed we hadn't delivered as many impressions as they had paid for. Some of them were upset that by that, and would have preferred that we had just kept the full amount.
- jeltz 6y ago
  So what is your experience in the business? I do not have any personal experience but I know plenty of people who work or have worked in adtech (e.g. ad words optimization consultants, ad agencies, affiliates who buy adwords) and from their stories I would say you overestimate the ad industry. I also know of several (3 that I can think of on top of my head) companies who went bankrupt from buying inefficient ads.
- TeMPOraL 6y ago
  > You might not like marketing, but it's silly for the conclusion to be "thus, the entire field is made of people who don't know what they are doing". It's not silly. Personally, I believe just that. Just because marketers use "conversion rates, A/B tests, attribution, and a lot of other techniques", doesn't mean they actually "calculate the ROI of advertising". They may be - and I believe are - mostly bullshitting themselves. Attribution is a hard problem. Doing an A/B test correctly is a specialized skill that requires some understanding of statistics most people in the industry don't have. And even the tools don't help, as evidenced by the famous case of Optimizely designing their product in a way that made people do A/B tests wrong - and in the exactly wrong way that made them feel Optimizely is helping them[0]. You can't seriously claim that all these small companies are hiring top STEM grads to trace ad spend and verify the work of top STEM grads working in small ad agencies. -- [0] - https://news.ycombinator.com/item?id=10872359 https://news.ycombinator.com/item?id=10872359
TAForObvReasons 6y ago
It's a prisoners dilemma of sorts: if one company reduces ad spend the others arguably benefit, and the only way to sustain lower rates is if every company in an industry agrees to reduce ad spend. When things return to normal, that dynamic won't go away
- ragebol 6y ago
  I really don't think ads have a significant impact at all. How much is your buying affected by ads, really? Do you really buy a different eg. toothpaste rather than the one you typically get due to ads or because it's some percent off this time and it's also just okay toothpaste?
  - Fauntleroy 6y ago
    Depends on the type of ad. Random preroll on a YouTube video? nah... Stealthy paid review / article? maybe...
  - BurningFrog 6y ago
    The standard counter question is: "Did you ever buy a tooth paste brand that didn't advertise?" Ideally you answer "no...", while a look of sudden realization comes over your face. Individual results may vary.
    - vonmoltke 6y ago
      Other than generic store brands, I haven't seen a toothpaste brand for sale that didn't advertise, so it isn't a really a fair or informative question.
      - freepor 6y ago
        Well there’s your comparison. The store brands are chemically basically identical to the brand names. But their market share is relatively low. So the advertising must do something.
3xblah 6y ago
There are countries, this may or may not include the USA, please forgive my ignorance, where only sellers of "essential" goods/services and their suppliers have been allowed to operate during lockdown. During this time what is the motivation for companies to spend on internet advertising for "non-essential" goods/services. The longer consumers are given to adapt to a lifestyle of purchasing only "essential" goods/services, spending more time with family, cooking for themselves, staying local, enjoying simpler, less expensive pleasures and leaving a lighter environmental footprint, how susceptible will they be, in the long-term, to internet advertising that aims to motivate them to purchase non-essential goods/services. Perhaps it is only temporary, but lockdowns are providing a paradigm shift away from internet advertising and toward increased non-commercial use of the internet. Those who advocate web advertising as necessary in order to support a functioning internet may have to change their arguments in the event that the internet does not become "useless" as advertising spend decreases.
- vikramkr 6y ago
  You describe it as if people are enjoying the experience. People around me are desperate to get out of the house, have some genuine human interaction, get their jobs back, maybe go to a bar or restaurant with some friends, go on a date, etc etc etc. And you can still get random stuff on amazon. And I dont know what " simpler, less expensive pleasures" you are referring to, but people are spending way more time on Netflix and YouTube. Cooking is more expensive because food delivery is expensive, you cant go to a hobby store, and so on. For most people this is hell and they can't wait for it to end - if anything I can see there being an overreaction to the crisis ending where people go out more and eat out more and so on
  - ewidar 6y ago
    > Cooking is more expensive because food delivery is expensive No, eating out is more expensive. Cooking is just as cheap as before.
    - vikramkr 6y ago
      Depends on where you are. I've got to pay an extra 8 to 18 bucks a shipment to get things shipped via instacart or whatever, and nothing is ever in stock. Things I stocked up on are cheaper, otherwise I'm overpaying for all delivered groceries here in New York. Parts of the country hit by the pandemic are not having a fun time. Everything is more expensive
deleted 6y ago
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ct520 6y ago
"When companies struggle the first thing they tend to pull is advertising." ... And the huge local facebook advertising uptick I see says otherwise?
ChuckMcM 6y ago
This is all good an true. But of the two Youtubers I got to talk to at the series finale of MakerFaire in San Mateo, they both whined that advertising rates were going down. The goal of my discussion was to talk to someone who had "been there, done that" to get an idea of the time investment and the expected returns. If they want to out themselves here they can. Independently they both have pretty robust tracking software to understand views, view time, clicks from views Etc[1]. Both have systems to measure $/views, and both used extensive "channelizing" to get focused on where the views came from and how their viewer found them. They both observed that if they had been "TV shows", as their ratings and viewer audience expanded their network would get more ad revenue per show, but for them they are consistently getting LESS and less revenue. It puts them on a treadmill of having to produce more videos to get more views to keep their revenue up but that also increases their costs. It resonated pretty strongly with my experience with AdSense and web pages. We can speculate on why that trend is where it is, but it seems pretty clear that one (or maybe both) things are true; Advertisers don't see as much "value" in advertising on Youtube videos, and the revenue growth curve for at least these two content producers does not seem to match either the slope or the magnitude of the change in revenue that Google reports in its earnings. [1] I got a good idea of how difficult this path could be when you are your own producer, accountant, and data science company.
- busterarm 6y ago
  The YouTube treadmill has creators pushing out 1-4 videos per day now. There is now a near-infinite supply of YouTube content. OF COURSE the advertising rates are approaching zero. With TV there's only a fixed number of channels & timeslots. Content creators are complaining about YouTube being strict but YouTube is strongly incentivized here to cut the supply of content. They want to raise advertising rates and charge advertisers more money! That means raising the bar of production value, etc, because YouTube wants to keep the same kind of viewership numbers. YouTube is now mainstream television. The channels that will survive here are going to play ball and raise the quality of their content and production values. They're going to be family safe. They're going to provide lots of content and it's going to be shot multi-camera by a staff of people. Smaller creators days on the platform are numbered. Thing is, the channels that do this best can do this for themselves. They don't need YouTube if they build a dedicated-enough audience. I've been looking at how to make this process easier for people, using things like Cloudflare Stream, and think there may be some business opportunity here.
3xblah 6y ago
Doesn't Google have millions of dollars in cash on hand. Perhaps it could pay YouTube content creators. Google sells ad sales services utilising, in part, data collected on YouTube visitors. An old saw amongst internet marketers was that "traffic" was the single most metric behind the financial success of any website. That idea only makes sense if the plan is to sell online ads or, in Google's case, provide online ad sales services. In lockdown, arguably the best "business plan" for a website is to sell essential goods/services. What consumers might be reminded or become aware of during lockdown is that the internet, including the web, still continuses to work without any online ads. Ad buyers might not be buying onlne ads, but consumers are still paying for home internet access. Lo and behold, even when online ads are diminished, creative and generous people still create content and use the internet to share it.
- bkanber 6y ago
  But why would Google pay YouTube creators out of pocket when the creators are perfectly willing to upload for free, as they have from the beginning?
- dragonwriter 6y ago
  > Doesn't Google have millions of dollars in cash on hand. Well, millions with a “b”. > Perhaps it could pay YouTube content creators. It...does. > What consumers might become aware of during lockdown is that the internet, including the web, still continuses to work without any online ads. It doesn't work without a revenue stream for the online service providers, whether that's ads (regular, “free” YouTube) or membership fees (YouTube Premium).
jotm 6y ago
There was a "big reset" in 2008-2009 in affiliate marketing. Many small networks did go under, but spending has quickly increased to previous levels and beyond. Most of that traffic is trash, yet companies still pay a lot for it. A similar situation happened on Google Search, I believe.
goatinaboat 6y ago
The long term danger for Google and others is when lots of companies realize they probably didn’t need to make all that spend in the first place. Ad spending is an arms race and Google has very deliberately set it up so that the only way to succeed on their near-monopoly platform is to out-spend your competitors who are also trying to do the same to you. But it’s a zero sum game the end state of which is Google captures all of your profits while you scramble to cut costs in a race to the bottom. The only way to win is not to play.
- kerkeslager 6y ago
  No, because then your competitors win. The only way to win is for everyone to agree as a society that advertising is harmful, and have nobody play. Enforcing that is difficult, but I think it's the right direction.
  - brainwad 6y ago
    That's very extreme. To solve the problem of capturing all profit, society just needs to agree some k so that all ad bidders only bid so much as would give them ROI of 1+k, instead of bidding all the way down to ROI of 1.
    - goatinaboat 6y ago
      It’s not extreme at all. Ad people justify what they do as informing the public of new products. So let ads be regulated to plain black text on a white background to be shown only on ad pages that people must specifically visit, and we’ll see the truth of that assessment. The real truth of advertising is that it is engineered to exploit flaws in the human psyche to hack a human into acting against their own best interests. To buy a product they don’t need, or to vote for a candidate that will harm them. It is toxic, and those who create it and distribute it are toxic.
    - kerkeslager 6y ago
      Hacker News, where the problem with lying to people to sell them inferior products they don't need is that it costs too much.

bpodgursky 6y ago

The most obvious case of the Dunning–Kruger effect is when random HN commenters think that nobody in marketing is capable of using data-driven metrics. I don't think you appreciate how numerical modern marketing is -- marketers use conversion rates, A/B tests, attribution, and a lot of other techniques to actually calculate the ROI of advertising. What you're describing may have been the case, in a number of companies, five years ago, but it's just not meaningful now-days. Companies spend marketing dollars because marketing dollars work. Any other interpretation is ideology-driven wishful thinking. You might not like marketing, but it's silly for the conclusion to be "thus, the entire field is made of people who don't know what they are doing".

pyentropy 6y ago
Marketing dollars work, and bidding for ad placement is competitive. The field is made of clever people that optimize it. However I think it's dangerous to believe that advertising is "numerical" or metrics can fully predict ROI of advertising - the same way subprime mortgages weren't numerical, and the same way a population mortality graph cannot predict coronavirus. A sudden drop in revenue may adjust the economy of bidding and show a potential bubble. The tiny budgets and one click campaigns (with platforms inventing unique metrics & targeting woo) in social media marketing compared to traditional marketing (huge barrier to entry) feel like penny stocks vs traditional stocks. You can easily mislead individuals and tiny businesses.
exolymph 6y ago
You're both right, _and_ wrong, because people, firms, and their respective behaviors vary a ton. Some marketing teams are great at measuring the effect of their ad spend. Some are not. It depends on the specific circumstances and the specific humans involved. I'd be interested in an argument over whether more marketers are competent versus not, but any argument that presupposes uniformity among marketers is just silly.
deanmoriarty 6y ago
You might be underestimating the number of companies who absolutely don’t know what they are doing budget-wise yet they manage to stay in business, and threw a lot of dollars in ads/marketing without deeply analyzing its effectiveness, just because raising money at stellar valuations was free until a month ago. Anecdotally, I happen to work for a 300 people saas company who just started drastically cutting expenses with the goal of reducing burn rate and delaying the need for another round of financing in this terrible environment: ads were one of the first few things to be dramatically cut (the second one was some super inefficient AWS spending). The ads budget shrank from 6 figures a year to near 0 overnight, and it’s unlikely to return to its former level any time soon. Also, half of the marketing team was laid off. Having 30 people in marketing for such a small company was definitely way too much (just like engineering, sales, ...), and it anecdotally proves GP’s argument. All consequences of the fact that money was free.
- joshuamorton 6y ago
  No it doesn't prove the claim that the marketing tram and budget won't regrow after the economy improves, nor the claim that marketing and advertising was being done wrong or unnecessary. All we have to go on for that is your opinion about how the company was being run, which isn't backed by any sort of data.
  - deanmoriarty 6y ago
    It is my opinion, but an informed one. A couple executives just plainly admitted how crazy inefficient our spending was, so I just can’t imagine how they could possibly go back to blow nearly a million a year in ads any time soon, or ever, when 90% of our revenues come from traditional enterprise deals that don’t have anything to do with ads, for the most part. They are all just worried that they will have to accept a down round in a year, and are trying to mitigate that. By the way, this is true for engineering as well, where I work: now that we figured out how to remain productive while cutting 40% of our AWS costs (spot instances, killing idle instances more often, ...), will we ever go back to be inefficient and leaving idle AWS clusters up at night just because “money is not an issue”? Very unlikely. And the marketing department wasn’t being run any more efficiently than engineering, budgets were just fat because money was free for nearly a decade.
CPLX 6y ago
I've worked in the field and have been closely involved in online advertising spending and you're way overstating this. Confusion, misdirection, dodgy attribution, questionable ROI calculations and outright fraud are rampant. Furthermore I'd say most people with deep knowledge of the field (assuming they don't have a vested interest in arguing otherwise) would agree in a heartbeat.
- petercooper 6y ago
  Furthermore I'd say most people with deep knowledge of the field (assuming they don't have a vested interest in arguing otherwise) would agree in a heartbeat. I don't know if this rhetorical device has a name, but basically saying "and other smart people would agree with me unless they had a sneaky reason not to" doesn't seem like supportive evidence of your point.. (... and I suspect most people would agree in a heartbeat.. sorry! ;-))
huac 6y ago
ah but how do you really know if any of those numbers are causal? marketers need to account for multi-touch attribution, if a customer sees an ad on one platform and converts on another, or if they do it ten minutes outside of your conversion window. there certainly are a lot of numbers in adtech and marketing. whether or not those actually relate to causal impact, across the industry, is not definitively answered. very few players (on the supply and demand side) have the scale and ability to properly do incrementality testing. personally, i think people don't want to know the real results. if the numbers say it's not broken, why risk your job?
- bluGill 6y ago
  Those are real concerns that I have no insight on if they are accounted for. I know that they can be accounted for and have been. TV and newspaper ads have been doing it for years where for obvious reasons they can't track where or when you saw the ad. McDonald's runs ads on those platforms anyway.
  - huac 6y ago
    yeah you can try, for print/OTT the most common way to estimate lift is with DMA segmentation, compare lift in the DMA's which saw the ad versus the DMA's which didn't. but how do you pick the right DMA's to pair, etc. it's hard and i think most people don't do it right; again, it requires very large n to do correctly, which requires very large budgets. mcdonalds is actually one of the savvier players here, they know that it's hard to quantify brand advertising if you only go off in-store purchases, so they spent very heavily to promote their app and develop a consumer-brand relationship there. now, if you see a mcdonalds ad on youtube, they can (try to) match your youtube ad impression to a purchase done through the app / credit card / other PII.
- summerlight 6y ago
  > very few players (on the supply and demand side) have the scale and ability to properly do incrementality testing. https://support.google.com/google-ads/answer/6394265 https://support.google.com/google-ads/answer/6394265 Actually Google is preparing it as a product, so I would guess the result was generally positive? FB also has a similar product as well.
josefresco 6y ago
"I don't think you appreciate how numerical modern marketing is" Maybe for the Fortune 500 / tech startup crowd, but I work for small / medium businesses and there is still a ton of ad dollars being spent with no attribution / tracking. I will routinely setup clients with tracking tools, which then discourages them as they finally see what their digital ads actually generate in terms of revenue. Many stop their digital campaigns and increase their traditional tv/radio/print budgets or, fall back to running digital campaigns with no tracking. AKA "Brand Awareness".
- epiphanitus 6y ago
  What is your perspective on the ROI of FB/google/targeted ads vs the traditional mediums? Is the targeting worth the premium?
  - rock_hard 6y ago
    Targeting is def worth the premium for the right categories Not for things like cars and toothpaste but for things like online services/games, fashion, homeware, etc
  - eyegor 6y ago
    When I last worked in a consumer tech startup, our best ROI by far was paying tech youtubers or doing targeted ads to tech categories on youtube. Being in a startup I was vaguely aware of marketing efforts but I was never involved directly, so I can't say why or how that was discovered. All I know is my coworkers dealing with marketing said the roi and conversion rates specifically for youtube far outstripped traditional targeted tech ads through google or facebook. Of course this may have been because we weren't great at advertising, so your mileage may vary.
    - anticsapp 6y ago
      Did you guys try paid YouTube ads? Or simply behind the scenes sponsored content marketing?
    - Nasrudith 6y ago
lotyrin 6y ago
I've fought to bring all those things to any marketing effort I've been involved with and have all but literally laughed out of the room. From my vantage point at least, the average marketing effort is "We spent all our budget, good job us."
tomrod 6y ago
I worked in the space, tested in the space, and can say returns for non-strategic models for brand aware entities is not meaningful.
coldtea 6y ago
>What you're describing may have been the case, in a number of companies, five years ago, but it's just not meaningful now-days. Companies spend marketing dollars because marketing dollars work. Companies do tons of things that don't make financial sense. And metrics can paint 100 pictures, including the picture the advertiser wants to paint. Not to mention it's in the best interest of the marketing department of a company and the advertising liaison within the company to continue spending money in advertising whether it works or not, if they want to have a job...
ZhuanXia 6y ago
I have seen a lot of shoddy statistics used by ad people to justify the necessity of ad people. I would trust a random engineer over the ad team for this task purely as a matter of incentives.
wpietri 6y ago
I'm deeply suspicious that an entire profession has changed the way they behave in just 5 years. Moreover, I think you're ignoring a few things. | One is that companies can only spend money on marketing they have cash to invest. In a sudden downturn, cash may become scarce. Another other is that in extreme circumstances, panic is a common reaction. Even if the marketing director is perfectly rational, getting an ad budget may not happen if the CEO and the CFO are waking up in the middle of the night trying hard to figure how to keep the company from bankruptcy. And a third, and possibly the biggest, is that it may be perfectly rational to pull ads now. There are whole classes of things that people can't really consume right now. All travel. All entertainment. For many, anything they have to leave the house to get, including big-ticket items like cars. And consumer psychology in a recession drives people to minimize discretionary purchasing, stick with familiar brands, and be more skeptical of anything new or unfamiliar. It's also important to realize that advertising is an arms race. A lot of advertising spending is only required because other people are also spending. E.g., everybody in the world already knows what Coca Cola is; they advertise not to inform, but to maintain dominance. So it's perfectly plausible that a lot of places will cut spending and see nothing change because their competitors cut spending too.
- anticsapp 6y ago
  The other thing you have to remember is ego. I see plenty of ads for WeWork office clones still running! Is it total neglect? I think it's hubris and Marketing Director's fighting to keep their ad spend, because if their entire budget is cut, guess who gets cut next?
manigandham 6y ago
You're both right. Marketing dollars work, but there's also a lot of wasted spend. Many big campaigns are just brand awareness, or are poorly implemented with lots of supply-chain and measurement overhead competing for the cheapest impressions. Video content is increasing and leading to an oversupply of inventory. There's competition from connected TV and streaming services. Privacy regulations are affecting targeting and measurement. A lot of budgets are also just paused in response to consumer demand, with uncertainty around the economy and shifting strategies to conserve cash and move to more efficient ads.
mrlatinos 6y ago
Just left a data engineering job in adtech. Speaking from personal experience, marketers make terrible ROI analysts because they always want to spend the same or more. Agencies are especially bad. Most incremental lift studies I've seen are valid, looking at CTR and A/B testing as you mentioned. But as soon as you start looking at revenue and brand lift, all studies seem to come to the same conclusion - the higher the spend, the better. Don't get me started on multi-channel attribution... garbage. Marketing is still very much spray and pray with diminishing returns. And in most cases, marketers will claim otherwise. I got tired of drinking the koolaid. Modern marketing is just as fraudulent as ever. Agencies are just getting better at lying.
- anticsapp 6y ago
  Agencies are thieves. At WPP Google wouldn't play ball with kickbacks, but you can't be a credible digital agency and not do search. So Google got their taste, just no GDN. Facebook wouldn't do kickbacks, so they were heavily discouraged. Any DSP that could advance client goals but wasn't part of the inner circle would be overruled by senior management. Total gaslighting. Everything goes to AppNexus or AppNexus partners. Because the parent company owns 20% or so of AppNexus. I got downvoted yesterday for this but I'll say it again, the mafia is in the tech, the tech is in the mafia. I have so many stories. edit: The funniest bit was when I would take thoughtful, younger clients out to dinner who understood the business model. They would laugh and say "don't tell me too much, just hit the artificial KPIs and make me look good for my Christmas bonus.".
- orangecat 6y ago
  Speaking from personal experience, marketers make terrible ROI analysts because they always want to spend the same or more. Yeah, principal-agent problem. At a previous job there was a case where we sent partial refunds to advertisers because we noticed we hadn't delivered as many impressions as they had paid for. Some of them were upset that by that, and would have preferred that we had just kept the full amount.
jeltz 6y ago
So what is your experience in the business? I do not have any personal experience but I know plenty of people who work or have worked in adtech (e.g. ad words optimization consultants, ad agencies, affiliates who buy adwords) and from their stories I would say you overestimate the ad industry. I also know of several (3 that I can think of on top of my head) companies who went bankrupt from buying inefficient ads.
TeMPOraL 6y ago
> You might not like marketing, but it's silly for the conclusion to be "thus, the entire field is made of people who don't know what they are doing". It's not silly. Personally, I believe just that. Just because marketers use "conversion rates, A/B tests, attribution, and a lot of other techniques", doesn't mean they actually "calculate the ROI of advertising". They may be - and I believe are - mostly bullshitting themselves. Attribution is a hard problem. Doing an A/B test correctly is a specialized skill that requires some understanding of statistics most people in the industry don't have. And even the tools don't help, as evidenced by the famous case of Optimizely designing their product in a way that made people do A/B tests wrong - and in the exactly wrong way that made them feel Optimizely is helping them[0]. You can't seriously claim that all these small companies are hiring top STEM grads to trace ad spend and verify the work of top STEM grads working in small ad agencies. -- [0] - https://news.ycombinator.com/item?id=10872359 https://news.ycombinator.com/item?id=10872359

TAForObvReasons 6y ago

It's a prisoners dilemma of sorts: if one company reduces ad spend the others arguably benefit, and the only way to sustain lower rates is if every company in an industry agrees to reduce ad spend. When things return to normal, that dynamic won't go away

ragebol 6y ago
I really don't think ads have a significant impact at all. How much is your buying affected by ads, really? Do you really buy a different eg. toothpaste rather than the one you typically get due to ads or because it's some percent off this time and it's also just okay toothpaste?
- Fauntleroy 6y ago
  Depends on the type of ad. Random preroll on a YouTube video? nah... Stealthy paid review / article? maybe...
- BurningFrog 6y ago
  The standard counter question is: "Did you ever buy a tooth paste brand that didn't advertise?" Ideally you answer "no...", while a look of sudden realization comes over your face. Individual results may vary.
  - vonmoltke 6y ago
    Other than generic store brands, I haven't seen a toothpaste brand for sale that didn't advertise, so it isn't a really a fair or informative question.
    - freepor 6y ago
      Well there’s your comparison. The store brands are chemically basically identical to the brand names. But their market share is relatively low. So the advertising must do something.

3xblah 6y ago

There are countries, this may or may not include the USA, please forgive my ignorance, where only sellers of "essential" goods/services and their suppliers have been allowed to operate during lockdown. During this time what is the motivation for companies to spend on internet advertising for "non-essential" goods/services. The longer consumers are given to adapt to a lifestyle of purchasing only "essential" goods/services, spending more time with family, cooking for themselves, staying local, enjoying simpler, less expensive pleasures and leaving a lighter environmental footprint, how susceptible will they be, in the long-term, to internet advertising that aims to motivate them to purchase non-essential goods/services. Perhaps it is only temporary, but lockdowns are providing a paradigm shift away from internet advertising and toward increased non-commercial use of the internet. Those who advocate web advertising as necessary in order to support a functioning internet may have to change their arguments in the event that the internet does not become "useless" as advertising spend decreases.

vikramkr 6y ago
You describe it as if people are enjoying the experience. People around me are desperate to get out of the house, have some genuine human interaction, get their jobs back, maybe go to a bar or restaurant with some friends, go on a date, etc etc etc. And you can still get random stuff on amazon. And I dont know what " simpler, less expensive pleasures" you are referring to, but people are spending way more time on Netflix and YouTube. Cooking is more expensive because food delivery is expensive, you cant go to a hobby store, and so on. For most people this is hell and they can't wait for it to end - if anything I can see there being an overreaction to the crisis ending where people go out more and eat out more and so on
- ewidar 6y ago
  > Cooking is more expensive because food delivery is expensive No, eating out is more expensive. Cooking is just as cheap as before.
  - vikramkr 6y ago
    Depends on where you are. I've got to pay an extra 8 to 18 bucks a shipment to get things shipped via instacart or whatever, and nothing is ever in stock. Things I stocked up on are cheaper, otherwise I'm overpaying for all delivered groceries here in New York. Parts of the country hit by the pandemic are not having a fun time. Everything is more expensive

deleted 6y ago

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ct520 6y ago

"When companies struggle the first thing they tend to pull is advertising." ... And the huge local facebook advertising uptick I see says otherwise?

ChuckMcM 6y ago

This is all good an true. But of the two Youtubers I got to talk to at the series finale of MakerFaire in San Mateo, they both whined that advertising rates were going down. The goal of my discussion was to talk to someone who had "been there, done that" to get an idea of the time investment and the expected returns. If they want to out themselves here they can. Independently they both have pretty robust tracking software to understand views, view time, clicks from views Etc[1]. Both have systems to measure $/views, and both used extensive "channelizing" to get focused on where the views came from and how their viewer found them. They both observed that if they had been "TV shows", as their ratings and viewer audience expanded their network would get more ad revenue per show, but for them they are consistently getting LESS and less revenue. It puts them on a treadmill of having to produce more videos to get more views to keep their revenue up but that also increases their costs. It resonated pretty strongly with my experience with AdSense and web pages. We can speculate on why that trend is where it is, but it seems pretty clear that one (or maybe both) things are true; Advertisers don't see as much "value" in advertising on Youtube videos, and the revenue growth curve for at least these two content producers does not seem to match either the slope or the magnitude of the change in revenue that Google reports in its earnings. [1] I got a good idea of how difficult this path could be when you are your own producer, accountant, and data science company.

busterarm 6y ago
The YouTube treadmill has creators pushing out 1-4 videos per day now. There is now a near-infinite supply of YouTube content. OF COURSE the advertising rates are approaching zero. With TV there's only a fixed number of channels & timeslots. Content creators are complaining about YouTube being strict but YouTube is strongly incentivized here to cut the supply of content. They want to raise advertising rates and charge advertisers more money! That means raising the bar of production value, etc, because YouTube wants to keep the same kind of viewership numbers. YouTube is now mainstream television. The channels that will survive here are going to play ball and raise the quality of their content and production values. They're going to be family safe. They're going to provide lots of content and it's going to be shot multi-camera by a staff of people. Smaller creators days on the platform are numbered. Thing is, the channels that do this best can do this for themselves. They don't need YouTube if they build a dedicated-enough audience. I've been looking at how to make this process easier for people, using things like Cloudflare Stream, and think there may be some business opportunity here.

3xblah 6y ago

Doesn't Google have millions of dollars in cash on hand. Perhaps it could pay YouTube content creators. Google sells ad sales services utilising, in part, data collected on YouTube visitors. An old saw amongst internet marketers was that "traffic" was the single most metric behind the financial success of any website. That idea only makes sense if the plan is to sell online ads or, in Google's case, provide online ad sales services. In lockdown, arguably the best "business plan" for a website is to sell essential goods/services. What consumers might be reminded or become aware of during lockdown is that the internet, including the web, still continuses to work without any online ads. Ad buyers might not be buying onlne ads, but consumers are still paying for home internet access. Lo and behold, even when online ads are diminished, creative and generous people still create content and use the internet to share it.

bkanber 6y ago
But why would Google pay YouTube creators out of pocket when the creators are perfectly willing to upload for free, as they have from the beginning?
dragonwriter 6y ago
> Doesn't Google have millions of dollars in cash on hand. Well, millions with a “b”. > Perhaps it could pay YouTube content creators. It...does. > What consumers might become aware of during lockdown is that the internet, including the web, still continuses to work without any online ads. It doesn't work without a revenue stream for the online service providers, whether that's ads (regular, “free” YouTube) or membership fees (YouTube Premium).

jotm 6y ago

There was a "big reset" in 2008-2009 in affiliate marketing. Many small networks did go under, but spending has quickly increased to previous levels and beyond. Most of that traffic is trash, yet companies still pay a lot for it. A similar situation happened on Google Search, I believe.

goatinaboat 6y ago

The long term danger for Google and others is when lots of companies realize they probably didn’t need to make all that spend in the first place. Ad spending is an arms race and Google has very deliberately set it up so that the only way to succeed on their near-monopoly platform is to out-spend your competitors who are also trying to do the same to you. But it’s a zero sum game the end state of which is Google captures all of your profits while you scramble to cut costs in a race to the bottom. The only way to win is not to play.

kerkeslager 6y ago
No, because then your competitors win. The only way to win is for everyone to agree as a society that advertising is harmful, and have nobody play. Enforcing that is difficult, but I think it's the right direction.
- brainwad 6y ago
  That's very extreme. To solve the problem of capturing all profit, society just needs to agree some k so that all ad bidders only bid so much as would give them ROI of 1+k, instead of bidding all the way down to ROI of 1.
  - goatinaboat 6y ago
    It’s not extreme at all. Ad people justify what they do as informing the public of new products. So let ads be regulated to plain black text on a white background to be shown only on ad pages that people must specifically visit, and we’ll see the truth of that assessment. The real truth of advertising is that it is engineered to exploit flaws in the human psyche to hack a human into acting against their own best interests. To buy a product they don’t need, or to vote for a candidate that will harm them. It is toxic, and those who create it and distribute it are toxic.
  - kerkeslager 6y ago
    Hacker News, where the problem with lying to people to sell them inferior products they don't need is that it costs too much.