A copy of Scientific Advertising and some thinking are about all that's needed to do the job well.
There are essentially 4 rules for effective advertising:
1) ignore all metrics from online platforms (especially the ones that sell ads)
2) ignore all metrics from ad agencies
3) run tests that make sense*
4) measure in dollars
The hard part is convincing the founder/owner to stop messing with stuff long enough that you can actually measure the results. Also, companies tend to way overspend on ads and data scientists while underspending on skilled advertisers. (They can be forgiven for the latter, there are too few skilled advertisers, and lousy advertisers usually sell themselves as experts.)
*Example: your job is to advertise a business with 20 locations in 2 cities. You want to know if radio ads are better than search ads. So you do the obvious thing: buy radio ads in city A and search ads in city B, then compare sales. If the difference in sales is big enough that managers get defensive and start pointing out why the test wasn't valid, you may have a winner. Run it in both cities and see if it still works.
(Rule of thumb: if nobody is upset with the outcome, the variations were too similar. Run bigger tests.)
As a career marketer, most people in marketing and pretty much every leader outside of it, want intense analytics. They don’t matter in the long run unless you have a big budget to make rapid iterative changes.
Total Revenue & Total Ad Spend ROI are the best metrics. Customer Acquisition Cost is second. Website visits and anecdotal brand measurements are third.
Imagine how much a company could make if the guy at the top was a hard cutter that didn't put up with unscientific money wasting! They could clean out all of the people who anti-did their jobs (managers who pollute the information stream for personal interest reasons, consultants who give you advice that was worse than what you would do otherwise), and then they would clean out any market.
> There are essentially 4 rules for effective advertising
The original sin, as pmarca put it, is advertising.
All you need to know to realize that this is a bubble is to look at how Youtube keeps asking you to subscribe for their ads-free plan.
Google know it, but it’s too late for them...switching users from “products:through selling their data” to “subscribers:who pay for services” is going to be hard to sustain.
Hard because google is now competing with others for a reputation, which they already know they have a serious problem with.
Paul Graham tweet from last month “When I bought extra space for GMail, I got logged into a "google account" that I'm logged into even when I do searches. Searches are much slower logged in. And I'm not sure if I can log out without logging out of GMail
Double-blind methodology would work great on that scenario.
Campaign manager to sales team: we did two experiments in cities A and B. We won't tell you what we did. Go look at the sales numbers, and tell us if you see improvements in sales in those cities. Then we can share what we actually did.
Reliably someone comes along every few months to question digital ads. I always come back to analyses of incrementality as the real proof.
Take an audience of X people. Divide them in two. Show ads to your test group, don't show to control. Watch your business grow and gauge the lift between the two audiences.
The companies that know how to advertise at scale do this constantly and can gauge the real effect of their ad dollars. Facebook, Google and others make these tests possible in their platforms, while other software suites such as Impact Altitude and VisualIQ allow you to do this kind of analysis and testing as well.
In the end, most of it proves out to be incremental. There are notable exceptions of course, but when are there not?
Been realizing how the global pandemic is exposing what a complete and utter disaster advertising supported journalism has become on the web. It's really now a race to the bottom--even the largest media brands basically exist to make you click fake articles. (It's bad even without considering astroturfing comments, entirely fake news sites, etc.)
Newspapers had their yellow journalism days and have always been adverting supported, but it's never been this bad. The internet solved the information availability problem, now we have a huge trustworthiness / curation problem. My hope is a marked return to subscriptions, the way the NYT has done. I just loathe any hybrid where you subscribe and _still_ get ads. I want to leave that crappy model way behind.
I would argue that the true low point of American news media was during the WWI wartime period where good reporting was illegal, and as a result impossible to find even if you sifted through all of the chaff.
Of course, bringing a healthy online-subscription model back into the mainstream is definitely ideal for journalism. Even more than that, I do wish there was a quick/easy/safe way to purchase individual articles (or even whole issues could work if needed) for a few bucks. Back in the old days, if you were curious about a hot running story, you just went to the news-stand and bought a copy, not a whole year's subscription then and there.
The ability to participate à la carte would certainly help paying customers like me.
After I read your comment, I checked my Feedly because I have a folder there that contains about 80 active news sources, mostly journalism and news sites covering a broad range of politics and perspectives. The amazing thing about this particular folder is that it seems like every time I open Feedly to check the news, the counter is maxed out at well above 1000 new updates. It takes very little time for stories to accumulate at that level.
What this makes me realise is that so many of these updates are complete unnecessary, blown-up and exaggerated "news" (even when legit) and often just clickbait. What you say is rather depressing when I think about it.
My friend worked in online gaming, similar to Zynga. Their strength wasn't in the games itself, because they mostly ripped off other games. It was in their advertising channel. They had around 10M active users and whenever they had a new game out, they would advertise it to their existing customers, and they would get instant users for their new games. Not 100% conversion, but enough to get traction.
By having their own home-grown advertising network, they didn't have to spend money on Google or Facebook ads, the could just milk their existing channel. I think things like this are pretty effective once you have things up and running, because it's free.
I've come to the tentative conclusion that advertising is, in most cases, kind of like money spent on good luck charms. The company wants to spend money on convincing people to buy their product (or service or etc.). Telling them, "there is no good way to do that, you'll have to just make a better product", is never going to be believed. They want to think that they can just spend money, and get money back.
Improving your product also requires money, probably, but in addition it would require good planning, a realistic vision, organizational competence, and a lot of other things that are harder to deliver than just buying ads.
Executive buy ads because it's easy to do, compared to making a better product (or service or etc.). So your ad company doesn't have to deliver better sales, it just has to be at least as good as other people's ad services. Because most executives are not going to promote the guy who says, "there is no easy way to spend money to get higher sales, you're going to have to do it the hard way".
I've been thinking more and more that when it comes to advertising, trying to squeeze irrational behaviour into a logical system just isnt going to work long term.
Rory Sutherland's "Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life" convinced me that advertising has not changed at all, no matter how much Silicon Valley wants it to. Their delusions WILL come home to roost eventually.
Only ~10% of advertising $ is spent on direct response.
~90% of advertising is brand advertising, with no immediate conversion as a goal. It's about slowly nurturing the creation of a STORY inside the heads of prospective customers.
At the start of covid lockdown I realized I needed a new pair of sweatpants. Where was the first place my brain thought to look? The nike store. Why was that? What specific ad or celebrity sponsorship can you trace that back to? Probably something to do with basketball but I honestly do not know. Regardless, I ended up buying a pair from nike.
I wonder how close ad markets are to zero sum. In the limited cases where ads are good for an individual firm, being close to zero sum would make ads a drain on the industry. In the article, they talk about how in most experiments, the most of the people who click your ad would have clicked your link anyways without the ad. In a really important footnote they talk about how this is crazy with a hugely important exception: if you don't bid, your competitor will. Like amazon bidding on searches for "walmart."
The effect is obvious and obviously wasteful for brand name searches, but it must extend to other searches as well. I search for "levi's" and your ad isn't going to make me materially more likely to buy jeans, but it will make me more likely to buy them from Levi's. Or, and here's the point, if I just search "jeans," your ad isn't going to make me materially more likely to buy jeans. But you have to bid or else I won't buy your jeans. It strikes me as just as wasteful as Levi's having to bid on the "levi's" search term. The money that was going to go towards the jeans industry still goes there, except that now Google and Facebook get a cut and the jeans industry's margin shrinks a little.
This article does a brilliant job convincing me that most ads aren't incremental for a firm because of selection effects, which convinces me that most ads that are incremental for the firm aren't incremental to the market. It seems so wasteful.
It's even more wasteful if you look at it at a societal level. There's an incredible amount of economic output that's devoted to advertising, so much so that there are large secondary industries (broadcast television, radio, social media, etc.) built around being advertisement delivery vehicles. Yet all of this economic activity is going towards something that's a net negative to society - an enormous amount of distracting material meant to manipulate a persons actions so that they're more beneficial for a company, and often less beneficial for themselves.
Advertising isn't alone in this. It seems like parasitic industries take up a large and growing part of our economic output.
I suspect that a rather large percentage of Google's revenue is this kind of protection money: bid on your own brand or even your organic link might not even fit "above the fold". The fact that ads are more and more similar to organic results helps this effect.
Getting so sick of the ads and such online. And every website has an adblocker detector now. You can't just look something up any more and end up on a website where someone wants to help you. You always end up on a website where someone is trying to make bank off of you.
The kind of copy Google encourages is at least as big a problem, I'd say.
Do you ever search for something, click a result, and find you have to skip down fifteen paragraphs to get what you wanted?
It's a real problem on the Web these days. Pages with incredibly low information density, on purpose.
Even the simplest piece of information may be buried way, way down a page with no actual content above it, just inane rambling.
This is a real problem for search results on all kinds of topics. You may have seen it yourself, these garbage pages with high search rankings.
How bad a problem is it? Often the entire first page of results is nothing but pages that waste your time on purpose.
(but seriously, imagine the sheer count of person-hours wasted writing and reading this useless fucking crap, making the Web worse on purpose, and it's been going on long enough that I guess... Google just thinks that's fine? Ugh. I swear it's like they just gave up on good search results around '08 or '09 and settled for whatever as long as the pages serve ads and get clicks)
I agree with this wholeheartedly. I think theres a hole in the market forming for another mega-information sorter and searcher now that google is losing its edge. Quite possibly a new format for organising information on web platforms.
> Web-based retailers and Web sites supported by advertising revenue have proven to be the two most failure-prone types of Internet business, and there are lessons to be learned from each segment.
I feel like for a long time there has been talk about online advertising collapsing because it is bad or not useful or something else.
Now I expect it will if only due to economic activity, but outside that I personally suspect online advertising continues to be used generally because folks don't see a lot of alternatives. What are they going to do? Radio ads?
The system might suck, but the internet is where folks are, anyone advertising likely needs to go there / try.
This makes me very sad because I fear it's true. I want to play around building successful side projects, but to get traction I need to play around with ads. To buy ads with my own money and knowing 95% of it will be wasted is too much of a blocker.
>For more than a century, advertising was an art, not a science. Hard data didn’t exist. An advertising guru of the Don Draper type proclaimed: "What you call love was invented by guys like me to sell nylons" – and advertisers could only hope it was true.
Man... one of these days I'll poke my eyes out if a read this Don Draper quote again on a online article about advertising...
It's not the quote itself, it's the lack of context when/how/whom behind that quote.
At best that quote can be used in the context: "The shit advertisers say to try to hook a whale (big account)".
Yet journalists use it like it was the wet dream motivates advertisers, that are so delusional and naive to believe it...
In house advertising is essentially non existent. Any newspaper would have in house ads printed next to the article. All have given up their autonomy to 3rd party vendors. You wouldn't be able to block in house advertising, but you sure can block all 3rd party skeezy advertising that want nothing but analytics. That largely do nothing better than an ad printed next to an article.
That’s my favorite part, too. I deal with a bunch of OR people at work so I couldn’t resist to bring this similar question up next time. Let see what they have to say!
I wonder if the only tangible value in advertisement isn't to increase your revenue by convincing consumers to buy your product, but to decrease your competitors' by convincing consumers they don't exist.
A lot of people use Google to find things. A lot of those people click the first search result that matches what they're looking for (low cost, certain feature, prestige, there's no right answer, just right answer for them).
Some of those clicks are for products and services with short buying/lead gen cycles. Once they've clicked, many are only going back if they don't like what they find.
The value of search ads is being the link they clicked. You can buy that click. You can literally insert your website into a demand/supply match. If you don't mess it up after they click, those clicks become transactions. In dollars.
Oil changes are a great example. Some of the people who type "oil change near me" in maps don't really care about the brand. They click the top result, schedule an appointment, and get their oil changed.
If the click was $3 and it took 10 people/bots clicking to set one appointment, that's $30. Now let's say the oil change is $39 so profit is ($39 - oil $7, - filter $3, - labor $5, - ads $30) = -$6 before the cost of skilled advertiser.
Are those ads profitable? It depends. If you can upsell 1/10 on replacing a cabin air filter for 10x cost, then yes.
Every other upsell becomes profit.
Also, at a car dealership you can sell 3-5% a car while they're there for a nice $1700-$3200 profit, which nicely covers the cost of the skilled advertiser.
That's the case for a lot of FMCG marketing - the aim isn't to drive immediate conversion, but to be so pervasive you take up all of the possible mental capacity a user has for (example) a "cola brand".
Advertising spending is already recognized as sort of a prisoner's dilemma so even if not literally true the effect are similar. Barring existing infamy or a backfire that makes them worse than generic like say Evony a sole advertising party would be priveledged in name recognition but if everyone does it is just an expense boost to enter in the red queen's race.
Online Advertising margins have been gutted year over year. Demand (people willing to pay for advertising) , today, has fallen to so few players (the largest brands and programmatic) anymore. Users have become so ineffectual to interacting with ads (and effective at blocking them) that measurement has become a black art of approximation, at best.
There is no bubble, as that time passed sometime before 2016.
[+] [-] itcrowd|5 years ago|reply
https://news.ycombinator.com/item?id=21465873
[+] [-] jlbnjmn|5 years ago|reply
There are essentially 4 rules for effective advertising:
1) ignore all metrics from online platforms (especially the ones that sell ads)
2) ignore all metrics from ad agencies
3) run tests that make sense*
4) measure in dollars
The hard part is convincing the founder/owner to stop messing with stuff long enough that you can actually measure the results. Also, companies tend to way overspend on ads and data scientists while underspending on skilled advertisers. (They can be forgiven for the latter, there are too few skilled advertisers, and lousy advertisers usually sell themselves as experts.)
*Example: your job is to advertise a business with 20 locations in 2 cities. You want to know if radio ads are better than search ads. So you do the obvious thing: buy radio ads in city A and search ads in city B, then compare sales. If the difference in sales is big enough that managers get defensive and start pointing out why the test wasn't valid, you may have a winner. Run it in both cities and see if it still works.
(Rule of thumb: if nobody is upset with the outcome, the variations were too similar. Run bigger tests.)
[+] [-] libertine|5 years ago|reply
In fact, probably the most expensive campaigns are used to consolidate market shares, brand positioning and notoriety.
People just seem to forget that advertising existed before the internet, and it worked without the bloat of metrics.
[+] [-] bryanmgreen|5 years ago|reply
As a career marketer, most people in marketing and pretty much every leader outside of it, want intense analytics. They don’t matter in the long run unless you have a big budget to make rapid iterative changes.
Total Revenue & Total Ad Spend ROI are the best metrics. Customer Acquisition Cost is second. Website visits and anecdotal brand measurements are third.
[+] [-] whatshisface|5 years ago|reply
[+] [-] maram|5 years ago|reply
The original sin, as pmarca put it, is advertising.
All you need to know to realize that this is a bubble is to look at how Youtube keeps asking you to subscribe for their ads-free plan.
Google know it, but it’s too late for them...switching users from “products:through selling their data” to “subscribers:who pay for services” is going to be hard to sustain.
Hard because google is now competing with others for a reputation, which they already know they have a serious problem with.
Paul Graham tweet from last month “When I bought extra space for GMail, I got logged into a "google account" that I'm logged into even when I do searches. Searches are much slower logged in. And I'm not sure if I can log out without logging out of GMail
Solution: Use duckduckgo.com for search.” https://twitter.com/paulg/status/1248207051542745089?s=21
Jack tweet from last year “I love @DuckDuckGo. My default search engine for a while now. The app is even better!” https://twitter.com/jack/status/1199783221162053633?s=21
And this comment on hacker news that was doing astroturfing for Google two months ago https://news.ycombinator.com/item?id=22383746
Internet has gone mainstream, globally. No one can live without an email or a social network!
Customers are now ready to pay for all the services they used to enjoy for free.
I wish App.net was still alive.
[+] [-] alain94040|5 years ago|reply
Campaign manager to sales team: we did two experiments in cities A and B. We won't tell you what we did. Go look at the sales numbers, and tell us if you see improvements in sales in those cities. Then we can share what we actually did.
[+] [-] kposehn|5 years ago|reply
Reliably someone comes along every few months to question digital ads. I always come back to analyses of incrementality as the real proof.
Take an audience of X people. Divide them in two. Show ads to your test group, don't show to control. Watch your business grow and gauge the lift between the two audiences.
The companies that know how to advertise at scale do this constantly and can gauge the real effect of their ad dollars. Facebook, Google and others make these tests possible in their platforms, while other software suites such as Impact Altitude and VisualIQ allow you to do this kind of analysis and testing as well.
In the end, most of it proves out to be incremental. There are notable exceptions of course, but when are there not?
[+] [-] toddmorey|5 years ago|reply
Newspapers had their yellow journalism days and have always been adverting supported, but it's never been this bad. The internet solved the information availability problem, now we have a huge trustworthiness / curation problem. My hope is a marked return to subscriptions, the way the NYT has done. I just loathe any hybrid where you subscribe and _still_ get ads. I want to leave that crappy model way behind.
[+] [-] whatshisface|5 years ago|reply
I would argue that the true low point of American news media was during the WWI wartime period where good reporting was illegal, and as a result impossible to find even if you sifted through all of the chaff.
[+] [-] MajorBee|5 years ago|reply
The ability to participate à la carte would certainly help paying customers like me.
[+] [-] wyclif|5 years ago|reply
What this makes me realise is that so many of these updates are complete unnecessary, blown-up and exaggerated "news" (even when legit) and often just clickbait. What you say is rather depressing when I think about it.
[+] [-] buboard|5 years ago|reply
[+] [-] ping_pong|5 years ago|reply
My friend worked in online gaming, similar to Zynga. Their strength wasn't in the games itself, because they mostly ripped off other games. It was in their advertising channel. They had around 10M active users and whenever they had a new game out, they would advertise it to their existing customers, and they would get instant users for their new games. Not 100% conversion, but enough to get traction.
By having their own home-grown advertising network, they didn't have to spend money on Google or Facebook ads, the could just milk their existing channel. I think things like this are pretty effective once you have things up and running, because it's free.
[+] [-] rossdavidh|5 years ago|reply
Improving your product also requires money, probably, but in addition it would require good planning, a realistic vision, organizational competence, and a lot of other things that are harder to deliver than just buying ads.
Executive buy ads because it's easy to do, compared to making a better product (or service or etc.). So your ad company doesn't have to deliver better sales, it just has to be at least as good as other people's ad services. Because most executives are not going to promote the guy who says, "there is no easy way to spend money to get higher sales, you're going to have to do it the hard way".
[+] [-] jp555|5 years ago|reply
Rory Sutherland's "Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life" convinced me that advertising has not changed at all, no matter how much Silicon Valley wants it to. Their delusions WILL come home to roost eventually.
Only ~10% of advertising $ is spent on direct response.
~90% of advertising is brand advertising, with no immediate conversion as a goal. It's about slowly nurturing the creation of a STORY inside the heads of prospective customers.
[+] [-] ahelwer|5 years ago|reply
[+] [-] 6gvONxR4sf7o|5 years ago|reply
The effect is obvious and obviously wasteful for brand name searches, but it must extend to other searches as well. I search for "levi's" and your ad isn't going to make me materially more likely to buy jeans, but it will make me more likely to buy them from Levi's. Or, and here's the point, if I just search "jeans," your ad isn't going to make me materially more likely to buy jeans. But you have to bid or else I won't buy your jeans. It strikes me as just as wasteful as Levi's having to bid on the "levi's" search term. The money that was going to go towards the jeans industry still goes there, except that now Google and Facebook get a cut and the jeans industry's margin shrinks a little.
This article does a brilliant job convincing me that most ads aren't incremental for a firm because of selection effects, which convinces me that most ads that are incremental for the firm aren't incremental to the market. It seems so wasteful.
[+] [-] Chathamization|5 years ago|reply
Advertising isn't alone in this. It seems like parasitic industries take up a large and growing part of our economic output.
[+] [-] gampleman|5 years ago|reply
[+] [-] jlbnjmn|5 years ago|reply
[+] [-] nullsmack|5 years ago|reply
[+] [-] karatestomp|5 years ago|reply
Do you ever search for something, click a result, and find you have to skip down fifteen paragraphs to get what you wanted?
It's a real problem on the Web these days. Pages with incredibly low information density, on purpose.
Even the simplest piece of information may be buried way, way down a page with no actual content above it, just inane rambling.
This is a real problem for search results on all kinds of topics. You may have seen it yourself, these garbage pages with high search rankings.
How bad a problem is it? Often the entire first page of results is nothing but pages that waste your time on purpose.
(but seriously, imagine the sheer count of person-hours wasted writing and reading this useless fucking crap, making the Web worse on purpose, and it's been going on long enough that I guess... Google just thinks that's fine? Ugh. I swear it's like they just gave up on good search results around '08 or '09 and settled for whatever as long as the pages serve ads and get clicks)
[+] [-] friendlybus|5 years ago|reply
[+] [-] 9wzYQbTYsAIc|5 years ago|reply
https://money.cnn.com/2000/11/09/technology/overview/
The year 2000 - how is this a new bubble?
[+] [-] franze|5 years ago|reply
In any scenario where
Churn > Referral -> Ads are a trap.
If
Churn < Referral -> Ads are a halfway decent accelerator.
Challenge is you can not really determine if Churn < Referral as long as you run ads.
I wrote about it here if someone is interested https://medium.com/@franz.enzenhofer/ads-are-a-trap-80df01d2... (free to read medium link, will migrate away from medium soon)
[+] [-] duxup|5 years ago|reply
Now I expect it will if only due to economic activity, but outside that I personally suspect online advertising continues to be used generally because folks don't see a lot of alternatives. What are they going to do? Radio ads?
The system might suck, but the internet is where folks are, anyone advertising likely needs to go there / try.
[+] [-] jlbnjmn|5 years ago|reply
95% of your money is wasted, but if you do it right, that last 5% makes up for it.
[+] [-] tiborsaas|5 years ago|reply
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] barbegal|5 years ago|reply
[+] [-] PeterSmit|5 years ago|reply
[+] [-] ksec|5 years ago|reply
[+] [-] libertine|5 years ago|reply
Man... one of these days I'll poke my eyes out if a read this Don Draper quote again on a online article about advertising...
It's not the quote itself, it's the lack of context when/how/whom behind that quote.
At best that quote can be used in the context: "The shit advertisers say to try to hook a whale (big account)".
Yet journalists use it like it was the wet dream motivates advertisers, that are so delusional and naive to believe it...
[+] [-] ngold|5 years ago|reply
[+] [-] jstanley|5 years ago|reply
I think you would? You'd just have to write rules that are specific to each publisher instead of each advertising network.
[+] [-] jjgreen|5 years ago|reply
[+] [-] _Microft|5 years ago|reply
https://htbimporter.files.wordpress.com/2011/02/wow_customer...
[+] [-] mrbonner|5 years ago|reply
[+] [-] qppo|5 years ago|reply
[+] [-] jlbnjmn|5 years ago|reply
Some of those clicks are for products and services with short buying/lead gen cycles. Once they've clicked, many are only going back if they don't like what they find.
The value of search ads is being the link they clicked. You can buy that click. You can literally insert your website into a demand/supply match. If you don't mess it up after they click, those clicks become transactions. In dollars.
Oil changes are a great example. Some of the people who type "oil change near me" in maps don't really care about the brand. They click the top result, schedule an appointment, and get their oil changed.
If the click was $3 and it took 10 people/bots clicking to set one appointment, that's $30. Now let's say the oil change is $39 so profit is ($39 - oil $7, - filter $3, - labor $5, - ads $30) = -$6 before the cost of skilled advertiser.
Are those ads profitable? It depends. If you can upsell 1/10 on replacing a cabin air filter for 10x cost, then yes.
Every other upsell becomes profit.
Also, at a car dealership you can sell 3-5% a car while they're there for a nice $1700-$3200 profit, which nicely covers the cost of the skilled advertiser.
[+] [-] wastedhours|5 years ago|reply
[+] [-] Nasrudith|5 years ago|reply
[+] [-] donclark|5 years ago|reply
[+] [-] loeg|5 years ago|reply
[+] [-] Supermancho|5 years ago|reply
There is no bubble, as that time passed sometime before 2016.