7 ms·

This is a good read. For a long time I explained to people that the value of search advertising was that it matched a buyer who had just asked a buying question

This is a good read. For a long time I explained to people that the value of search advertising was that it matched a buyer who had just asked a buying question with advertisers who wanted to answer that question. This was HUGELY different than previous Internet "banner" advertising. Think of it this way; I put a poster up in the metro that says "Best Deals on Rolex watches" and a million people a day "see it" but a vanishingly small number want to buy a Rolex. However, if Google gets a query "Where to buy a Rolex" or "best deals on Rolex watches", well you know that person is perhaps already considering buying a watch, so you want first crack at the deal. The secret sauce was instantly pairing "commercial intent" (or the intention to do some commercial action, buy, sell, hire, Etc.) with vendors and firms who can satisfy that intent or "aspects" of that intent. (You might get an Uber ad on a query for "restaurants near me" for example) Amazon has that in spades. If you are on the Amazon site, that is a huge signal that you are intending to make a commercial transaction. Either with Amazon, or perhaps you are reading reviews of things you can get locally, but the probability that you are about to do something commercial is much much higher. (So does Facebook along a different vector but that is a different post for a different time.) I know from experience at Blekko that one way to piss off Amazon is to out advertise them :-). That just told me that they considered Ads strategic and selling stuff was secondary to that goal[1]. [1] I reasoned it this way, if selling stuff was primary then any additional exposure is "good" even if you have to pay affiliate fees for it. If advertising was the money maker, then someone doing it better than you (converting your ad revenue into their affiliate revenue) then you respond harshly to that.

gundmc 6y ago
Google and Facebook are going to get screwed. They'll get hit by antitrust action (even if just more fines and settlements) while also under the radar losing market share to Amazon via market forces, which ironically is an argument against taking antitrust action against the formers.
tyingq 6y ago
The pricing for the click might kill off any benefit over less targeted advertising though. I poked around in keyword planner, and one click for some rolex related phrases costs $3-$10. I imagine you would have to do quite a lot of expensive experimentation to figure out how to make that profitable.
- doopy1 6y ago
  Rolexes sell for five figures. Even if someone has to spend $x,xxx on clicks before a single conversion, they are still making a killer ROI.
  - deleted 6y ago
    [deleted]
  - Nextgrid 6y ago
    The question is how many people search for Rolexes vs how many people actually end up buying one now (or at the very least, later but from the same seller, to offset the ad's cost)? I think that for luxury goods, you can have a lot of people (more than for other expensive but otherwise boring goods) looking at them (maybe they are curious about the price) but very few that would actually follow through with their purchase.
  - saalweachter 6y ago
    One of my favorite anecdotes from my time in comparison shopping (where north of 80% of our revenue was CPA deals) was looking at the variation of margins by product (electronics paid 1%; clothing more like 8-10% as a rev share) and seeing one outlier where we were paid a commission of 50%. The product was a fake rolex, as in, the name of the item was literally something like "Fake Rolex", and while it was only something like $100, instead of $10,000, it was apparently still such a high margin that the seller would pay us a 50% sales commission.
    - moneywoes 6y ago
      Sorry what are cpa deals
      - benglish11 6y ago
        Cost per acquisition
        6y ago
miked85 6y ago
> I know from experience at Blekko that one way to piss off Amazon is to out advertise them It is a shame (at least to me) that Blekko was acquired by IBM - it showed a lot of promise and I was a fan at the time.
BoppreH 6y ago
However, if Google gets a query "Where to buy a Rolex" or "best deals on Rolex watches", well you know that person is perhaps already considering buying a watch, so you want first crack at the deal. I've found that my "buying questions" are never properly answered by those ads. The more commercial intent I display, the scummier the ads get. I blame misaligned interests: I want to know if the product is good and to find good deals, they want me to give them money, now! And since advertising is a numbers game, they don't pull their punches when manipulating me. No, thank you. Talk to my adblocker.
- mr_toad 6y ago
  > I've found that my "buying questions" are never properly answered by those ads. The more commercial intent I display, the scummier the ads get. It’s a lot like walking into a car dealership. They aren’t aiming to match you with the best car for you, they’re aiming to sell you the car that makes them the most money.
  - c_s_guy 6y ago
    I've never actually bought straight from a dealership so excuse my naivety here, but wouldn't they be better off trying to sell me the car that is best for me? Otherwise if it doesn't meet my needs, I won't be buying anything.
    - neolog 6y ago
      You probably can't tell which car is best for you, and salespeople aren't gonna help.
      - deleted 6y ago
        [deleted]
    - Dylan16807 6y ago
      They just have to convince you it's good enough. Even if they do pick a car largely based on your needs, they're never going to say it's anything but a perfect or near-perfect fit.
Macha 6y ago
A theory as to why the ads are so useless to people despite the above: Who has the most to gain from being shown in these advertising spots? Those who would not be purchased otherwise. If you are the default choice, maybe some amount of people will be swayed by the competitors ad, but % wise, not a huge amount. Who wouldn't be purchased otherwise? Those without recognition otherwise. This could be those who are simply too small to be known, or those who are "just another no name brand" with possibly questionable quality. Of these two groups, it's the latter who will have more money to spend - the "small" sellers by definition don't have the marketing budget. So it's those selling crap in volume who have both the incentive and the resources to put the most into these ads, and why they end up showing up disproportionately among the advertisments.
maxerickson 6y ago
The most prominent ads I see on Amazon are for the thing I just bought, that isn't a kind of thing most people buy repeatedly.
- ehsankia 6y ago
  Where do you see those ads? The most prominent ads I see on amazon is when I search for literally anything, the top results are often whoever paid Amazon the most to be the top results. Sometimes I will literally search for a brand by name and some other brand will be shown before it. This kind of race to the bottom is something I've heard a lot of companies complain about, companies literally need to pay Amazon for the ads on their own terms to outbid competitors.
- serial_dev 6y ago
  Well, you might think that. Did you consider that you might be wrong and maybe Amazon actually has lot of data that you don't and they know it better? Just a couple of examples. I might have bought a hard disk drive a couple of days ago and realize that I actually want more so I can do backups (or I want to build a cute HDD tower with a Raspberry Pi). I might have bought ear plugs for home, and decide a week later that it would be nice to have those at work, too. I could have bought zip ties, only to realize that I actually want more in different sizes and colors. I bought a pijama, it was delivered and I want to buy 3 more of those, so I can throw out my old ugly pijamas and not worry about buying new pijamas for the next 5 years. I got headphones but they aren't quite perfect. I didn't issue a refund yet, but I know I'd eventually send them back and want to buy a similar headphone asap.
  - maxerickson 6y ago
    No, I never, ever, consider that I might be wrong about anything. Doesn't happen.
  - Boxxed 6y ago
    Except the same-damn-product ads also come up for things that make very little sense for re-purchase: artwork, DVDs, books, and so on.
thewarrior 6y ago
Would love to hear your thoughts on Facebook and how that’s similar / different
throwaway2048 6y ago
Part of the issue with this logic is that ads for things people were already going to buy are going to preform like gangbusters according to metrics, and will be having next to zero actual impact on future sales.
- ChuckMcM 6y ago
  Not future sales, the choice, right now, that the buyer makes. I suspect it is most effective when you have a "product" which several sources in China make under what ever trade name you want. (There seems to be lots of electronic test equipment like that) And your typical FBA business. Advertise you gear when the right keywords come up and get a click ahead of the guy selling it at the cheapest price. If all the products look the same and Vendor B advertises to put it at the front and pays a service for a few hundred 5 star reviews, I would not be surprised if it added 10 to 15% to the net margin on sales.
Jugurtha 6y ago
>then you respond harshly to that How harshly? I've got the popcorn ready... >So does Facebook along a different vector but that is a different post for a different time. That was six hours ago. Now is a different time...
lifeisstillgood 6y ago
I think the great problem is "commercial intent". I search the internet multiple times a day, but I rarely want to actually buy something. Amazon has a win here compared to facebook or Google because if I search for something on Amazon it's vastly more likely I am buying. It's the difference between asking a sales assistant "do you have good coffee" (amazon), asking a librarian for a book on good coffee (google) and asking my friend if they like their coffee (facebook). Intent and context matter. https://news.ycombinator.com/item?id=26535260 https://news.ycombinator.com/item?id=26535260
- mjevans 6y ago
  That, or I'm shopping for someone else to recommend it to them. Where Amazon's got a major problem is that the counterfeits and the perception that any negative product experience might be the result of that, makes it increasingly less likely that I and others, go to Amazon looking for that product.
  - lifeisstillgood 6y ago
    I have been thinking about why Amazon is pissing in its own soup, with counterfeit and other "problematic" goods. 1. Scale - it's just too hard to curate all those products. Meh - Amazon has hired like a billion people, it can hire product line owners. 2. Do you remember in the mid-90s Amazon had some big push for sellers to add their SKUs abs descriptions of goods (ie instead of Amazon holding a database of goods, and you saying "i am selling one of these" you the seller added it to amazon marketplace. This was a move to collect all the data about all the goods ever. The current allowance of poor quality goods is I think the same game. Most dodgy goods sold are not "dangerous counterfeit" - as in selling medicinal drugs made from floor sweepings. Most dodgy goods are the things you find in Poundland and market stalls. A plastic knock off of "Mike-y Mouse" or running tops made from cotton not the high tech wick, or often the same goods as branded made on same machines, just not branded. This set of goods is what the next billion consumers will buy for two decades. You cannot afford H&M prices but you can afford the knock offs pouring out of Chinese and Philipino factories - and yet how do you get the catalog for those factories? The same way Amazon did in the 90s. Anyway ..
lifeisstillgood 6y ago
It's also worth mentioning that "a buyer who just asked a buying question" can be almost entirely met through contextual search (no need to track the user, just the question ala duckduckgo) - and so you can let go of an awful lot of previously held behavioural data (tracking people across multiple sites) - partly for privacy but also I have not seen any evidence it adds (significant) value
- ChuckMcM 6y ago
  This is true. The behavioral data is valuable to the bidding process. If you can provide context that this user previously bought things after clicking through, their demographic with respect to your target market, etc. Can be used by advertisers to change their "bid." (increase it generally) So providing behavioral data improves the CPC which improves advertising margins for the publisher. That is what drives harvesting all of that data. DDG could increase their ad margins buy supplying identifying data, but perhaps they choose not to with the assumption that higher volumes will result in more gross revenue. I've never seen the books at DDG so I can only speculate.
elorant 6y ago
Rolex doesn't need to advertise on public spaces. They will just sponsor an event that attracts the wealthy, like a sailing race or a horse race. Contextual advertising is very powerful, and it's the one thing digital networks decided to abandon because it's way easier to automate everything and spy on users.

gundmc 6y ago

Google and Facebook are going to get screwed. They'll get hit by antitrust action (even if just more fines and settlements) while also under the radar losing market share to Amazon via market forces, which ironically is an argument against taking antitrust action against the formers.

tyingq 6y ago

The pricing for the click might kill off any benefit over less targeted advertising though. I poked around in keyword planner, and one click for some rolex related phrases costs $3-$10. I imagine you would have to do quite a lot of expensive experimentation to figure out how to make that profitable.

doopy1 6y ago
Rolexes sell for five figures. Even if someone has to spend $x,xxx on clicks before a single conversion, they are still making a killer ROI.
- deleted 6y ago
  [deleted]
- Nextgrid 6y ago
  The question is how many people search for Rolexes vs how many people actually end up buying one now (or at the very least, later but from the same seller, to offset the ad's cost)? I think that for luxury goods, you can have a lot of people (more than for other expensive but otherwise boring goods) looking at them (maybe they are curious about the price) but very few that would actually follow through with their purchase.
- saalweachter 6y ago
  One of my favorite anecdotes from my time in comparison shopping (where north of 80% of our revenue was CPA deals) was looking at the variation of margins by product (electronics paid 1%; clothing more like 8-10% as a rev share) and seeing one outlier where we were paid a commission of 50%. The product was a fake rolex, as in, the name of the item was literally something like "Fake Rolex", and while it was only something like $100, instead of $10,000, it was apparently still such a high margin that the seller would pay us a 50% sales commission.
  - moneywoes 6y ago
    Sorry what are cpa deals
    - benglish11 6y ago
      Cost per acquisition
      - 6y ago

miked85 6y ago

> I know from experience at Blekko that one way to piss off Amazon is to out advertise them It is a shame (at least to me) that Blekko was acquired by IBM - it showed a lot of promise and I was a fan at the time.

BoppreH 6y ago

However, if Google gets a query "Where to buy a Rolex" or "best deals on Rolex watches", well you know that person is perhaps already considering buying a watch, so you want first crack at the deal. I've found that my "buying questions" are never properly answered by those ads. The more commercial intent I display, the scummier the ads get. I blame misaligned interests: I want to know if the product is good and to find good deals, they want me to give them money, now! And since advertising is a numbers game, they don't pull their punches when manipulating me. No, thank you. Talk to my adblocker.

mr_toad 6y ago
> I've found that my "buying questions" are never properly answered by those ads. The more commercial intent I display, the scummier the ads get. It’s a lot like walking into a car dealership. They aren’t aiming to match you with the best car for you, they’re aiming to sell you the car that makes them the most money.
- c_s_guy 6y ago
  I've never actually bought straight from a dealership so excuse my naivety here, but wouldn't they be better off trying to sell me the car that is best for me? Otherwise if it doesn't meet my needs, I won't be buying anything.
  - neolog 6y ago
    You probably can't tell which car is best for you, and salespeople aren't gonna help.
    - deleted 6y ago
      [deleted]
  - Dylan16807 6y ago
    They just have to convince you it's good enough. Even if they do pick a car largely based on your needs, they're never going to say it's anything but a perfect or near-perfect fit.

Macha 6y ago

A theory as to why the ads are so useless to people despite the above: Who has the most to gain from being shown in these advertising spots? Those who would not be purchased otherwise. If you are the default choice, maybe some amount of people will be swayed by the competitors ad, but % wise, not a huge amount. Who wouldn't be purchased otherwise? Those without recognition otherwise. This could be those who are simply too small to be known, or those who are "just another no name brand" with possibly questionable quality. Of these two groups, it's the latter who will have more money to spend - the "small" sellers by definition don't have the marketing budget. So it's those selling crap in volume who have both the incentive and the resources to put the most into these ads, and why they end up showing up disproportionately among the advertisments.

maxerickson 6y ago

The most prominent ads I see on Amazon are for the thing I just bought, that isn't a kind of thing most people buy repeatedly.

ehsankia 6y ago
Where do you see those ads? The most prominent ads I see on amazon is when I search for literally anything, the top results are often whoever paid Amazon the most to be the top results. Sometimes I will literally search for a brand by name and some other brand will be shown before it. This kind of race to the bottom is something I've heard a lot of companies complain about, companies literally need to pay Amazon for the ads on their own terms to outbid competitors.
serial_dev 6y ago
Well, you might think that. Did you consider that you might be wrong and maybe Amazon actually has lot of data that you don't and they know it better? Just a couple of examples. I might have bought a hard disk drive a couple of days ago and realize that I actually want more so I can do backups (or I want to build a cute HDD tower with a Raspberry Pi). I might have bought ear plugs for home, and decide a week later that it would be nice to have those at work, too. I could have bought zip ties, only to realize that I actually want more in different sizes and colors. I bought a pijama, it was delivered and I want to buy 3 more of those, so I can throw out my old ugly pijamas and not worry about buying new pijamas for the next 5 years. I got headphones but they aren't quite perfect. I didn't issue a refund yet, but I know I'd eventually send them back and want to buy a similar headphone asap.
- maxerickson 6y ago
  No, I never, ever, consider that I might be wrong about anything. Doesn't happen.
- Boxxed 6y ago
  Except the same-damn-product ads also come up for things that make very little sense for re-purchase: artwork, DVDs, books, and so on.

thewarrior 6y ago

Would love to hear your thoughts on Facebook and how that’s similar / different

throwaway2048 6y ago

Part of the issue with this logic is that ads for things people were already going to buy are going to preform like gangbusters according to metrics, and will be having next to zero actual impact on future sales.

ChuckMcM 6y ago
Not future sales, the choice, right now, that the buyer makes. I suspect it is most effective when you have a "product" which several sources in China make under what ever trade name you want. (There seems to be lots of electronic test equipment like that) And your typical FBA business. Advertise you gear when the right keywords come up and get a click ahead of the guy selling it at the cheapest price. If all the products look the same and Vendor B advertises to put it at the front and pays a service for a few hundred 5 star reviews, I would not be surprised if it added 10 to 15% to the net margin on sales.

Jugurtha 6y ago

>then you respond harshly to that How harshly? I've got the popcorn ready... >So does Facebook along a different vector but that is a different post for a different time. That was six hours ago. Now is a different time...

lifeisstillgood 6y ago

I think the great problem is "commercial intent". I search the internet multiple times a day, but I rarely want to actually buy something. Amazon has a win here compared to facebook or Google because if I search for something on Amazon it's vastly more likely I am buying. It's the difference between asking a sales assistant "do you have good coffee" (amazon), asking a librarian for a book on good coffee (google) and asking my friend if they like their coffee (facebook). Intent and context matter. https://news.ycombinator.com/item?id=26535260 https://news.ycombinator.com/item?id=26535260

mjevans 6y ago
That, or I'm shopping for someone else to recommend it to them. Where Amazon's got a major problem is that the counterfeits and the perception that any negative product experience might be the result of that, makes it increasingly less likely that I and others, go to Amazon looking for that product.
- lifeisstillgood 6y ago
  I have been thinking about why Amazon is pissing in its own soup, with counterfeit and other "problematic" goods. 1. Scale - it's just too hard to curate all those products. Meh - Amazon has hired like a billion people, it can hire product line owners. 2. Do you remember in the mid-90s Amazon had some big push for sellers to add their SKUs abs descriptions of goods (ie instead of Amazon holding a database of goods, and you saying "i am selling one of these" you the seller added it to amazon marketplace. This was a move to collect all the data about all the goods ever. The current allowance of poor quality goods is I think the same game. Most dodgy goods sold are not "dangerous counterfeit" - as in selling medicinal drugs made from floor sweepings. Most dodgy goods are the things you find in Poundland and market stalls. A plastic knock off of "Mike-y Mouse" or running tops made from cotton not the high tech wick, or often the same goods as branded made on same machines, just not branded. This set of goods is what the next billion consumers will buy for two decades. You cannot afford H&M prices but you can afford the knock offs pouring out of Chinese and Philipino factories - and yet how do you get the catalog for those factories? The same way Amazon did in the 90s. Anyway ..

lifeisstillgood 6y ago

It's also worth mentioning that "a buyer who just asked a buying question" can be almost entirely met through contextual search (no need to track the user, just the question ala duckduckgo) - and so you can let go of an awful lot of previously held behavioural data (tracking people across multiple sites) - partly for privacy but also I have not seen any evidence it adds (significant) value

ChuckMcM 6y ago
This is true. The behavioral data is valuable to the bidding process. If you can provide context that this user previously bought things after clicking through, their demographic with respect to your target market, etc. Can be used by advertisers to change their "bid." (increase it generally) So providing behavioral data improves the CPC which improves advertising margins for the publisher. That is what drives harvesting all of that data. DDG could increase their ad margins buy supplying identifying data, but perhaps they choose not to with the assumption that higher volumes will result in more gross revenue. I've never seen the books at DDG so I can only speculate.

elorant 6y ago

Rolex doesn't need to advertise on public spaces. They will just sponsor an event that attracts the wealthy, like a sailing race or a horse race. Contextual advertising is very powerful, and it's the one thing digital networks decided to abandon because it's way easier to automate everything and spy on users.