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Hmm, I feel like this analysis comes from trying to rationalise what’s happening. From my experience the truth is simpler, and much more disappointing: Advertis

by yarekt 3y ago

Hmm, I feel like this analysis comes from trying to rationalise what’s happening. From my experience the truth is simpler, and much more disappointing: Advertising is about statistics, and if some wonky new data model creates better conversions the advertisers don’t care how it’s underlying rule sets work. The cost of pushing ads to people who already have mattresses is insignificant to capturing those that are about to buy them, statistically speaking. The disappointing thing about this trend is that even if the rule sets are obviously wrong, yet still provide positive results means that their operators have little reason to change them. Statistics don’t work for individuals. Case in point is credit rating and insurance underwriting

blowski 3y ago
Those advertisers are responding to signals in the junk data the OP is talking about. You’re both right.
- aCoreyJ 3y ago
  Yup this is addressed in the article, it seems there isn't actually data backing up the idea that this way is better
AJ007 3y ago
This is yet another of the recurring "online advertising doesn't work" articles, which have been published regularly for the past 20 years.
- raincole 3y ago
  Some people are just so confident. All the companies, from startups to giants, across different countries and cultures, must be wrong. Only few (and they all write blogs) can see through the vile of disguise and tell the readers how online advertising doesn't work.
  - ClumsyPilot 3y ago
    All the oil companies investing billions into destroying ecosystem we depend on can't be wrong!
  - wincy 3y ago
    I mean there were a few people correct that mortgage backed securities were much higher risk than they were classified as. Just because a bunch of smart people agree on something doesn’t necessarily mean it’s correct. But it can take a long time for people with a lot of money to go broke.
    - zarathustreal 3y ago
      Exactly. Kind of similar to how everyone in a Hacker News thread can agree, downvote, and even flag something and it can still be true!
      - mint2 3y ago
        Except a big part of downvoting has nothing to do with the truth of a statement - yes factual inaccuracies and misinformation will be downvoted but that’s just scratching the surface. If people are rude or posting something completely unhelpful that’s a downvote even if the statement is overall true.
        zarathustreal 3y ago
        That’s a rather unhelpful way to use a voting system, considering no two people have the same sensibilities toward rudeness or the same purpose for reading a thread. At least voting based on truth has universal utility. In fact, downvoting true information could be actively harmful in many (most?) situations as many (most?) platforms boost or suppress content based on those votes I also find it a bit.. idk what the word is, egotistical? Self-centered? Judgemental? To vote based on subjective qualities like perceived rudeness or helpfulness (toward one’s own goals or one’s own understanding of a stated goal)
- chowells 3y ago
  No, it's not. It never claims advertising doesn't work. It claims that data-driven targeting is a scam on multiple levels. That isn't to say advertising doesn't work, just that "data-driven" doesn't improve its results.
Simon_O_Rourke 3y ago
I think I've outlined this before on HN, but I've worked with a proper sleazy DSP, who I found out were basically targeting vulnerable folks with ads. These guys have zero ethics and less morals and have an attitude of "if it works it works, and to hell with the consequences".
- oAlbe 3y ago
  Would you be willing to share their name? Even privately?
api 3y ago
There are a whole class of fallacious modes of thinking that revolve around assuming the world is smarter than it actually is and that people are more competent than they actually are. The most common these days is “conspiracy theory,” which is really an optimistic view that starts with the assumption that someone understands what is happening and can coherently control it. If these conspiracies were true it would mean that all we’d have to do to fix major problems is get “them” out of power or convince “them” to become the good guys. Very, very optimistic.
- DropInIn 3y ago
  I'd say the conspiracy stuff is more that either the individuals are ignorant of Hanlons Razor or simply refuse to accept it's applicability. Combined with supremacist beliefs (They are superior which gives them insight others can't possess) and we get pretty much all the conspiracy theories. Sadly, there are plenty of very real conspiracies in this world, doing immense harms, yet those are seemingly actively ignored by the theorists... Which I often presume to be a result of the inability for the theorist to hold the "special knowledge" card as any who looks at the evidence would come to the same position and thus the promulgation of such legitimate theories are "too mainstream" for those seeking to further thier self delusion of supremacy.
- klabb3 3y ago
  This is a popular meta-conspiracy theory. “It takes too many too keep a secret”. Yes, but not everyone has to stay silent. If you have a lot of resources you can buy silence, it is literally a product for purchase (not perfect, but close enough). How do you think Harvey Weinstein got his victims to shut up? How did numerous large companies suppress their own research that their products were harmful, for decades? How did Jeffrey Epstein build a jetset trafficking empire without getting caught (and when he did get caught – the first time – he got a slap on the wrist and no media coverage)? Worst case, if someone refuses to stay silent, you can just label them “disgruntled”, question their character, their mental well-being, claim that they’re in cahoots by some known evil agent, etc etc. Point is.. many conspiracies don’t require perfectly competent agents with perfect knowledge. > If these conspiracies were true Well, quite obviously all theories are not true. The bulk of random conspiracy theories are most certainly bogus, just like most low-effort theorizing by laymen in general. But aggregates don’t make conspiracies impossible.
KnobbleMcKnees 3y ago
> The cost of pushing ads to people who already have mattresses is insignificant to capturing those that are about to buy them, statistically speaking. This is called conversion rate and for some businesses it can be surprisingly tiny while still making that business completely viable. I would hazard that rates in the mattress industry are almost preposterously low (<5%) but margins are so high that it doesn't matter in the slightest
- tmpz22 3y ago
  The lower the conversion rate the lower the profit margin influencing the company to cut additional corners that they may be able to get away with. This whole ad driven philosophy encourages the absolute bare minimal product that the customer will still pay for. As a consumer that is bad for me. Ultimately “voting with your wallet” becomes an inefficient communication method with all the layers of bullshit in between.
- deleted 3y ago
  [deleted]
- barbariangrunge 3y ago
  5% is low? You mean that having 1/20 people buy your product after seeing an ad is a bad outcome? If I sold just about anything, I bet that having a 1% conversion rate would be a money printing machine
  - rahimnathwani 3y ago
    The denominator is people who land on your site, i.e. those who clicked the ad, not those who saw the ad.
  - nucleardog 3y ago
    Click through rate (CTR) is `people clicked ad / people shown ad`. Conversion rate is `people bought thing / people clicked ad`. For Google search ads pretty good CTR would be about 8%, and a pretty good conversion rate would be about 5%. So it’s more like 1/250 buying if you’re doing pretty well. At average costs, that’ll be one conversion for something like $40 in ad spend. More average would be like 2% and 3% so more like 1/1700 and like $70 per conversion. (Display ads are more like 0.3% and 0.6%. So more like 1/50,000. Costs are cheaper.) Those prices are _average_. There’s no flat rate for these—they’re an auction. So generally your higher margin items, especially in industries with higher average click/conversion rates, are going to end up with higher bids and higher costs. A bank will pay a lot more to convert someone to a mortgage customer than a restaurant will pay to convert them. You may end up paying $30 per click for someone searching for mortgage refinancing. Assuming the same “good” search conversion rates, you’re paying $600 for the conversion at a $30 CPC. (I suspect the conversion rate on something like mortgage refinancing is probably lower.) It’s been a few years since I was forced to live in the advertising world but (1) no it’s not a money printing machine (except for the ad networks) and in fact (2) I’ve literally never seen a directly attributable positive ROI. Mostly the gap is explained away as "well, it's building _brand awareness_". Most of the positive results I’ve seen were… questionable. Usually “you didn’t acquire new customers, you took existing ones or existing leads and funneled them into your advertising pipeline and attributed them there”. Think advertising on your own company’s name—people searching for your company by name were almost definitely going to end up there anyway.
SoftTalker 3y ago
Yep, in the past they would advertise in newspapers or magazines or TV or radio where the vast majority of the audience had zero interest in buying a mattress anytime soon. Narrowing that down to "people who have recently searched for a mattress" is a win, even if that includes some people who already bought one. Despite what people think about Google being all-knowing, it's less likely that they know you bought a mattress than they know you searched for one.
- disgruntledphd2 3y ago
  There's no central repository of purchases, whereas there is for views. That's why this keeps happening. Also, the incentives of the advertising platforms and the advertisers mitigate against efficiency.

by yarekt 3y ago

blowski 3y ago

Those advertisers are responding to signals in the junk data the OP is talking about. You’re both right.

aCoreyJ 3y ago
Yup this is addressed in the article, it seems there isn't actually data backing up the idea that this way is better

AJ007 3y ago

This is yet another of the recurring "online advertising doesn't work" articles, which have been published regularly for the past 20 years.

raincole 3y ago
Some people are just so confident. All the companies, from startups to giants, across different countries and cultures, must be wrong. Only few (and they all write blogs) can see through the vile of disguise and tell the readers how online advertising doesn't work.
- ClumsyPilot 3y ago
  All the oil companies investing billions into destroying ecosystem we depend on can't be wrong!
- wincy 3y ago
  I mean there were a few people correct that mortgage backed securities were much higher risk than they were classified as. Just because a bunch of smart people agree on something doesn’t necessarily mean it’s correct. But it can take a long time for people with a lot of money to go broke.
  - zarathustreal 3y ago
    Exactly. Kind of similar to how everyone in a Hacker News thread can agree, downvote, and even flag something and it can still be true!
    - mint2 3y ago
      Except a big part of downvoting has nothing to do with the truth of a statement - yes factual inaccuracies and misinformation will be downvoted but that’s just scratching the surface. If people are rude or posting something completely unhelpful that’s a downvote even if the statement is overall true.
      - zarathustreal 3y ago
        That’s a rather unhelpful way to use a voting system, considering no two people have the same sensibilities toward rudeness or the same purpose for reading a thread. At least voting based on truth has universal utility. In fact, downvoting true information could be actively harmful in many (most?) situations as many (most?) platforms boost or suppress content based on those votes I also find it a bit.. idk what the word is, egotistical? Self-centered? Judgemental? To vote based on subjective qualities like perceived rudeness or helpfulness (toward one’s own goals or one’s own understanding of a stated goal)
chowells 3y ago
No, it's not. It never claims advertising doesn't work. It claims that data-driven targeting is a scam on multiple levels. That isn't to say advertising doesn't work, just that "data-driven" doesn't improve its results.

Simon_O_Rourke 3y ago

I think I've outlined this before on HN, but I've worked with a proper sleazy DSP, who I found out were basically targeting vulnerable folks with ads. These guys have zero ethics and less morals and have an attitude of "if it works it works, and to hell with the consequences".

oAlbe 3y ago
Would you be willing to share their name? Even privately?

api 3y ago

There are a whole class of fallacious modes of thinking that revolve around assuming the world is smarter than it actually is and that people are more competent than they actually are. The most common these days is “conspiracy theory,” which is really an optimistic view that starts with the assumption that someone understands what is happening and can coherently control it. If these conspiracies were true it would mean that all we’d have to do to fix major problems is get “them” out of power or convince “them” to become the good guys. Very, very optimistic.

DropInIn 3y ago
I'd say the conspiracy stuff is more that either the individuals are ignorant of Hanlons Razor or simply refuse to accept it's applicability. Combined with supremacist beliefs (They are superior which gives them insight others can't possess) and we get pretty much all the conspiracy theories. Sadly, there are plenty of very real conspiracies in this world, doing immense harms, yet those are seemingly actively ignored by the theorists... Which I often presume to be a result of the inability for the theorist to hold the "special knowledge" card as any who looks at the evidence would come to the same position and thus the promulgation of such legitimate theories are "too mainstream" for those seeking to further thier self delusion of supremacy.
klabb3 3y ago
This is a popular meta-conspiracy theory. “It takes too many too keep a secret”. Yes, but not everyone has to stay silent. If you have a lot of resources you can buy silence, it is literally a product for purchase (not perfect, but close enough). How do you think Harvey Weinstein got his victims to shut up? How did numerous large companies suppress their own research that their products were harmful, for decades? How did Jeffrey Epstein build a jetset trafficking empire without getting caught (and when he did get caught – the first time – he got a slap on the wrist and no media coverage)? Worst case, if someone refuses to stay silent, you can just label them “disgruntled”, question their character, their mental well-being, claim that they’re in cahoots by some known evil agent, etc etc. Point is.. many conspiracies don’t require perfectly competent agents with perfect knowledge. > If these conspiracies were true Well, quite obviously all theories are not true. The bulk of random conspiracy theories are most certainly bogus, just like most low-effort theorizing by laymen in general. But aggregates don’t make conspiracies impossible.

KnobbleMcKnees 3y ago

> The cost of pushing ads to people who already have mattresses is insignificant to capturing those that are about to buy them, statistically speaking. This is called conversion rate and for some businesses it can be surprisingly tiny while still making that business completely viable. I would hazard that rates in the mattress industry are almost preposterously low (<5%) but margins are so high that it doesn't matter in the slightest

tmpz22 3y ago
The lower the conversion rate the lower the profit margin influencing the company to cut additional corners that they may be able to get away with. This whole ad driven philosophy encourages the absolute bare minimal product that the customer will still pay for. As a consumer that is bad for me. Ultimately “voting with your wallet” becomes an inefficient communication method with all the layers of bullshit in between.
deleted 3y ago
[deleted]
barbariangrunge 3y ago
5% is low? You mean that having 1/20 people buy your product after seeing an ad is a bad outcome? If I sold just about anything, I bet that having a 1% conversion rate would be a money printing machine
- rahimnathwani 3y ago
  The denominator is people who land on your site, i.e. those who clicked the ad, not those who saw the ad.
- nucleardog 3y ago
  Click through rate (CTR) is `people clicked ad / people shown ad`. Conversion rate is `people bought thing / people clicked ad`. For Google search ads pretty good CTR would be about 8%, and a pretty good conversion rate would be about 5%. So it’s more like 1/250 buying if you’re doing pretty well. At average costs, that’ll be one conversion for something like $40 in ad spend. More average would be like 2% and 3% so more like 1/1700 and like $70 per conversion. (Display ads are more like 0.3% and 0.6%. So more like 1/50,000. Costs are cheaper.) Those prices are _average_. There’s no flat rate for these—they’re an auction. So generally your higher margin items, especially in industries with higher average click/conversion rates, are going to end up with higher bids and higher costs. A bank will pay a lot more to convert someone to a mortgage customer than a restaurant will pay to convert them. You may end up paying $30 per click for someone searching for mortgage refinancing. Assuming the same “good” search conversion rates, you’re paying $600 for the conversion at a $30 CPC. (I suspect the conversion rate on something like mortgage refinancing is probably lower.) It’s been a few years since I was forced to live in the advertising world but (1) no it’s not a money printing machine (except for the ad networks) and in fact (2) I’ve literally never seen a directly attributable positive ROI. Mostly the gap is explained away as "well, it's building _brand awareness_". Most of the positive results I’ve seen were… questionable. Usually “you didn’t acquire new customers, you took existing ones or existing leads and funneled them into your advertising pipeline and attributed them there”. Think advertising on your own company’s name—people searching for your company by name were almost definitely going to end up there anyway.

SoftTalker 3y ago

Yep, in the past they would advertise in newspapers or magazines or TV or radio where the vast majority of the audience had zero interest in buying a mattress anytime soon. Narrowing that down to "people who have recently searched for a mattress" is a win, even if that includes some people who already bought one. Despite what people think about Google being all-knowing, it's less likely that they know you bought a mattress than they know you searched for one.

disgruntledphd2 3y ago
There's no central repository of purchases, whereas there is for views. That's why this keeps happening. Also, the incentives of the advertising platforms and the advertisers mitigate against efficiency.