Ad-tech as a bubble overdue for a bursting
Tadelis designed another experiment and found that these ads were actually responsible for 0.5% of [eBay's] revenue – an order of magnitude less than their estimate – and that every $1 they spent generated $0.60 in losses. They cut $100m from their ad-spending.
But despite publication of these findings, the world increased its ad-tech spending. Tadelis attributes this to the fact that the major players in ad-tech are all incentivized to repeat the unsubstantiated tale of ad-tech's efficacy.
Ad-tech companies, publishers, and ad-tech buying consultancies are all compromised and unable to objectively assess whether ads work (cue Upton Sinclair: "It's difficult to get a man to understand something when his salary depends on his not understanding it").
https://pluralistic.net/2020/12/06/surveillance-tulip-bulbs/#adtech-bubble
HN discussion: https://news.ycombinator.com/item?id=25325974
#AdTech #Advertising #Google #Facebook #ItsABubble #pluralistic
Freakonomics: Does Advertising Actually Work? (Part 1: TV) (Ep. 440)
Companies around the world spend more than half-a-trillion dollars each year on ads. The ad industry swears by its efficacy — but a massive new study tells a different story. ...
@dredmorbius while I generally agree, the examples are not great. eBay and P&G have spent decades advertising. Dropping advertising for a month will not reduce mindshare much. Better examples would have been testing with small companies who are not well known and only use online ads.
@1ll173r47 I tend to agree with that: brand awareness is built over years and decades, and decays slowly.
@dredmorbius
Bubble ... When's the last time you clicked on a sponsored ad? And don't count the times you did it by mistake.
@cebadams Personal anecdote is a very poor tell. There are billions of peope in the world. I am but one of them.
@dredmorbius
Those two Freakonomics podcasts were very good.
@dredmorbius
This has been pointed out before:
```
Recall that advertising is when someone pays you to tell your users they'll be happy if they buy a product or service.
Yahoo is an example of a company that runs on advertising. Gawker is a company that runs on advertising.
Investor storytime is when someone pays you to tell them how rich they'll get when you finally put ads on your site.
Pinterest is a site that runs on investor storytime.
```
@dredmorbius
And it seems rather relevant that of the to companies mentioned which "run on advertising" one is dead and the other is bought out.
@dredmorbius
Thia lecture is gold
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These really pissed me off, not because I have a problem with Zipcar, but because they showed me the algorithm wasn't even trying.
It's one thing to get the targeting wrong, but the ad engine can't even decide if I have a car or not! You just showed me five ads for car insurance. You don't care that you're mathematically certain to be wasting my time.
```
I thing what it boils down to is the adtech companies aren't dumb, they're screwing the advertisers.
@dredmorbius I'm reminded of the famous statement by John Wanamaker that half of his ad spending was wasted, he just didn't know which half.
@Ahuka Mentioned in the Freakonomics episode.
@dredmorbius For small to medium companies that have a focusable ad spend, PPC / online advertising is actually an effective model. In fact, for a startup, it is one of the few effective ways to drive revenue.
What would be great is if this could be done ethically, affordably and without privacy infringement and creepy demographic profiling.
Freakonomics: Does Advertising Actually Work? (Part 2: Digital) (Ep. 441)
https://freakonomics.com/podcast/advertising-part-2/
#advertising #adtech #google #facebook #ItsABubble