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We Have No Idea If Online Ads Work

258 points by hownottowrite 12y ago

hownottowrite 12y ago
Plus research paper, "Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment" without the paywall: http://faculty.haas.berkeley.edu/stadelis/tadelis.pdf http://faculty.haas.berkeley.edu/stadelis/tadelis.pdf
djim 12y ago
this seems to be based on a study done by ebay, who had an atrocious ppc campaign. it was run by monkeys. really no wonder they didn't achieve any good or predictable results. http://www.searchenginejournal.com/how-not-to-run-a-ppc-campaign-inspired-by-ebays-adwords-fail/61025/ http://www.searchenginejournal.com/how-not-to-run-a-ppc-camp...
- mcfunley 12y ago
  To be fair, for all these people know the examples of insane ebay ads are the experimental control. Probably not, but maybe.
coldcode 12y ago
We have no idea if ads work anywhere but it doesn't stop the ad industry.
- Mahn 12y ago
  My previous employer was a company doing hundreds of millions in revenue per year built almost exclusively on ppc advertising. I think the question is not whether ads work, but when and in which cases do they work.
  - rahimnathwani 12y ago
    What do they sell?
- 1stop 12y ago
  Yeah we do: Coca-cola <-- The product offers no value other than "brand". (Brand is advertising).
  - DanBC 12y ago
    But is that advertising or just excellent distribution of product?
    - notahacker 12y ago
      The two go had in hand. It's certainly a tribute to the breadth of Coca Cola's distribution that you can find it sold in ramshackle huts in the most-off-the beaten track overseas locations imaginable. But it's the brand that makes the distribution network worthwhile, so people living on $2 per day who traditionally drink tea and eat an abundance of locally grown fresh fruit believe a 20 cent bottle of sugary water is a worthwhile luxury. There's also a certain amount of effort that goes into persuading very different consumers that it's socially acceptable to mix that same blend of sugary water with mid-priced spirits or in cocktails at exclusive bars in the expensive cities.
  - hackuser 12y ago
    > Yeah we do: Coca-cola <-- The product offers no value other than "brand". (Brand is advertising). It tastes good. How is it different than any other form of pleasure that is sold, such as (non-artistic) video games, alcohol, any luxury good, fashion, etc. EDIT: ... or World Cup soccer, on my TV now.
    - 1stop 12y ago
      No one would ever wake up and go: "I need/want coke" (without advertising).
zwieback 12y ago
There are also new annoying features of online advertising that might turn consumers off. Even after buying something I frequently see ads for the same exact product from the same exact vendor for several days. For some reason this annoys me so much that it turns me off from the vendor.
- esw 12y ago
  It's called remarketing. If they're showing you an ad for a product you actually bought, they're doing it wrong. It's supposed to show you an ad for something you looked at, but didn't buy.
  - gerbal 12y ago
    Or they are trying to do the thing BMW and Apple do where they are trying to make you feel good about a decision you already made.
    - notahacker 12y ago
      Or at least trying to avoid the feeling of being stalked you might get if their all-pervading ad-retargeting campaign that follows you round the internet for weeks after you first visit their website stops the day you actually buy.
      - gerbal 12y ago
        Hey, if it keeps you from returning the product or avoiding a merchant, it has worked.
  - unclebucknasty 12y ago
    If it's not being done purposely for reasons others have mentioned, then I wonder if it comes down to the company's integration with Google. Presumably, Google wouldn't know if a sale took place unless the merchant somehow notified them. I'm guessing this might be with a pixel, script, or similar on their order confirmation page. So, if the merchant failed to implement this, Google would never know to stop showing the ad.
lukasm 12y ago
Ad impressions don't work. Twitter & Facebook can't monetize. Facebook paid >20B for companies that don't sell ads.
- frandroid 12y ago
  The point is that the ads don't work for the advertisers; clearly, they've worked well for the platforms selling ads, e.g. Google.
  - lukasm 12y ago
    Yes. The advertisers are more and more aware of that.
fumar 12y ago
Online ads is a broad category. It includes social media, display ads, re-targeting ads, and paid search ads. Social media adverts are hard to measure in terms of ROI. At my workplace we have found a way to measure profitability for paid per click ads. We can optimize to drive more conversions at a cost effective price. Success depends on what one is measuring and what the end goal is. In the sea of data it is easy to get carried away on optimizing and improving front end metrics.
- cbsmith 12y ago
  Read the article. The point is there is so much noise in the signal that optimization is generally not possible unless you are running a truly massive campaign.
hawkharris 12y ago
This reminds me of a fascinating article in The New Yorker called "Twilight of the Brands." [0] The author's basic argument is that brands have historically filled an information gap. Before the Internet, when consumers didn't have tons of on-demand info about products, brands were a compass that pointed them in the right direction. If the last Sylvania TV you bought worked well, you might buy another one without hunting down reviews for the new model. Now that product info is ubiquitous, the author says, the role of brands and traditional advertising is declining. So, when I hear critiques about a particular form of online advertising, I think about the broader, more subtle ways in which websites influence our purchases. Companies are starting to pay more attention to online forums and social sites, which are more persuasive to consumers than traditional banner ads. [0] http://www.newyorker.com/talk/financial/2014/02/17/140217ta_talk_surowiecki http://www.newyorker.com/talk/financial/2014/02/17/140217ta_...
- josu 12y ago
  I understand the point he is making, and I agree that the importance of advertising is declining. However, I wouldn't be able to explain Samsung's success without looking at advertising.
  - baddox 12y ago
    How about economy of scale in manufacturing, and (mostly) competent design and engineering teams?
    - josu 12y ago
      From a consumer's perspective all I see is a bunch of high end cell phones with very similar features and priced the same. Nevertheless, many people decide to buy the Samsung flagship phone over the Sony, LG or HTC. Better economies of scale could be the reason if they decided to price their phones lower, but they don't. So that it's not the reason why people are choosing Samsung. About the competent design, I don't see the Galaxy being superior to the HTC one or the Z2.
      - 12y ago
raverbashing 12y ago
The premise of the article is naive at best You can use web analytics to measure a conversion rate from ads. Hence user clicks ad -> sales happens (in the best cases). That's Internet Ads 101 In fact, with online ads the "if it works" part is much more measurable than for other medias "Last year, a group of economists working with eBay’s internal research lab issued a massive experimental study with a simple, startling conclusion: For a large, well-known brand, search ads are probably worthless." Once again: "For a large, well-known brand" Well, so do you mean that pumping ads for something everybody already knows (and already gets massive advertisement everywhere else) doesn't work? Color me shocked.
- omonra 12y ago
  The point of the article is that the sale would happen regardless of the ad. Ie showing an ad on Google to someone who types 'Ebay' in the search string is a waste of money - since Ebay shows up as the first natural result anyways.
  - droopyEyelids 12y ago
    However, this leads to the other flaw in the argument, where eBay has been the company most famous for abusing Google's ads, and using them in a completely nonsensical way. http://www.searchenginejournal.com/how-not-to-run-a-ppc-campaign-inspired-by-ebays-adwords-fail/61025/ http://www.searchenginejournal.com/how-not-to-run-a-ppc-camp... I'm sure you've noticed that a search for any noun called forth an ad for eBay. You're enticed to "buy Dog Vomit on eBay" when your dog is sick. And then, even if it was something eBay plausibly sold, when you clicked through it'd take you to a generic eBay search page or, often, a landing page that was not useful at all.
    - unclebucknasty 12y ago
      Well, there's nothing to say that eBay's research lab was using these horrible PPC ads in their tests. In fact, I would guess that they had to hold the landing page as a constant (e.g. homepage when "ebay" was the keyword), or otherwise account for that variable in the study design. For instance, the study notes that, for one test, they simply turned off their PPC campaigns for one geo and compared results to others. So, presumably, even if they were using their horrible PPC ads during this test, they would have been equally horrible across geos.
deleted 12y ago
[deleted]
markowenh 12y ago
Just because something cannot be quantified DOES not mean it does not work....Marketing is often UNQUANTIFYABLE...but almost always effective.
- room271 12y ago
  I think people are being harsh in the down-votes here. I suspect most people (HN people) hold pretty strongly the belief that everything can be quantified. However, within reasonable limits and current stats and science, lots of things in practice cannot - yet at least. A lot of advertising probably falls under this. To verify effectiveness we'd need, as the article notes, to control for so many other factors that it would often be too difficult. So we often guess, or leverage past knowledge and apply it to what we hope are similar circumstances. If you take the point to be that marketing is not a hard-science, than it's true. Some cases sure, but plenty not.
- cbsmith 12y ago
  > Marketing is often UNQUANTIFYABLE...but almost always effective. That last part is the part you can't say definitively unless you have a lot of data, which is the point of the article.
michh 12y ago
I remember reading the tobacco industry was actually secretly grateful when the EU banned them from advertising. As I remember it, they were in a stale-mate. The market was pretty much divided up. Most people were loyal to their brand and that was that. Despite that, they were spending a massive amount of money on advertising even though their market shares remained unchanged. The reason was that if one of them stopped funnelling massive amounts of cash into advertising, they would lose a big chunk of their market share to the others. So they were all paying mostly to maintain the status quo. With the ban on advertising, the amount of money saved greatly outweighed the revenue lost as others couldn't advertise either so it really only affected new smokers rather than convince current smokers to switch brands. I see a similar thing happening in my line of work. In our niche of e-commerce every player of importance works with the same online marketing networks and paying rather a lot per sale or click. There's a whole lot of sites out there which basically exist to infest organic search results, send traffic to us and our competitors and collect their referral fee from the advertising network. They add no value[1]. Without them, the customer would have been similarly divided amongst the competition as well without having to pay for it. Yet, if we stop paying them, we'll lose a lot of business as our competitors will continue to do so. Disclaimer: this is all as I understand it and in no way my employers opinion or persepctive ;) 1) Some do, by providing extra information or ranking the shops by what's best for the consumer (price, reviews) rather than the most cash-per-click.
- unclebucknasty 12y ago
  Interesting. I understand if you don't want to name your company, but can you share the niche?
  - michh 12y ago
    Cell plans and phones, but I suspect it's a plague in more markets than just ours.
- tobinfricke 12y ago
  NB, while tobacco ads are banned from TV, they are still everywhere on outdoor advertising, at least here in Germany. Actually, I went on a "street art tour" that turned out to be sponsored by a cigarette company, and they were handing out free cigarettes. So: tobacco advertising is alive and well in Germany.
pretzel 12y ago
There are ads and then there are ads. One of the things that the company I work for, Qubit, does is to validate that the tracking tags that vendors put on people's websites drive an uplift. We talk about one of our clients doing it here [1] While blindly targeting people using search engine "promoted searches" may not work for every impression, this does not take into account the ads that you see on other 3rd party sites - which is probably what people think of when they talk about "ads". Google's version of this is AdSense (as opposed to AdWords). This is something that is quite easy to test, and we have seen that some really do work and some not so much. But driving someone back to a website with an offer on something that they have added to their basket but not purchased, is one way to be sure that you are getting people buying after seeing your content. The problem then is to make sure you aren't cutting into your margins too much... [1] http://www.qubitproducts.com/content/video/arcadia-video-case-study http://www.qubitproducts.com/content/video/arcadia-video-cas...
- cbsmith 12y ago
  As per the article, there is more than a bit of "post hoc ergo propter hoc" reasoning in the above. Just because you seeing "people buying after seeing your content" doesn't mean the ads are working.
- frik 12y ago
  > But driving someone back to a website with an offer on something that they have added to their basket but not purchased, [...] People like useful recommender engines (e.g. Amazon.com). But not so personalized smart ads that follow them on every website the visit. What's wrong with the static ads that fit the targeted website category?
ComputerGuru 12y ago
It certainly works out to the benefit of the advertising companies, the media companies, and Google, though...
bowlofpetunias 12y ago
Discuss advertising with anybody and you'll come to the conclusion that apparently advertising works on other people. Who those "other people" are, no idea. I strongly suspect some people really are just statistics.
- Gustomaximus 12y ago
  Other people here. I've been working in online advertising for 10 odd years and have seen advertising working and not. This Ebay example was great showing both sides; bidding for their brand term was a waste of money as they are a brand leader not in a defensive strategy. Finding new customers was profitable. It seems they let the former get out of hand and dominate their spend mix. I see similar situations of excessive wasted spend all the time as companies target the wrong metrics (note: there always is some). Until this study I would bet my house the PPC team at eBay were being largely judged by 'CPA' type metrics. Every year they would have tighter goals in a market that is getting more competitive so they go for cheap wins that look good on paper i.e.grab customers already coming in as you know they will convert. I see this at almost every company. Profitable advertising absolutely does exist but like anything, you need smart people running the program and you can't surround them with targets that make them go for the wins that look good in the short-term reports. As much as we monitor more advertising remains part art, part science. And I say that as a guy that likes his data more than most. Anyway, if you're being told ads only work for other people you're talking to the wrong people. I love my marketing and what it can do for a company when run well. If you have any questions I'll happily talk your ear off.
davemel37 12y ago
There are media productivity companies, like MarketShare that cost a boat load but accurately track every possible interaction with an ad and brand to see what actually works. If you use a company like this and a DMP (data management platform) you can track ads and measure on a scale this article doesn't seem to even know exists... It might cost you a few million to close the feedback loop accurately but there are companies that can correlate an unclicked banner impression to an in store offline purchase...
jebblue 12y ago
I read some of the comments and decided to go read the article, click the link, up pops a massive ad window for Slate. :-)
- petercooper 12y ago
  Well, sort of. It's funny because it really proves the headline right. Slate are trying to get you to sign up for their subscription package because I guess the ads aren't entirely cutting the mustard money-wise ;-)
nyrulez 12y ago
Ebay is known for very ineffective campaigns, which they tried to justify by publishing "papers". They basically claimed that the fact that search results exist, makes the advertising next to them mostly ineffective. There are so many issues with this argument, it is not even worth starting. But yeah this circle jerk has been going for a while. Also to claim that if it did not work them, it won't work for anyone else is a bit of an over generalization. You will also find papers stating the exact opposite and how to get great returns and stuff. Everyone it seems gets a different experience from the same platform and then they justify it by publishing white papers. Just like anything else, it is never black and white. But black folks want everything to be black while white folks make fun of the black. Also check this more detailed analysis that goes a bit deeper: http://www.wordstream.com/blog/ws/2013/03/13/dear-ebay-its-not-adwords-its-you http://www.wordstream.com/blog/ws/2013/03/13/dear-ebay-its-n...
deleted 12y ago
[deleted]
- gwern 12y ago
  Lewis/Rao are certainly relevant, and indeed, OP spends several paragraphs on them: > It isn’t easy, of course. In 2013, Randall Lewis of Google and Justin Rao of Microsoft released the paper “On the Near Impossibility of Measuring the Returns on Advertising.” In it, they analyzed the results of 25 different field experiments involving digital ad campaigns, most of which reached more than 1 million unique viewers. The gist: Consumer behavior is so erratic that even in a giant, careful trial, it’s devilishly difficult to arrive at a useful conclusion about whether advertisements work. > > For example, when the researchers calculated the return on investment for each ad campaign, the median standard error was a massive 51 percent. In other words, even if the analysis suggested an ad buy delivered a 50 percent return, it was possible that the company actually lost money. You couldn’t say for sure. “As an advertiser, the data are stacked against you,” the researchers concluded. That bodes poorly for your typical marketing schmo trying to glean meaning from a Google analytics page—all he can do is try to stack enough data to overcome his statistical problems. > > Still, in an email, Lewis told me that he believes “online ads absolutely work.” Or, at least, they can work. For instance, Lewis and his Google colleague David Reiley have written papers showing that display ads on Yahoo led to more customers making purchases in stores. The problem, Lewis argues, is that most analytics firms aren’t scientific enough about measuring profitability. Because they don’t run real experiments, he thinks most end up conflating correlation and causation. (It's a very nice paper, I think, one of the most insightful applications of power analysis I've seen.)
wildwood 12y ago
They're a bit vague when describing the "I-was-going-to-buy-it-anyway" problem, but it sounds like they're mainly talking about PPC ads on search engines stealing from SEO links on the same pages. (Some of it seems to be talking about stealing sales from the direct channel, which I have no idea how to handle.) If your website is already tracking ad performance on a per-ad basis (i.e., tracking all the clicks on that ad, and keeping what you pay per click below what you're getting per click), then optimizing for only the paid search traffic that's incremental, and not cannibalistic, is pretty straight-forward, conceptually. For a given ad's keyword, instead of optimizing only for the results you get from PPC traffic, you treat your PPC bid as an input that affects sales across PPC and SEO traffic for that keyword, and optimize accordingly. There are a few extra steps and decisions that need to be made before full implementation, but this is the basic idea. It's actually not too bad to account for.
- davemel37 12y ago
  There are other reasons to advertise in search engines on your branded keywords. For starters, you have account wide and campaign wide quality scores which impact how much you pay per click across your entire account. Having branded keywords which will have high quality scores can help lower all your costs. Secondly, your competitors can advertise on your brand even if its trademarked. Owning the top position is cheaper for you and a good idea. Third of all, You would think a brand would want to own as much of the search results page as possible. It will drive up clicks even on your organic listings. There are also many case studies that show paid search for branded keywords getting more traffic than just organic listings. I'll search for a product and amazon all the time. I would just easily buy that same product from Walmart if they had it for less. Branded search does not mean they will buy from you anyway. It could mean that, but it certainly doesn't guarantee that.
davemel37 12y ago
Advertising by definition is Arbitrage. Leveraging a disconnect between the value of the audience and the cost to reach and engage them with content. Efficient Markets dictates that over time advertising will become less effective. It is the natural progression of all advertising. Here's an article I wrote a while ago about how content marketing and native advertising are the same thing converging on a point where modern day advertising stops working... http://www.adotas.com/2014/05/surviving-the-adpocalypse-what-will-you-do-when-the-current-model-stops-working/ http://www.adotas.com/2014/05/surviving-the-adpocalypse-what...
- gerbal 12y ago
  One of the flaws of many advertising strategies is that it assumes the main flaw of the market is imperfect information. However that requires a rational consumer. And Consumers are not rational. Selling ideas is as important as the good itself. Take most car advertising for example. A significant portion of the ads are from dealers advertising sales. Those are classic attempts to correct for imperfect information on the part of the consumer. But the other portion of the ads are all about how you should feel in a given car. When you see an add for a luxury sedan combined with platitudes about performance, speed, and engineering or a truck and cliches about America, the goal isn't to sell you on the merits of the vehicle, but to sell you on a concept of a brand. The ideal targets for these ads aren't actually consumers currently in the market for a new car, but the people who just bought a new car. The people for whom the shine is starting to come off the rose. If you sell someone the idea that yes their purchase makes them special, then they are more likely to be happy with their decision, more likely to repeat that decision later, more likely to be a unwitting brand ambassador.
  - Spooky23 12y ago
    That's the thing I always saw as lacking with online advertising -- there's no brand placement. Online ads always seem to me to be focused on transactional response "Wow, I can use this weird trick to buy a vitamin, sign me up!" Billboard/display advertising is really effective at this. I happen to know that a particular orthopedic medical practice that I wasn't familiar with has a walk in clinic until 10PM every day to fix broken bones, etc. That's effective advertising! In contrast, I've been a heavy internet user since 1994. The only product I can think of that I actually learned of via online advertising is those X10 video cameras that dominated pop-up/under advertising a decade ago. That's pretty sad for advertisers!
egypturnash 12y ago
We have no idea if online ads actually work at the scale of huge corporate brands competing for mindshare. I'm pretty sure it works for smaller outfits - every time I find an appropriate place to run an ad campaign, I see a permanant uptick in readers of my web comic. Eventually I'll have gotten everyone in that place who's going to be interested in my stuff, and I move on.
- julespitt 12y ago
  Willing to share where you advertise and why? I've got lots of friends and relatives doing comics online, would love to have a little specialist knowledge to help them out.
  - egypturnash 12y ago
    Mostly just Project Wonderful, an ad network that mostly sells ads on web comics. It's pretty easy to drop a couple hundred into a broad campaign, dink around in your analytics to see what sources give you engaged traffic, and drop some more money onto those specific places. Also your friends and relatives may want to check out webcomics.com; I don't agree with everything Brad says about Making Comics On The Web but for the most part his site is full of a ton of great advice that's well worth the yearly fee.
    - julespitt 12y ago
      Thanks! Was curious if Project Wonderful worked, given how remarkably cheap it is. Targeting specific comics works best, got it.
- cbsmith 12y ago
  Actually, per the article... its actually harder to know with certainty that ads are working for smaller outfits. Large campaigns are the one case where you might accumulate enough data to know.
klunger 12y ago
I would really like to see a similar study done with less well known brands, to see if it makes a difference in cases with non-household names.
cm2012 12y ago
As someone responsible for $xxxxxx monthly spend in online advertising, it clearly works. We measure it pretty much from end to end.
- hackuser 12y ago
  > As someone responsible for $xxxxxx monthly spend in online advertising, it clearly works. We measure it pretty much from end to end. Do you know how much profit you would have earned without the advertising? How do you determine that (if you can say)? That is, without the ads, some customers would purchase more or more profitable products; some would purchase the same, and some would purchase less. But how would it net out -- and more interesting to me, how do you measure that?
  - cm2012 12y ago
    Yes. If we stop advertising we stop getting sales proportional to the advertising spend. Most people arent coca cola.
  - chmullig 12y ago
    It's very frequently measured with pretty standard experimental designs involving treatment and control groups. Track sales to each group, and you can easily figure out the return on ad spend.
BrandonM 12y ago
This topic came up in a month-old submission about why eBay lost many of its organic rankings in Google's Panda 4.0 release. Some of the comments from that discussion seem quite relevant to this one. http://news.ycombinator.com/item?id=7788804 http://news.ycombinator.com/item?id=7788804 When Slate refers to eBay research, is it based on methods that allowed ads like this gem? Vomit sale New & used Vomit. Check out the deals now! www.ebay.com (http://www.wordstream.com/images/panda-4-ebay-2.jpg http://www.wordstream.com/images/panda-4-ebay-2.jpg) If so, can we really take their findings seriously?
Shivetya 12y ago
Well far too many online ads do the exact opposite with me, as in I tend to avoid the advertiser and/or their product. This usually only occurs when the ad is presented in some fashion which inconveniences me in the task I am using the site for. Unobtrusive ads, more power to you. Pop up on me, find ways to circumvent blockers against such, or hide parts of the article I want to read, you get mentally flagged.
danmaz74 12y ago
There is one very important point that I didn't see in the article, nor the comments. By not advertising in search, incumbents would make it less expensive for newcomers to put their offer in front of the incumbent's customers. This can be very risky.
programminggeek 12y ago
Search ads don't work. Please everybody stop spending money on ads... (so I can have them all to myself.)
autokad 12y ago
I had guest lecturers from chief data scientists of companies that purchase these adds for companies targeted to users. I was told most companies do not want to pay for the controlled experiments, and many times even when they are run for 'free' they do not want to know the answer. i was surprised at the latter
- cbsmith 12y ago
  It's incredibly infuriating but makes perfect sense once you understand the motivations of all the parties involved.
marincounty 12y ago
I think some idiotic consumer products will always require advertising--like soda, candy bars, figh fashion, etc.? There are some industries like auto insurance where I think it's a waste of time. Every year I call around and get the cheapest insurance. I face had good luck with Mercury(last 4 years). Esurance only quotes for 6 months--that's why they seem cheap. As to Internet advertising; my biggest grip lately is having to watch a ad video before the intended video.(I turn down the volume and look away for 20 seconds). I have a feeling Google tracking works too well. I am waiting for the day DuckDuckgo is King. I don't like to be tracked. I don't like my house photographed.(Google put up previously requested blurred homes, cars, persons without any notice. If you think you have a blurred out house--check again.)
dcnstrct 12y ago
As someone who leads an analytics team in the advertising industry I have to say this title and the studies they are referencing are not accurate to the entire industry at all. Advertising absolutely works when done right. The effect on brand consideration, shopping behavior, and incremental purchase value can be quantified. The most sophisticated advertisers spend a lot of money to accurately track and ensure their campaigns are lifting their desires metrics. Now to the eBay study they reference. That study is specific to eBay, a large brand that has spent hundreds of millions a year on advertising for many years and is a top web property visited by a significant percent of the online audience. For eBay it turns out brand search marketing largely does not have a contribution as most of their shoppers are likely going to buy anyway. Trying to generalize that to a brand that did not have the amount of equity, natural SEO rankings, and established shopping behaviors would be foolhardy. Additionally if you dig deeper into the eBay study they did find a positive effect for the small percent of users that are new shoppers to eBay. They just happen to be a relatively small percent of the audience reached with the spend given the large size of eBay. In the digital space there is a huge variability in performance based on the type of ad, the nature of the targeting, the product being advertised, the creative message, etc. Trying to generalize to all online advertising without controlling for the kind of brand, product being sold, current marketing positioning, and campaign objective seems a bit naive. In our work we find huge variability in performance even within the same web property dependent on the placement of the ad within the site and the unit being served. We measure how long the ad was on the page, how many users actually hovered over it in view, and then the incremental lift of exposed users compared to control group. Turns out if you properly optimize to maximize true ad viewing and engagement you will see lifts in brand response, digital visitation, and shopping metrics compared to the control. In fact I'd much rather have money for digital advertising any day over old fashioned ads with the limited tracking possible. I know how many people saw our spot on the YouTube home page, how long they spent interacting with it, and can tell you exactly what they were interested in. For that TV spot I don't know if you were watching, skipping, going to the bathroom, looking at your phone, or any number of other factors which could diminish effectiveness. TLDR; online advertising works when done correctly and absolutely can be measured
- alphapapa 12y ago
wz1000 12y ago
This is a classical example of a Prisoner's Dilemma [0] The conclusions drawn by the author don't seem to consider the fact that if Ebay doesn't buy ads next to it's own name, Amazon would. As with a Prisoner's Dilemma situation, if all parties(In this case companies with substantial recognition and brand loyalty) stop buying ads, they would stand to make the maximum profit. However, this opens them up to the possibility of losing clicks to a 'cheating' competitor, thus driving them into essentially an 'ad war'. [0] http://en.wikipedia.org/wiki/Prisoner's_dilemma#In_economics http://en.wikipedia.org/wiki/Prisoner's_dilemma#In_economics
johnsteve 12y ago
Why cannot they? Online ads usually work and they benefit the company as well as the individual users in the long run as well as the short run Ever heard of Google AdSense? That is the most common way to make the online ads work
tauslu 12y ago
Since Google does not have vast majority (more than 90%) market share in the US and it is possible to do geo-location based advertising (location based on IP information is largely accurate), they were able to test it out. Well, this shows that being a monopoly helps a lot with monetization when there are few technical possibilities to test . The slate article puts it very nicely. "Art was far more profitable than science."
tragomaskhalos 12y ago
How sophisticated is click-tracking these days? Is a click on an advertising link always billed, or are there other qualifying criteria in play? I ask because the only time I ever click on an ad link is by mistake (typically when Safari is busy jiggling about with the page layout so that my finger hits the wrong target), and wonder if this is actually costing the company concerned.
tauslu 12y ago
How does one know that a keyword is a brand or not? If the click through rate is above 30% (people really searched for the term) and there is some normal conversion after clicking (meaning that people really search for the relevant keyword, they do not mistake it with something else), then the keyword is a brand.

258 points by hownottowrite 12y ago

Plus research paper, "Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment" without the paywall: http://faculty.haas.berkeley.edu/stadelis/tadelis.pdf http://faculty.haas.berkeley.edu/stadelis/tadelis.pdf

djim 12y ago

this seems to be based on a study done by ebay, who had an atrocious ppc campaign. it was run by monkeys. really no wonder they didn't achieve any good or predictable results. http://www.searchenginejournal.com/how-not-to-run-a-ppc-campaign-inspired-by-ebays-adwords-fail/61025/ http://www.searchenginejournal.com/how-not-to-run-a-ppc-camp...

mcfunley 12y ago
To be fair, for all these people know the examples of insane ebay ads are the experimental control. Probably not, but maybe.

coldcode 12y ago

We have no idea if ads work anywhere but it doesn't stop the ad industry.

Mahn 12y ago
My previous employer was a company doing hundreds of millions in revenue per year built almost exclusively on ppc advertising. I think the question is not whether ads work, but when and in which cases do they work.
- rahimnathwani 12y ago
  What do they sell?
1stop 12y ago
Yeah we do: Coca-cola <-- The product offers no value other than "brand". (Brand is advertising).
- DanBC 12y ago
  But is that advertising or just excellent distribution of product?
  - notahacker 12y ago
    The two go had in hand. It's certainly a tribute to the breadth of Coca Cola's distribution that you can find it sold in ramshackle huts in the most-off-the beaten track overseas locations imaginable. But it's the brand that makes the distribution network worthwhile, so people living on $2 per day who traditionally drink tea and eat an abundance of locally grown fresh fruit believe a 20 cent bottle of sugary water is a worthwhile luxury. There's also a certain amount of effort that goes into persuading very different consumers that it's socially acceptable to mix that same blend of sugary water with mid-priced spirits or in cocktails at exclusive bars in the expensive cities.
- hackuser 12y ago
  > Yeah we do: Coca-cola <-- The product offers no value other than "brand". (Brand is advertising). It tastes good. How is it different than any other form of pleasure that is sold, such as (non-artistic) video games, alcohol, any luxury good, fashion, etc. EDIT: ... or World Cup soccer, on my TV now.
  - 1stop 12y ago
    No one would ever wake up and go: "I need/want coke" (without advertising).

zwieback 12y ago

There are also new annoying features of online advertising that might turn consumers off. Even after buying something I frequently see ads for the same exact product from the same exact vendor for several days. For some reason this annoys me so much that it turns me off from the vendor.

esw 12y ago
It's called remarketing. If they're showing you an ad for a product you actually bought, they're doing it wrong. It's supposed to show you an ad for something you looked at, but didn't buy.
- gerbal 12y ago
  Or they are trying to do the thing BMW and Apple do where they are trying to make you feel good about a decision you already made.
  - notahacker 12y ago
    Or at least trying to avoid the feeling of being stalked you might get if their all-pervading ad-retargeting campaign that follows you round the internet for weeks after you first visit their website stops the day you actually buy.
    - gerbal 12y ago
      Hey, if it keeps you from returning the product or avoiding a merchant, it has worked.
- unclebucknasty 12y ago
  If it's not being done purposely for reasons others have mentioned, then I wonder if it comes down to the company's integration with Google. Presumably, Google wouldn't know if a sale took place unless the merchant somehow notified them. I'm guessing this might be with a pixel, script, or similar on their order confirmation page. So, if the merchant failed to implement this, Google would never know to stop showing the ad.

lukasm 12y ago

Ad impressions don't work. Twitter & Facebook can't monetize. Facebook paid >20B for companies that don't sell ads.

frandroid 12y ago
The point is that the ads don't work for the advertisers; clearly, they've worked well for the platforms selling ads, e.g. Google.
- lukasm 12y ago
  Yes. The advertisers are more and more aware of that.

fumar 12y ago

Online ads is a broad category. It includes social media, display ads, re-targeting ads, and paid search ads. Social media adverts are hard to measure in terms of ROI. At my workplace we have found a way to measure profitability for paid per click ads. We can optimize to drive more conversions at a cost effective price. Success depends on what one is measuring and what the end goal is. In the sea of data it is easy to get carried away on optimizing and improving front end metrics.

cbsmith 12y ago
Read the article. The point is there is so much noise in the signal that optimization is generally not possible unless you are running a truly massive campaign.

hawkharris 12y ago

This reminds me of a fascinating article in The New Yorker called "Twilight of the Brands." [0] The author's basic argument is that brands have historically filled an information gap. Before the Internet, when consumers didn't have tons of on-demand info about products, brands were a compass that pointed them in the right direction. If the last Sylvania TV you bought worked well, you might buy another one without hunting down reviews for the new model. Now that product info is ubiquitous, the author says, the role of brands and traditional advertising is declining. So, when I hear critiques about a particular form of online advertising, I think about the broader, more subtle ways in which websites influence our purchases. Companies are starting to pay more attention to online forums and social sites, which are more persuasive to consumers than traditional banner ads. [0] http://www.newyorker.com/talk/financial/2014/02/17/140217ta_talk_surowiecki http://www.newyorker.com/talk/financial/2014/02/17/140217ta_...

josu 12y ago
I understand the point he is making, and I agree that the importance of advertising is declining. However, I wouldn't be able to explain Samsung's success without looking at advertising.
- baddox 12y ago
  How about economy of scale in manufacturing, and (mostly) competent design and engineering teams?
  - josu 12y ago
    From a consumer's perspective all I see is a bunch of high end cell phones with very similar features and priced the same. Nevertheless, many people decide to buy the Samsung flagship phone over the Sony, LG or HTC. Better economies of scale could be the reason if they decided to price their phones lower, but they don't. So that it's not the reason why people are choosing Samsung. About the competent design, I don't see the Galaxy being superior to the HTC one or the Z2.
    - 12y ago

raverbashing 12y ago

The premise of the article is naive at best You can use web analytics to measure a conversion rate from ads. Hence user clicks ad -> sales happens (in the best cases). That's Internet Ads 101 In fact, with online ads the "if it works" part is much more measurable than for other medias "Last year, a group of economists working with eBay’s internal research lab issued a massive experimental study with a simple, startling conclusion: For a large, well-known brand, search ads are probably worthless." Once again: "For a large, well-known brand" Well, so do you mean that pumping ads for something everybody already knows (and already gets massive advertisement everywhere else) doesn't work? Color me shocked.

omonra 12y ago
The point of the article is that the sale would happen regardless of the ad. Ie showing an ad on Google to someone who types 'Ebay' in the search string is a waste of money - since Ebay shows up as the first natural result anyways.
- droopyEyelids 12y ago
  However, this leads to the other flaw in the argument, where eBay has been the company most famous for abusing Google's ads, and using them in a completely nonsensical way. http://www.searchenginejournal.com/how-not-to-run-a-ppc-campaign-inspired-by-ebays-adwords-fail/61025/ http://www.searchenginejournal.com/how-not-to-run-a-ppc-camp... I'm sure you've noticed that a search for any noun called forth an ad for eBay. You're enticed to "buy Dog Vomit on eBay" when your dog is sick. And then, even if it was something eBay plausibly sold, when you clicked through it'd take you to a generic eBay search page or, often, a landing page that was not useful at all.
  - unclebucknasty 12y ago
    Well, there's nothing to say that eBay's research lab was using these horrible PPC ads in their tests. In fact, I would guess that they had to hold the landing page as a constant (e.g. homepage when "ebay" was the keyword), or otherwise account for that variable in the study design. For instance, the study notes that, for one test, they simply turned off their PPC campaigns for one geo and compared results to others. So, presumably, even if they were using their horrible PPC ads during this test, they would have been equally horrible across geos.

deleted 12y ago

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markowenh 12y ago

Just because something cannot be quantified DOES not mean it does not work....Marketing is often UNQUANTIFYABLE...but almost always effective.

room271 12y ago
I think people are being harsh in the down-votes here. I suspect most people (HN people) hold pretty strongly the belief that everything can be quantified. However, within reasonable limits and current stats and science, lots of things in practice cannot - yet at least. A lot of advertising probably falls under this. To verify effectiveness we'd need, as the article notes, to control for so many other factors that it would often be too difficult. So we often guess, or leverage past knowledge and apply it to what we hope are similar circumstances. If you take the point to be that marketing is not a hard-science, than it's true. Some cases sure, but plenty not.
cbsmith 12y ago
> Marketing is often UNQUANTIFYABLE...but almost always effective. That last part is the part you can't say definitively unless you have a lot of data, which is the point of the article.

michh 12y ago

I remember reading the tobacco industry was actually secretly grateful when the EU banned them from advertising. As I remember it, they were in a stale-mate. The market was pretty much divided up. Most people were loyal to their brand and that was that. Despite that, they were spending a massive amount of money on advertising even though their market shares remained unchanged. The reason was that if one of them stopped funnelling massive amounts of cash into advertising, they would lose a big chunk of their market share to the others. So they were all paying mostly to maintain the status quo. With the ban on advertising, the amount of money saved greatly outweighed the revenue lost as others couldn't advertise either so it really only affected new smokers rather than convince current smokers to switch brands. I see a similar thing happening in my line of work. In our niche of e-commerce every player of importance works with the same online marketing networks and paying rather a lot per sale or click. There's a whole lot of sites out there which basically exist to infest organic search results, send traffic to us and our competitors and collect their referral fee from the advertising network. They add no value[1]. Without them, the customer would have been similarly divided amongst the competition as well without having to pay for it. Yet, if we stop paying them, we'll lose a lot of business as our competitors will continue to do so. Disclaimer: this is all as I understand it and in no way my employers opinion or persepctive ;) 1) Some do, by providing extra information or ranking the shops by what's best for the consumer (price, reviews) rather than the most cash-per-click.

unclebucknasty 12y ago
Interesting. I understand if you don't want to name your company, but can you share the niche?
- michh 12y ago
  Cell plans and phones, but I suspect it's a plague in more markets than just ours.
tobinfricke 12y ago
NB, while tobacco ads are banned from TV, they are still everywhere on outdoor advertising, at least here in Germany. Actually, I went on a "street art tour" that turned out to be sponsored by a cigarette company, and they were handing out free cigarettes. So: tobacco advertising is alive and well in Germany.

pretzel 12y ago

There are ads and then there are ads. One of the things that the company I work for, Qubit, does is to validate that the tracking tags that vendors put on people's websites drive an uplift. We talk about one of our clients doing it here [1] While blindly targeting people using search engine "promoted searches" may not work for every impression, this does not take into account the ads that you see on other 3rd party sites - which is probably what people think of when they talk about "ads". Google's version of this is AdSense (as opposed to AdWords). This is something that is quite easy to test, and we have seen that some really do work and some not so much. But driving someone back to a website with an offer on something that they have added to their basket but not purchased, is one way to be sure that you are getting people buying after seeing your content. The problem then is to make sure you aren't cutting into your margins too much... [1] http://www.qubitproducts.com/content/video/arcadia-video-case-study http://www.qubitproducts.com/content/video/arcadia-video-cas...

cbsmith 12y ago
As per the article, there is more than a bit of "post hoc ergo propter hoc" reasoning in the above. Just because you seeing "people buying after seeing your content" doesn't mean the ads are working.
frik 12y ago
> But driving someone back to a website with an offer on something that they have added to their basket but not purchased, [...] People like useful recommender engines (e.g. Amazon.com). But not so personalized smart ads that follow them on every website the visit. What's wrong with the static ads that fit the targeted website category?

ComputerGuru 12y ago

It certainly works out to the benefit of the advertising companies, the media companies, and Google, though...

bowlofpetunias 12y ago

Discuss advertising with anybody and you'll come to the conclusion that apparently advertising works on other people. Who those "other people" are, no idea. I strongly suspect some people really are just statistics.

Gustomaximus 12y ago
Other people here. I've been working in online advertising for 10 odd years and have seen advertising working and not. This Ebay example was great showing both sides; bidding for their brand term was a waste of money as they are a brand leader not in a defensive strategy. Finding new customers was profitable. It seems they let the former get out of hand and dominate their spend mix. I see similar situations of excessive wasted spend all the time as companies target the wrong metrics (note: there always is some). Until this study I would bet my house the PPC team at eBay were being largely judged by 'CPA' type metrics. Every year they would have tighter goals in a market that is getting more competitive so they go for cheap wins that look good on paper i.e.grab customers already coming in as you know they will convert. I see this at almost every company. Profitable advertising absolutely does exist but like anything, you need smart people running the program and you can't surround them with targets that make them go for the wins that look good in the short-term reports. As much as we monitor more advertising remains part art, part science. And I say that as a guy that likes his data more than most. Anyway, if you're being told ads only work for other people you're talking to the wrong people. I love my marketing and what it can do for a company when run well. If you have any questions I'll happily talk your ear off.

davemel37 12y ago

There are media productivity companies, like MarketShare that cost a boat load but accurately track every possible interaction with an ad and brand to see what actually works. If you use a company like this and a DMP (data management platform) you can track ads and measure on a scale this article doesn't seem to even know exists... It might cost you a few million to close the feedback loop accurately but there are companies that can correlate an unclicked banner impression to an in store offline purchase...

jebblue 12y ago

I read some of the comments and decided to go read the article, click the link, up pops a massive ad window for Slate. :-)

petercooper 12y ago
Well, sort of. It's funny because it really proves the headline right. Slate are trying to get you to sign up for their subscription package because I guess the ads aren't entirely cutting the mustard money-wise ;-)

nyrulez 12y ago

Ebay is known for very ineffective campaigns, which they tried to justify by publishing "papers". They basically claimed that the fact that search results exist, makes the advertising next to them mostly ineffective. There are so many issues with this argument, it is not even worth starting. But yeah this circle jerk has been going for a while. Also to claim that if it did not work them, it won't work for anyone else is a bit of an over generalization. You will also find papers stating the exact opposite and how to get great returns and stuff. Everyone it seems gets a different experience from the same platform and then they justify it by publishing white papers. Just like anything else, it is never black and white. But black folks want everything to be black while white folks make fun of the black. Also check this more detailed analysis that goes a bit deeper: http://www.wordstream.com/blog/ws/2013/03/13/dear-ebay-its-not-adwords-its-you http://www.wordstream.com/blog/ws/2013/03/13/dear-ebay-its-n...

deleted 12y ago

[deleted]

gwern 12y ago
Lewis/Rao are certainly relevant, and indeed, OP spends several paragraphs on them: > It isn’t easy, of course. In 2013, Randall Lewis of Google and Justin Rao of Microsoft released the paper “On the Near Impossibility of Measuring the Returns on Advertising.” In it, they analyzed the results of 25 different field experiments involving digital ad campaigns, most of which reached more than 1 million unique viewers. The gist: Consumer behavior is so erratic that even in a giant, careful trial, it’s devilishly difficult to arrive at a useful conclusion about whether advertisements work. > > For example, when the researchers calculated the return on investment for each ad campaign, the median standard error was a massive 51 percent. In other words, even if the analysis suggested an ad buy delivered a 50 percent return, it was possible that the company actually lost money. You couldn’t say for sure. “As an advertiser, the data are stacked against you,” the researchers concluded. That bodes poorly for your typical marketing schmo trying to glean meaning from a Google analytics page—all he can do is try to stack enough data to overcome his statistical problems. > > Still, in an email, Lewis told me that he believes “online ads absolutely work.” Or, at least, they can work. For instance, Lewis and his Google colleague David Reiley have written papers showing that display ads on Yahoo led to more customers making purchases in stores. The problem, Lewis argues, is that most analytics firms aren’t scientific enough about measuring profitability. Because they don’t run real experiments, he thinks most end up conflating correlation and causation. (It's a very nice paper, I think, one of the most insightful applications of power analysis I've seen.)

wildwood 12y ago

They're a bit vague when describing the "I-was-going-to-buy-it-anyway" problem, but it sounds like they're mainly talking about PPC ads on search engines stealing from SEO links on the same pages. (Some of it seems to be talking about stealing sales from the direct channel, which I have no idea how to handle.) If your website is already tracking ad performance on a per-ad basis (i.e., tracking all the clicks on that ad, and keeping what you pay per click below what you're getting per click), then optimizing for only the paid search traffic that's incremental, and not cannibalistic, is pretty straight-forward, conceptually. For a given ad's keyword, instead of optimizing only for the results you get from PPC traffic, you treat your PPC bid as an input that affects sales across PPC and SEO traffic for that keyword, and optimize accordingly. There are a few extra steps and decisions that need to be made before full implementation, but this is the basic idea. It's actually not too bad to account for.

davemel37 12y ago
There are other reasons to advertise in search engines on your branded keywords. For starters, you have account wide and campaign wide quality scores which impact how much you pay per click across your entire account. Having branded keywords which will have high quality scores can help lower all your costs. Secondly, your competitors can advertise on your brand even if its trademarked. Owning the top position is cheaper for you and a good idea. Third of all, You would think a brand would want to own as much of the search results page as possible. It will drive up clicks even on your organic listings. There are also many case studies that show paid search for branded keywords getting more traffic than just organic listings. I'll search for a product and amazon all the time. I would just easily buy that same product from Walmart if they had it for less. Branded search does not mean they will buy from you anyway. It could mean that, but it certainly doesn't guarantee that.

davemel37 12y ago

Advertising by definition is Arbitrage. Leveraging a disconnect between the value of the audience and the cost to reach and engage them with content. Efficient Markets dictates that over time advertising will become less effective. It is the natural progression of all advertising. Here's an article I wrote a while ago about how content marketing and native advertising are the same thing converging on a point where modern day advertising stops working... http://www.adotas.com/2014/05/surviving-the-adpocalypse-what-will-you-do-when-the-current-model-stops-working/ http://www.adotas.com/2014/05/surviving-the-adpocalypse-what...

gerbal 12y ago
One of the flaws of many advertising strategies is that it assumes the main flaw of the market is imperfect information. However that requires a rational consumer. And Consumers are not rational. Selling ideas is as important as the good itself. Take most car advertising for example. A significant portion of the ads are from dealers advertising sales. Those are classic attempts to correct for imperfect information on the part of the consumer. But the other portion of the ads are all about how you should feel in a given car. When you see an add for a luxury sedan combined with platitudes about performance, speed, and engineering or a truck and cliches about America, the goal isn't to sell you on the merits of the vehicle, but to sell you on a concept of a brand. The ideal targets for these ads aren't actually consumers currently in the market for a new car, but the people who just bought a new car. The people for whom the shine is starting to come off the rose. If you sell someone the idea that yes their purchase makes them special, then they are more likely to be happy with their decision, more likely to repeat that decision later, more likely to be a unwitting brand ambassador.
- Spooky23 12y ago
  That's the thing I always saw as lacking with online advertising -- there's no brand placement. Online ads always seem to me to be focused on transactional response "Wow, I can use this weird trick to buy a vitamin, sign me up!" Billboard/display advertising is really effective at this. I happen to know that a particular orthopedic medical practice that I wasn't familiar with has a walk in clinic until 10PM every day to fix broken bones, etc. That's effective advertising! In contrast, I've been a heavy internet user since 1994. The only product I can think of that I actually learned of via online advertising is those X10 video cameras that dominated pop-up/under advertising a decade ago. That's pretty sad for advertisers!

egypturnash 12y ago

We have no idea if online ads actually work at the scale of huge corporate brands competing for mindshare. I'm pretty sure it works for smaller outfits - every time I find an appropriate place to run an ad campaign, I see a permanant uptick in readers of my web comic. Eventually I'll have gotten everyone in that place who's going to be interested in my stuff, and I move on.

julespitt 12y ago
Willing to share where you advertise and why? I've got lots of friends and relatives doing comics online, would love to have a little specialist knowledge to help them out.
- egypturnash 12y ago
  Mostly just Project Wonderful, an ad network that mostly sells ads on web comics. It's pretty easy to drop a couple hundred into a broad campaign, dink around in your analytics to see what sources give you engaged traffic, and drop some more money onto those specific places. Also your friends and relatives may want to check out webcomics.com; I don't agree with everything Brad says about Making Comics On The Web but for the most part his site is full of a ton of great advice that's well worth the yearly fee.
  - julespitt 12y ago
    Thanks! Was curious if Project Wonderful worked, given how remarkably cheap it is. Targeting specific comics works best, got it.
cbsmith 12y ago
Actually, per the article... its actually harder to know with certainty that ads are working for smaller outfits. Large campaigns are the one case where you might accumulate enough data to know.

klunger 12y ago

I would really like to see a similar study done with less well known brands, to see if it makes a difference in cases with non-household names.

cm2012 12y ago

As someone responsible for $xxxxxx monthly spend in online advertising, it clearly works. We measure it pretty much from end to end.

hackuser 12y ago
> As someone responsible for $xxxxxx monthly spend in online advertising, it clearly works. We measure it pretty much from end to end. Do you know how much profit you would have earned without the advertising? How do you determine that (if you can say)? That is, without the ads, some customers would purchase more or more profitable products; some would purchase the same, and some would purchase less. But how would it net out -- and more interesting to me, how do you measure that?
- cm2012 12y ago
  Yes. If we stop advertising we stop getting sales proportional to the advertising spend. Most people arent coca cola.
- chmullig 12y ago
  It's very frequently measured with pretty standard experimental designs involving treatment and control groups. Track sales to each group, and you can easily figure out the return on ad spend.

BrandonM 12y ago

This topic came up in a month-old submission about why eBay lost many of its organic rankings in Google's Panda 4.0 release. Some of the comments from that discussion seem quite relevant to this one. http://news.ycombinator.com/item?id=7788804 http://news.ycombinator.com/item?id=7788804 When Slate refers to eBay research, is it based on methods that allowed ads like this gem? Vomit sale New & used Vomit. Check out the deals now! www.ebay.com (http://www.wordstream.com/images/panda-4-ebay-2.jpg http://www.wordstream.com/images/panda-4-ebay-2.jpg) If so, can we really take their findings seriously?

Shivetya 12y ago

Well far too many online ads do the exact opposite with me, as in I tend to avoid the advertiser and/or their product. This usually only occurs when the ad is presented in some fashion which inconveniences me in the task I am using the site for. Unobtrusive ads, more power to you. Pop up on me, find ways to circumvent blockers against such, or hide parts of the article I want to read, you get mentally flagged.

danmaz74 12y ago

There is one very important point that I didn't see in the article, nor the comments. By not advertising in search, incumbents would make it less expensive for newcomers to put their offer in front of the incumbent's customers. This can be very risky.

programminggeek 12y ago

Search ads don't work. Please everybody stop spending money on ads... (so I can have them all to myself.)

autokad 12y ago

I had guest lecturers from chief data scientists of companies that purchase these adds for companies targeted to users. I was told most companies do not want to pay for the controlled experiments, and many times even when they are run for 'free' they do not want to know the answer. i was surprised at the latter

cbsmith 12y ago
It's incredibly infuriating but makes perfect sense once you understand the motivations of all the parties involved.

marincounty 12y ago

I think some idiotic consumer products will always require advertising--like soda, candy bars, figh fashion, etc.? There are some industries like auto insurance where I think it's a waste of time. Every year I call around and get the cheapest insurance. I face had good luck with Mercury(last 4 years). Esurance only quotes for 6 months--that's why they seem cheap. As to Internet advertising; my biggest grip lately is having to watch a ad video before the intended video.(I turn down the volume and look away for 20 seconds). I have a feeling Google tracking works too well. I am waiting for the day DuckDuckgo is King. I don't like to be tracked. I don't like my house photographed.(Google put up previously requested blurred homes, cars, persons without any notice. If you think you have a blurred out house--check again.)

dcnstrct 12y ago

As someone who leads an analytics team in the advertising industry I have to say this title and the studies they are referencing are not accurate to the entire industry at all. Advertising absolutely works when done right. The effect on brand consideration, shopping behavior, and incremental purchase value can be quantified. The most sophisticated advertisers spend a lot of money to accurately track and ensure their campaigns are lifting their desires metrics. Now to the eBay study they reference. That study is specific to eBay, a large brand that has spent hundreds of millions a year on advertising for many years and is a top web property visited by a significant percent of the online audience. For eBay it turns out brand search marketing largely does not have a contribution as most of their shoppers are likely going to buy anyway. Trying to generalize that to a brand that did not have the amount of equity, natural SEO rankings, and established shopping behaviors would be foolhardy. Additionally if you dig deeper into the eBay study they did find a positive effect for the small percent of users that are new shoppers to eBay. They just happen to be a relatively small percent of the audience reached with the spend given the large size of eBay. In the digital space there is a huge variability in performance based on the type of ad, the nature of the targeting, the product being advertised, the creative message, etc. Trying to generalize to all online advertising without controlling for the kind of brand, product being sold, current marketing positioning, and campaign objective seems a bit naive. In our work we find huge variability in performance even within the same web property dependent on the placement of the ad within the site and the unit being served. We measure how long the ad was on the page, how many users actually hovered over it in view, and then the incremental lift of exposed users compared to control group. Turns out if you properly optimize to maximize true ad viewing and engagement you will see lifts in brand response, digital visitation, and shopping metrics compared to the control. In fact I'd much rather have money for digital advertising any day over old fashioned ads with the limited tracking possible. I know how many people saw our spot on the YouTube home page, how long they spent interacting with it, and can tell you exactly what they were interested in. For that TV spot I don't know if you were watching, skipping, going to the bathroom, looking at your phone, or any number of other factors which could diminish effectiveness. TLDR; online advertising works when done correctly and absolutely can be measured

alphapapa 12y ago

wz1000 12y ago

This is a classical example of a Prisoner's Dilemma [0] The conclusions drawn by the author don't seem to consider the fact that if Ebay doesn't buy ads next to it's own name, Amazon would. As with a Prisoner's Dilemma situation, if all parties(In this case companies with substantial recognition and brand loyalty) stop buying ads, they would stand to make the maximum profit. However, this opens them up to the possibility of losing clicks to a 'cheating' competitor, thus driving them into essentially an 'ad war'. [0] http://en.wikipedia.org/wiki/Prisoner's_dilemma#In_economics http://en.wikipedia.org/wiki/Prisoner's_dilemma#In_economics

johnsteve 12y ago

Why cannot they? Online ads usually work and they benefit the company as well as the individual users in the long run as well as the short run Ever heard of Google AdSense? That is the most common way to make the online ads work

tauslu 12y ago

Since Google does not have vast majority (more than 90%) market share in the US and it is possible to do geo-location based advertising (location based on IP information is largely accurate), they were able to test it out. Well, this shows that being a monopoly helps a lot with monetization when there are few technical possibilities to test . The slate article puts it very nicely. "Art was far more profitable than science."

tragomaskhalos 12y ago

How sophisticated is click-tracking these days? Is a click on an advertising link always billed, or are there other qualifying criteria in play? I ask because the only time I ever click on an ad link is by mistake (typically when Safari is busy jiggling about with the page layout so that my finger hits the wrong target), and wonder if this is actually costing the company concerned.

tauslu 12y ago

How does one know that a keyword is a brand or not? If the click through rate is above 30% (people really searched for the term) and there is some normal conversion after clicking (meaning that people really search for the relevant keyword, they do not mistake it with something else), then the keyword is a brand.