When companies struggle the first thing they tend to pull is advertising. Need some help making this quarter’s numbers? Pull all the TV adverts for a few weeks. “Go dark” as insiders say.
Short term this is all standard. The long term danger for Google and others is when lots of companies realize they probably didn’t need to make all that spend in the first place. That big “reset” is a new normal that advertising dollar driven tech companies will need to adjust to.
This is all good an true. But of the two Youtubers I got to talk to at the series finale of MakerFaire in San Mateo, they both whined that advertising rates were going down.
The goal of my discussion was to talk to someone who had "been there, done that" to get an idea of the time investment and the expected returns.
If they want to out themselves here they can. Independently they both have pretty robust tracking software to understand views, view time, clicks from views Etc[1]. Both have systems to measure $/views, and both used extensive "channelizing" to get focused on where the views came from and how their viewer found them. They both observed that if they had been "TV shows", as their ratings and viewer audience expanded their network would get more ad revenue per show, but for them they are consistently getting LESS and less revenue. It puts them on a treadmill of having to produce more videos to get more views to keep their revenue up but that also increases their costs.
It resonated pretty strongly with my experience with AdSense and web pages. We can speculate on why that trend is where it is, but it seems pretty clear that one (or maybe both) things are true; Advertisers don't see as much "value" in advertising on Youtube videos, and the revenue growth curve for at least these two content producers does not seem to match either the slope or the magnitude of the change in revenue that Google reports in its earnings.
[1] I got a good idea of how difficult this path could be when you are your own producer, accountant, and data science company.
The YouTube treadmill has creators pushing out 1-4 videos per day now. There is now a near-infinite supply of YouTube content. OF COURSE the advertising rates are approaching zero. With TV there's only a fixed number of channels & timeslots.
Content creators are complaining about YouTube being strict but YouTube is strongly incentivized here to cut the supply of content. They want to raise advertising rates and charge advertisers more money! That means raising the bar of production value, etc, because YouTube wants to keep the same kind of viewership numbers. YouTube is now mainstream television.
The channels that will survive here are going to play ball and raise the quality of their content and production values. They're going to be family safe. They're going to provide lots of content and it's going to be shot multi-camera by a staff of people. Smaller creators days on the platform are numbered.
Thing is, the channels that do this best can do this for themselves. They don't need YouTube if they build a dedicated-enough audience.
I've been looking at how to make this process easier for people, using things like Cloudflare Stream, and think there may be some business opportunity here.
> There is now a near-infinite supply of YouTube content. OF COURSE the advertising rates are approaching zero.
This doesn't make sense to me. The advertising rates are a connection between the advertiser and the consumer. If the content scales to infinity, there's still the same number of consumers that advertising dollars compete for regardless of available content.
> The channels that will survive here are going to play ball and raise the quality of their content and production values. They're going to be family safe. They're going to provide lots of content and it's going to be shot multi-camera by a staff of people. Smaller creators days on the platform are numbered.
> Thing is, the channels that do this best can do this for themselves. They don't need YouTube if they build a dedicated-enough audience.
> This doesn't make sense to me. The advertising rates are a connection between the advertiser and the consumer. If the content scales to infinity, there's still the same number of consumers that advertising dollars compete for regardless of available content.
The advertiser has a set budget and is looking at a supply of content. If there's a fixed supply of avenues to reach their customers, then they have to bid against lots of other advertisers to reach those customers. The rate to advertise goes up. If the supply of avenues to reach customers is near infinite, then the cost to reach those customers is almost nothing because there's no market driving up the cost of advertising. It doesn't make sense to spend more money to reach those customers. Reaching customers is cheap and easy. This is Supply & Demand 101.
In terrestrial advertising, there's only a small number of advertising slots that are valuable because that content is gated by place & time. This is not true online (caveat, read below).
(caveat explanation) Okay, I lied: It actually is really valuable. Joe Rogan's advertising slots are _extremely valuable_ and he uses them to to advertise businesses he has a partial ownership stake in (Onnit), which is brilliant. This is the same shit the Zuffa brothers did with the UFC & Xyience and it put millions upon millions of dollars in their pockets. But that's not advertisers paying for those slots, that's pocket A paying pocket B...and as a regular advertiser you can't buy that slot!
PewDiePie is probably making a small fortune off G Fuel, those chairs, and his phone games. These are the smart content creators today. Everyone relying on YouTube or Twitch partner programs for monetization is just on the dole or will be.
If you're a content creator with a reasonable following and not on a 2-3 year plan for productizing your brand, you're on a path to insolvency.
> Then that leaves room for the smaller creators.
Not on YouTube. And video hosting with a global CDN costs money and requires some know-how.
Aren't you just splitting up the consumers into smaller batches? Sure, you now have 100x as many avenues, but each one has 100x fewer customers at the end of it. How does reaching consumers get cheaper because of this?
Because your target consumers are watching more YouTube channels than ever before. Example: as a 3D printing and general "maker" enthusiast, there used to only be a few channels putting out a few videos a month in these categories. Now I'm subbed to probably a dozen and their release frequency is increasing while the overall ad budget has probably not grown much. On a per-channel, per-minute basis, the dollar value has thus gone down.
In other words, creator and content growth outstripped ad spend growth.
> In other words, creator and content growth outstripped ad spend growth.
And by several orders of magnitude. I'm surprised at how many highly intelligent people out there have failed to grasp these basics.
It's also sort of a winner-take-all market. Established channels for each customer segment will capture all of the revenue. Everyone else fights for scraps.
If you look at art/culture trends through modern history, teens aspire to the accomplishments of the generation before them. The clearest sign of YouTube being "done" was all of the surveys of teenagers aspiring to be Youtubers.
Ah, so the important part isn't that creator or content growth is outstripping ad spend; it's that viewer growth is outstripping ad spend. (Which means less revenue per view.) That makes way more sense.
I'd say it's both. More viewers, so per-view revenue is down, but more creators and videos as well so per-video revenue is also down due to increased competition. The net result is what you see today on channels - ad revenue used to be plenty for creators, but now they're plugging sponsors, merch, Patreon, and anything else they can to make up the shortfall.
True, but that's a separate issue from the one being discussed in this article. Increased competition between creators may make it more difficult to get viewers, but it doesn't directly hurt CPM.
What the other guy said. Also, segments have overlap and you can target.
If all 100 of the streamers creating content about diy synthesizers have an audience that also watches this larger channel about vintage amplifiers, I might be better consolidating my spend there...or if I'm a small advertiser with a tiny budget, I might be better off doing just the opposite and spending tiny amounts at the 100 small channels.
The point is that as an advertiser I'm almost fully in control over my own destiny, which is simply not true with television and radio networks.
Advertisers and Content Creators aren't really against each other...they're kind of following separate destinies, but if a Content Creator is entirely reliant on Advertisers for their funding model and the market is heavily skewed in favor of Advertisers like online content and newspapers are now, then Content Creators are going to have a really bad time. And there's a bloodbath just over the horizon.
If you look at Netflix, it's the opposite problem. Content Creators are reaping huge rewards and Advertisers have no power, but that's also financially untenable.
I’m theory, digital marketing ought to be viewer “targeted” specific. Advertisers ought to be able to locate their key demos trivially. Google Analytics simply sucks - maybe I underestimate the difficulty in not showing a mid 30’s make such as myself spanx adverts.
Instagram is where high quality content is migrated by virtue of the greater speciation of branding opportunities.
Interesting, yet we would expect better engagement if there is supposedly less noise? Unless marketing in general, no matter how digitized, is a game of low bit rates?
Digital advertising engagement is better than terrestrial. People hate TV & Radio ads and billboards but all they can do is look away or mute or fast forward.
Sure, we have ad block, but digital advertising that performs performs amazingly. When you hit your segment, the money rolls in.
Advertising rates are way down because less companies are paying. Ads are sold in auctions and if there is less competition for ad space, cost per view and per click naturally go down.
The most obvious case of the Dunning–Kruger effect is when random HN commenters think that nobody in marketing is capable of using data-driven metrics. I don't think you appreciate how numerical modern marketing is -- marketers use conversion rates, A/B tests, attribution, and a lot of other techniques to actually calculate the ROI of advertising.
What you're describing may have been the case, in a number of companies, five years ago, but it's just not meaningful now-days. Companies spend marketing dollars because marketing dollars work.
Any other interpretation is ideology-driven wishful thinking. You might not like marketing, but it's silly for the conclusion to be "thus, the entire field is made of people who don't know what they are doing".
You might be underestimating the number of companies who absolutely don’t know what they are doing budget-wise yet they manage to stay in business, and threw a lot of dollars in ads/marketing without deeply analyzing its effectiveness, just because raising money at stellar valuations was free until a month ago.
Anecdotally, I happen to work for a 300 people saas company who just started drastically cutting expenses with the goal of reducing burn rate and delaying the need for another round of financing in this terrible environment: ads were one of the first few things to be dramatically cut (the second one was some super inefficient AWS spending).
The ads budget shrank from 6 figures a year to near 0 overnight, and it’s unlikely to return to its former level any time soon. Also, half of the marketing team was laid off. Having 30 people in marketing for such a small company was definitely way too much (just like engineering, sales, ...), and it anecdotally proves GP’s argument. All consequences of the fact that money was free.
If this is the case, you should be thinking about your own job. There are very few companies that can stay afloat without new customers. And even fewer SaaS companies as churn is amplified during a downturn.
Do you know what the CFO is telling their lieutenants about now? Cut all superfluous spending and reduce monthly expenses. That means your sales people are going to be getting calls from their clients asking for a fee reduction or a contract revision. Very few SaaS companies are critical or defensible.
I 100% agree, in fact a couple weeks ago I gave my notice despite me being insulated from the current layoffs. I had been wanting to do this for a while, and hearing the CEO giving projections of how much our revenues are going to shrink due to covid, compared to our crazy speculative company valuation, was the last nail in the coffin. They should have managed the company better and more frugally, so I vote with my feet.
This is my last week and I’ll be starting next week in a much more solid company with a much better compensation too, wish me luck :-)
I think you're underestimating how much big companies spend on online ads compared to small companies. Most big companies have big non-terrible marketing teams that know how to track the effectiveness of their ads. Most of the times, they have ROAS requirements. If the ads aren't making money, they get turned off.
> and threw a lot of dollars in ads/marketing without deeply analyzing its effectiveness, just because raising money at stellar valuations was free until a month ago.
And in turn, I think you're overestimating the impact of profit-limited capital dependant companies on the advertising landscape.
I was managing a 6 figure ad budget all by myself at an established but small non-tech company and had full E2E tracking flows for pretty much every £. "Burn" isn't a thing in almost all companies out there. You want to spend a dollar, you need to tell your boss exactly how it'll make you a buck fifty.
A young, growing company is going to throw whatever at the wall and see what sticks. That's just how to learn what works and what doesn't.
I wouldn't extrapolate that experience to large companies that have weathered dozens of downturns. I'm not saying that large companies all have a clue what they are doing vis-a-vis marketing, but there are a few giants who understand their only asset is their brand. Think companies like P&G or Nestle. Largely, the biggests differentiating factor between toothpastes or frozen pizzas is brand awareness and distribution deals. These are the companies that know exactly how much more money they will make if they change the color red to yellow on a box for a product sold in Georgia.
No it doesn't prove the claim that the marketing tram and budget won't regrow after the economy improves, nor the claim that marketing and advertising was being done wrong or unnecessary.
All we have to go on for that is your opinion about how the company was being run, which isn't backed by any sort of data.
A couple executives just plainly admitted how crazy inefficient our spending was, so I just can’t imagine how they could possibly go back to blow nearly a million a year in ads any time soon, or ever, when 90% of our revenues come from traditional enterprise deals that don’t have anything to do with ads, for the most part. They are all just worried that they will have to accept a down round in a year, and are trying to mitigate that.
By the way, this is true for engineering as well, where I work: now that we figured out how to remain productive while cutting 40% of our AWS costs (spot instances, killing idle instances more often, ...), will we ever go back to be inefficient and leaving idle AWS clusters up at night just because “money is not an issue”? Very unlikely. And the marketing department wasn’t being run any more efficiently than engineering, budgets were just fat because money was free for nearly a decade.
"I don't think you appreciate how numerical modern marketing is"
Maybe for the Fortune 500 / tech startup crowd, but I work for small / medium businesses and there is still a ton of ad dollars being spent with no attribution / tracking.
I will routinely setup clients with tracking tools, which then discourages them as they finally see what their digital ads actually generate in terms of revenue. Many stop their digital campaigns and increase their traditional tv/radio/print budgets or, fall back to running digital campaigns with no tracking.
The power and effectiveness of digital targeting is often overblown for small businesses.
Many of my small business owner clients hear anecdotes where a business was able to use targeting to create a veritable "money machine". The problem is these scnerios are fleetingly rare, complete bullshit or only apply to a specific niche.
The anecdote often glazes over the thousands of wasted dollars spent trying to perfect the model and a hundred other details that factored into the success.
The good thing for most is that digital advertising is no less effective than traditional advertising. Even if there's little to no targeting, or no tracking in place it's not any worse than tv/radio/print.
I can count on one hand the number of clients in my 20 years of web work that have created a model where they dump money in the top, and are able to extract more out the bottom. In all cases it didn't last more than a couple years at most.
For any small business considering hiring an ad agency that claims to have mastered this model ask yourself this: Why aren't they doing it themselves?
I do a lot of Facebook and most of my clients target CAC earnback in 7-9 months. I once was able to do arbitrage for my product and made a non-infinitely scalable positive ROI within one week with targeted Facebook ads but it was 2012. Not nowadays, the CPGs finally jumped in and the CPMs/CPCs are too competitive.
I think now the move is to go after territories that the major brands/agencies are afraid of. Tik Tok? I don't know, but I would trust doing DIY and examining the real numbers, I used to sell agency services, I'd say anything to win business. And 30% of the time we actually overdelivered on my absurd promises.
Small companies probably see the biggest bang for the buck on SEO and maybe blog posts. I feel like most small companies have niche offerings, since most things that can be big, are big by now. When people/business have issues with their sewage system, they go searching online for someone to help. So the difference in ranking between Walters Waste Water Warriors and Steve's Sewage System Saviors comes down who has the nicest, most informative site.
When I last worked in a consumer tech startup, our best ROI by far was paying tech youtubers or doing targeted ads to tech categories on youtube. Being in a startup I was vaguely aware of marketing efforts but I was never involved directly, so I can't say why or how that was discovered. All I know is my coworkers dealing with marketing said the roi and conversion rates specifically for youtube far outstripped traditional targeted tech ads through google or facebook. Of course this may have been because we weren't great at advertising, so your mileage may vary.
I suspect it was probably because of trust. An openly gifted reviewer gives more trustworthiness than just video ads or underhanded shills.
Given that you were probably smaller and not commodity priced to move I guess that sort of "honesty" helped move it better if people could closer to try before they buy.
I'm deeply suspicious that an entire profession has changed the way they behave in just 5 years. Moreover, I think you're ignoring a few things.
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One is that companies can only spend money on marketing they have cash to invest. In a sudden downturn, cash may become scarce. Another other is that in extreme circumstances, panic is a common reaction. Even if the marketing director is perfectly rational, getting an ad budget may not happen if the CEO and the CFO are waking up in the middle of the night trying hard to figure how to keep the company from bankruptcy.
And a third, and possibly the biggest, is that it may be perfectly rational to pull ads now. There are whole classes of things that people can't really consume right now. All travel. All entertainment. For many, anything they have to leave the house to get, including big-ticket items like cars. And consumer psychology in a recession drives people to minimize discretionary purchasing, stick with familiar brands, and be more skeptical of anything new or unfamiliar.
It's also important to realize that advertising is an arms race. A lot of advertising spending is only required because other people are also spending. E.g., everybody in the world already knows what Coca Cola is; they advertise not to inform, but to maintain dominance. So it's perfectly plausible that a lot of places will cut spending and see nothing change because their competitors cut spending too.
The other thing you have to remember is ego. I see plenty of ads for WeWork office clones still running! Is it total neglect? I think it's hubris and Marketing Director's fighting to keep their ad spend, because if their entire budget is cut, guess who gets cut next?
Just left a data engineering job in adtech. Speaking from personal experience, marketers make terrible ROI analysts because they always want to spend the same or more. Agencies are especially bad.
Most incremental lift studies I've seen are valid, looking at CTR and A/B testing as you mentioned. But as soon as you start looking at revenue and brand lift, all studies seem to come to the same conclusion - the higher the spend, the better.
Don't get me started on multi-channel attribution... garbage.
Marketing is still very much spray and pray with diminishing returns. And in most cases, marketers will claim otherwise.
I got tired of drinking the koolaid. Modern marketing is just as fraudulent as ever. Agencies are just getting better at lying.
Agencies are thieves. At WPP Google wouldn't play ball with kickbacks, but you can't be a credible digital agency and not do search. So Google got their taste, just no GDN. Facebook wouldn't do kickbacks, so they were heavily discouraged.
Any DSP that could advance client goals but wasn't part of the inner circle would be overruled by senior management. Total gaslighting.
Everything goes to AppNexus or AppNexus partners. Because the parent company owns 20% or so of AppNexus. I got downvoted yesterday for this but I'll say it again, the mafia is in the tech, the tech is in the mafia. I have so many stories.
edit: The funniest bit was when I would take thoughtful, younger clients out to dinner who understood the business model. They would laugh and say "don't tell me too much, just hit the artificial KPIs and make me look good for my Christmas bonus.".
Speaking from personal experience, marketers make terrible ROI analysts because they always want to spend the same or more.
Yeah, principal-agent problem. At a previous job there was a case where we sent partial refunds to advertisers because we noticed we hadn't delivered as many impressions as they had paid for. Some of them were upset that by that, and would have preferred that we had just kept the full amount.
>What you're describing may have been the case, in a number of companies, five years ago, but it's just not meaningful now-days. Companies spend marketing dollars because marketing dollars work.
Companies do tons of things that don't make financial sense. And metrics can paint 100 pictures, including the picture the advertiser wants to paint. Not to mention it's in the best interest of the marketing department of a company and the advertising liaison within the company to continue spending money in advertising whether it works or not, if they want to have a job...
You're both right, _and_ wrong, because people, firms, and their respective behaviors vary a ton. Some marketing teams are great at measuring the effect of their ad spend. Some are not. It depends on the specific circumstances and the specific humans involved.
I'd be interested in an argument over whether more marketers are competent versus not, but any argument that presupposes uniformity among marketers is just silly.
I've worked in the field and have been closely involved in online advertising spending and you're way overstating this. Confusion, misdirection, dodgy attribution, questionable ROI calculations and outright fraud are rampant.
Furthermore I'd say most people with deep knowledge of the field (assuming they don't have a vested interest in arguing otherwise) would agree in a heartbeat.
Furthermore I'd say most people with deep knowledge of the field (assuming they don't have a vested interest in arguing otherwise) would agree in a heartbeat.
I don't know if this rhetorical device has a name, but basically saying "and other smart people would agree with me unless they had a sneaky reason not to" doesn't seem like supportive evidence of your point.. (... and I suspect most people would agree in a heartbeat.. sorry! ;-))
Marketing dollars work, and bidding for ad placement is competitive. The field is made of clever people that optimize it. However I think it's dangerous to believe that advertising is "numerical" or metrics can fully predict ROI of advertising - the same way subprime mortgages weren't numerical, and the same way a population mortality graph cannot predict coronavirus.
A sudden drop in revenue may adjust the economy of bidding and show a potential bubble. The tiny budgets and one click campaigns (with platforms inventing unique metrics & targeting woo) in social media marketing compared to traditional marketing (huge barrier to entry) feel like penny stocks vs traditional stocks. You can easily mislead individuals and tiny businesses.
I've fought to bring all those things to any marketing effort I've been involved with and have all but literally laughed out of the room. From my vantage point at least, the average marketing effort is "We spent all our budget, good job us."
ah but how do you really know if any of those numbers are causal? marketers need to account for multi-touch attribution, if a customer sees an ad on one platform and converts on another, or if they do it ten minutes outside of your conversion window.
there certainly are a lot of numbers in adtech and marketing. whether or not those actually relate to causal impact, across the industry, is not definitively answered. very few players (on the supply and demand side) have the scale and ability to properly do incrementality testing.
personally, i think people don't want to know the real results. if the numbers say it's not broken, why risk your job?
google and facebook are not "most players" -- they own walled gardens for measurement, it's much harder to do measurement on open web auction placements.
the google page you linked also says, "you won't be able to continue using this model if your data drops below 10,000 clicks on Google Search or below 400 conversions for the conversion action within 30 days." depends on what your market/CTA is, but a lot of SMB likely don't hit these thresholds. similarly with FB, my understanding is that you have to go through an account rep to set it up and that the minimum spend is fairly high to qualify.
i think that these measurements are possible to do with a reasonable level of certainty, but they require a particular set of circumstances to pull off.
Those are real concerns that I have no insight on if they are accounted for. I know that they can be accounted for and have been. TV and newspaper ads have been doing it for years where for obvious reasons they can't track where or when you saw the ad. McDonald's runs ads on those platforms anyway.
yeah you can try, for print/OTT the most common way to estimate lift is with DMA segmentation, compare lift in the DMA's which saw the ad versus the DMA's which didn't. but how do you pick the right DMA's to pair, etc. it's hard and i think most people don't do it right; again, it requires very large n to do correctly, which requires very large budgets.
mcdonalds is actually one of the savvier players here, they know that it's hard to quantify brand advertising if you only go off in-store purchases, so they spent very heavily to promote their app and develop a consumer-brand relationship there. now, if you see a mcdonalds ad on youtube, they can (try to) match your youtube ad impression to a purchase done through the app / credit card / other PII.
> You might not like marketing, but it's silly for the conclusion to be "thus, the entire field is made of people who don't know what they are doing".
It's not silly. Personally, I believe just that. Just because marketers use "conversion rates, A/B tests, attribution, and a lot of other techniques", doesn't mean they actually "calculate the ROI of advertising". They may be - and I believe are - mostly bullshitting themselves. Attribution is a hard problem. Doing an A/B test correctly is a specialized skill that requires some understanding of statistics most people in the industry don't have. And even the tools don't help, as evidenced by the famous case of Optimizely designing their product in a way that made people do A/B tests wrong - and in the exactly wrong way that made them feel Optimizely is helping them[0].
You can't seriously claim that all these small companies are hiring top STEM grads to trace ad spend and verify the work of top STEM grads working in small ad agencies.
You're both right. Marketing dollars work, but there's also a lot of wasted spend.
Many big campaigns are just brand awareness, or are poorly implemented with lots of supply-chain and measurement overhead competing for the cheapest impressions. Video content is increasing and leading to an oversupply of inventory. There's competition from connected TV and streaming services. Privacy regulations are affecting targeting and measurement.
A lot of budgets are also just paused in response to consumer demand, with uncertainty around the economy and shifting strategies to conserve cash and move to more efficient ads.
I have seen a lot of shoddy statistics used by ad people to justify the necessity of ad people. I would trust a random engineer over the ad team for this task purely as a matter of incentives.
So what is your experience in the business? I do not have any personal experience but I know plenty of people who work or have worked in adtech (e.g. ad words optimization consultants, ad agencies, affiliates who buy adwords) and from their stories I would say you overestimate the ad industry.
I also know of several (3 that I can think of on top of my head) companies who went bankrupt from buying inefficient ads.
There are countries, this may or may not include the USA, please forgive my ignorance, where only sellers of "essential" goods/services and their suppliers have been allowed to operate during lockdown.
During this time what is the motivation for companies to spend on internet advertising for "non-essential" goods/services.
The longer consumers are given to adapt to a lifestyle of purchasing only "essential" goods/services, spending more time with family, cooking for themselves, staying local, enjoying simpler, less expensive pleasures and leaving a lighter environmental footprint, how susceptible will they be, in the long-term, to internet advertising that aims to motivate them to purchase non-essential goods/services.
Perhaps it is only temporary, but lockdowns are providing a paradigm shift away from internet advertising and toward increased non-commercial use of the internet.
Those who advocate web advertising as necessary in order to support a functioning internet may have to change their arguments in the event that the internet does not become "useless" as advertising spend decreases.
You describe it as if people are enjoying the experience. People around me are desperate to get out of the house, have some genuine human interaction, get their jobs back, maybe go to a bar or restaurant with some friends, go on a date, etc etc etc. And you can still get random stuff on amazon. And I dont know what " simpler, less expensive pleasures" you are referring to, but people are spending way more time on Netflix and YouTube. Cooking is more expensive because food delivery is expensive, you cant go to a hobby store, and so on. For most people this is hell and they can't wait for it to end - if anything I can see there being an overreaction to the crisis ending where people go out more and eat out more and so on
Depends on where you are. I've got to pay an extra 8 to 18 bucks a shipment to get things shipped via instacart or whatever, and nothing is ever in stock. Things I stocked up on are cheaper, otherwise I'm overpaying for all delivered groceries here in New York. Parts of the country hit by the pandemic are not having a fun time. Everything is more expensive
If you or people in your household aren't immunocompromised or in high-risk groups, you can still put your gloves and mask on and go get groceries. I live in NYC and can assure you that that is still an option. It's not totally risk-free, but the fact that stores are letting fewer people in at a time definitely helps mitigate the risk a lot.
If you are at-risk, there are huge groups doing mutual aid all across the city on a volunteer basis that are more than happy to do grocery runs for you. I'm in a slack group for Bed Stuy and I am seeing requests come in and get delivered all day long.
The idea that you need to rely on SV companies like Amazon or Instacart to bring you groceries is madness.
There was a "big reset" in 2008-2009 in affiliate marketing. Many small networks did go under, but spending has quickly increased to previous levels and beyond.
Most of that traffic is trash, yet companies still pay a lot for it.
A similar situation happened on Google Search, I believe.
It's a prisoners dilemma of sorts: if one company reduces ad spend the others arguably benefit, and the only way to sustain lower rates is if every company in an industry agrees to reduce ad spend. When things return to normal, that dynamic won't go away
I really don't think ads have a significant impact at all. How much is your buying affected by ads, really? Do you really buy a different eg. toothpaste rather than the one you typically get due to ads or because it's some percent off this time and it's also just okay toothpaste?
I bought a Casper because I needed a new mattress, and I was already aware (thanks to ads they ran incessantly on my favorite podcasts) that there was a company with a quick and simple solution to my problem. I did a few minutes of research to verify that people actually liked the product, then I bought one. Yes, in the few minutes I spent doing my due diligence, I found a ton of other companies that were also selling foam mattresses over the internet, and many of them were cheaper. But the quality and wide distribution of Casper's marketing suggested they were a real company with substantial resources, and would likely be around for a while to support the product, whereas the other companies seemed like much smaller operations.
I have certainly switched brands or variants of laundry detergent, toothpaste, deodorant, etc. because I saw an ad that let me know there was something "better" to try out.
The common denominator here is that these are products I don't care that much about and am not going to invest that much time in researching. I don't really want to spend much time thinking about mattresses or toothpaste, and so I'm perfectly willing to rely on advertising as a passive way of getting information about what's available.
On the other hand - I would never buy a smartphone, or a laptop, or a car from an advertisement, because these are things I'm passionate about and I already know the market and what fits my requirements.
Other than generic store brands, I haven't seen a toothpaste brand for sale that didn't advertise, so it isn't a really a fair or informative question.
I don't see a point except "everybody is doing it". While I don't agree with the person you are responding to, I don't think this is really evidence to the contrary or says anything much about the value of advertising.
Why do you think only brands with advertising make it on the store shelf?
Or why doesn't one of the marketed brands stop the advertising? If it doesn't affect sales, it's a useless expense, and any profit maximizing entity would cut it.
To me, the obvious answer is that advertising does work. Without it people don't by your product that much, and you get replaced on the store shelves by brands that produce sales.
Also note that the store brands are being advertised when the store markets itself. They're not unadvertised.
Google won the search engine market because it was objectively better and thus spread through word of mouth. The first time I saw Google run actual ads was when they pushed Chrome hard.
Facebook also spread mostly through word of mouth and only started doing ads when its public image deteriorated.
(Side-note: I'm in Germany, so this is about German ad campaigns. Also I have had adblockers for a long time, so when I say "they run ads", I mostly mean TV, print and billboards.)
You just described two companies that became the ad channels, so they certainly are a bit of an exception. Even Apple, who has the most word-of-mouth viral product line in all history, used advertisements from the beginning.
Tesla might not have advertisements on TV or radio, but it is not a coincidence that luxury malls have prime parking dedicated to Tesla chargers, that they have prominent show rooms and that their CEO is always getting in the news.
Not really. There could be multiple possible reasons why everyone is advertising. Everyone buying ads does not necessarily prove that ads work. I personally think they do, but that is not any proof.
That's interesting. You could imagine these kind of brands can make a name for themselves by not participating in the vulgar ad rat race, and that would appeal to the sophisticated target group.
Then again, when I google tom's of maine advertising, I get many hits saying the opposite, like
Most of those brands are owned by larger companies now. Tom's is primarily owned by Comgate-Palmolive. Jason is part of Hain-Celestial.
I doubt it's financially feasible to advertise on TV for the sales they expect in their niche. I'm not sure if it's the best way to reach people interested in natural toothpaste. I don't know whether consumers would think they stand out for not advertising, but it's possible that some customers prefer a a less known brand for some sort of feeling of exclusivity.
Well there’s your comparison. The store brands are chemically basically identical to the brand names. But their market share is relatively low. So the advertising must do something.
I didn't make the claim it didn't. I was just reacting to that particular rhetorical question.
On this subject, though, there is more at play than just advertising. First is availability; smaller stores won't have a private label option available at all, so some chink of the market is not open to them.
Second is quality; this is not as much an issue with OTC pharmaceuticals since it's all about the active ingredient, but for products where more than just the active ingredient matters (like flavor or consistency) there is sometimes a quality difference. There definitely is with food.
That said, I frequently buy store brands over name brands. I also buy some "name brands" that I have never seen an advertisement for.
No idea - I haven’t seen a toithpaste advert since the 90s. The only one I remember is aqua fresh, who had a jingle.
That was in the days when I did watch adverts.
I certainly do see adverts nowadays - when I take the tube at Euston for example. Sometimes I seek adverts out (Christmas). No doubt there’s some product placement too, but I can’t think of any that is toothpaste.
I have used other toothpaste on occasion (hotels etc), but I stick with Colgate as the taste is acceptable and I’ve used it for many many years. Why would I change?
Doesn't Google have millions of dollars in cash on hand. Perhaps it could pay YouTube content creators.
Google sells ad sales services utilising, in part, data collected on YouTube visitors.
An old saw amongst internet marketers was that "traffic" was the single most metric behind the financial success of any website. That idea only makes sense if the plan is to sell online ads or, in Google's case, provide online ad sales services. In lockdown, arguably the best "business plan" for a website is to sell essential goods/services.
What consumers might be reminded or become aware of during lockdown is that the internet, including the web, still continuses to work without any online ads. Ad buyers might not be buying onlne ads, but consumers are still paying for home internet access. Lo and behold, even when online ads are diminished, creative and generous people still create content and use the internet to share it.
> Doesn't Google have millions of dollars in cash on hand.
Well, millions with a “b”.
> Perhaps it could pay YouTube content creators.
It...does.
> What consumers might become aware of during lockdown is that the internet, including the web, still continuses to work without any online ads.
It doesn't work without a revenue stream for the online service providers, whether that's ads (regular, “free” YouTube) or membership fees (YouTube Premium).
The long term danger for Google and others is when lots of companies realize they probably didn’t need to make all that spend in the first place.
Ad spending is an arms race and Google has very deliberately set it up so that the only way to succeed on their near-monopoly platform is to out-spend your competitors who are also trying to do the same to you. But it’s a zero sum game the end state of which is Google captures all of your profits while you scramble to cut costs in a race to the bottom.
The only way to win is for everyone to agree as a society that advertising is harmful, and have nobody play. Enforcing that is difficult, but I think it's the right direction.
That's very extreme. To solve the problem of capturing all profit, society just needs to agree some k so that all ad bidders only bid so much as would give them ROI of 1+k, instead of bidding all the way down to ROI of 1.
It’s not extreme at all. Ad people justify what they do as informing the public of new products. So let ads be regulated to plain black text on a white background to be shown only on ad pages that people must specifically visit, and we’ll see the truth of that assessment.
The real truth of advertising is that it is engineered to exploit flaws in the human psyche to hack a human into acting against their own best interests. To buy a product they don’t need, or to vote for a candidate that will harm them. It is toxic, and those who create it and distribute it are toxic.
The whole advertising industry is imploding during this pandemic. I mean, it was falling apart before with privacy regulations and browsers fighting an industry that put all their eggs in the "personalized targeting" bucket, but performance is exceptionally bad now.
It kind of makes sense. There are ads for products you can't buy at stores that are closed, for cars you won't need to commute with, insurance you're already not using, other goods that won't ship for a month, and small gadgets that are totally out of stock; and that's assuming the person viewing the ad isn't avoiding spending due to financial risks.
If ads aren't converting viewers into customers, it doesn't matter if there are 2x or 20x more viewers than there were before, the ad placements are just worth less.
Local big-city paper ran several days with virtually no ads. Sport and Entertainment sections still carry none, though a few are appearing in the news and. business pages. And of course, obituaries -- or as they're called in the biz, "former subscriber appreciations".
Even the Sunday edition inserts were reduced to a single druggist's circular.
Even with increased eyeballs, ad buys are likely down and both business and people are avoiding all possible expenditure.
Lately I've been seeing a lot of (allegedly) dropshipping advertisements for "home gym" equipment, from "brands"/"stores" with no recognition.
Sure I'll buy this from you. Especially something that's heavy and from an ad teaming with jpeg artifacts and a non-local currency. I'm sure I won't pay an arm and a leg for shipping and I'll have no issues with a brand that has 3 posts on instagram.
I work in DS for a car insurance company, from the inside the returning of premium seems more of a 'pr goodwill' type of thing than anything else. As soon as one company did it, they sort of all wanted to follow suit in order to preserve optics.
There really isn't a limit to profits such as, 'we can only make $500 off of this policy anything over that we would have to refund'
So I am not an actuary so I'm not super familiar with all the rules, but i believe there isn't a hard and fast profit rule for auto insurance. Now that being said, a lot of the times we use the observed loss ratio as rational for changes to plans so if we were 'too profitable' i would imagine it would open us up to a lot more scrutiny from the DOIs.
Apparently car insurance companies are regulated in the sense that they can only charge based on the risk they are taking. since accidents are down, they might be charging too much and have to refund. So I guess profit margins are more or less constant.
That doesn't however stop you from acquiring more customers and increasing absolute profit.
This pretty of close, but a little off. You are correct that they are heavily regulated because auto insurance is mandated by law, but mainly pertains to what they are allowed to charge for. In the US, each state has a DOI that checks over models that car insurance companies use to charge people. There are a lot of rules about what can and can not be rated on. T̶h̶e̶r̶e̶ i̶s̶n̶t̶ r̶e̶a̶l̶l̶y̶ a̶ l̶e̶v̶e̶r̶ f̶o̶r̶ 'I̶ w̶a̶n̶t̶ t̶h̶i̶s̶ m̶u̶c̶h̶ p̶r̶o̶f̶i̶t̶' o̶t̶h̶e̶r̶ t̶h̶a̶n̶ t̶h̶e̶ b̶a̶s̶e̶ r̶a̶t̶e̶ t̶h̶e̶y̶ c̶h̶a̶r̶g̶e̶. Edit: (The comment below me is correct. I was getting a little hand-wavy. In general every part of a insurance plan will be scrutinized and has to be well supported. Insurance companies need to justify why there is a surcharge for some characteristic of a policy, this is what stops companies from just raking in money) They have to make an argument to the DOIs for why their base rate is what it is, so they cant really increase it for no reason.
The other comment in response about loss ratio is correct
Close, but not quite. Most states have a statute which says "rates shall not be inadequate or excessive". Pretty much all rate filings I've seen include a return on equity (ROE) in their analysis, and states review that in light of above statute.
States have pretty broad powers and I could see them forcing a disgorgement if they felt so inclined.
Source: I was a state insurance regulator for the Alaska Division of Insurance for a few years
since you said you were a regulator, hope you don't mind another question.
This model seems to be doing a fairly good job keeping auto insurance costs under control. Is this regulatory model also being applied to health insurance ?
If yes, why isn't it controlling healthcare costs ?
I focused on property & casualty but yes, the statute usually applies to health insurance, and I think the ACA further codified it as a requirement.
While I haven't done a deep dive recently, I doubt health insurance administrative expenses and profit are the main driving factor in health insurance costs. Losses (utilization multiplied by price) are the main driving force. You can look up rate reviews at https://ratereview.healthcare.gov/ and probably view the entire filings on the state DOI website, altho these filings are usually not really as accessible as they should be.
Will let the parent reply but at a high level (at least for comprehensive insurance) there is a) a fairly competitive market (and comparison shopping is possible) for car repairs and b) a limit to the cost of a repair (the value of a new comparable car) that we don't / won't place on human lives.
I recall getting partial refunds from health insurance for a few years after the ACA was first enacted due to regulations about how much they can charge.
Yep, that's about it. Or even worse, from the carrier's POV, regulators would take the higher profits from this year to regulate rates for the future (carriers file their target "loss ratios" with states, and if it deviates substantially, prices have to be adjusted).
The California DOI is requiring that companies issue some sort of "reasonable" refund, which has to be justified to the department in some way. Other states will likely do something similar.
I see it as an opportunity for smaller businesses to be noticed. People will check stuff online and might notice your brand... Though yeah you would have to stand out to be remembered.
It doesn't even have to be advertising in newspapers.
I live a block away from a shopping complex; the "anchor store" is a chain grocery but there are other businesses ranging from restaurants, drycleaners, a smoke shop, an alcohol store, and so forth.
There is a local movie theater in this complex. It is obviously shuttered due to COVID19; no audience means no movies means no popcorn, &c. So their marquee "should" be blank or say "Closed". Instead, they are using their road-side marquee to advertise who in the complex is opened for take-out.
I don't know if this is out of "solidarity" or if they're getting a trickle of money for an otherwise unused resource, but I'm fine about it either way.
> ...one in four media buyers and brands have paused all advertising for the first half of 2020, and a further 46% have adjusted their spending downwards
> Digital ad spending is down by a third, according to the IAB — a slightly less painful drop than the traditional media’s 39% cut
Traffic is up but ad spending is down more than the traffic increase.
if no one is shopping because they're all cutting back on non-essential spending, brand advertising is useless. You'd want to do the brand advertising right at the cusp of recovery so that your brand is on the minds of shoppers when they finally get back to work and have money to spend.
Most executives are very short term thinkers and thus while your logic makes sense it’s generally not how most people think. They need cash now so they cut first and think later.
You’re right that some smart execs will run into the fire as everyone is fleeing, buying up cheap adverts for a long term investment. There are some signs of this with a few companies seemingly increasing spend to take advantage of the cheap prices. Purely anecdotally I noticed a lot more adverts from Scott’s on lawn care products. Their pitch is basically “hey so the lawn care guy is on lockdown... go to our site and we’ll ship you fertilizer and tell you how to apply it.”
Cutting non-performance marketing spend like brand frees up cash they need to stay afloat. It’s short term thinking by necessity.
The execs running into the fire with ad spend to take advantage aren’t any smarter than the rest, just better positioned for the pandemic. I doubt virtually any of them prepared or planned for this scenario.
Though from my experience there’ll be lot of companies out there cutting short cycle high ROAS campaigns, throwing the baby out with the bath water.
Nobody prepared for this pandemic. However smart executives have prepared for something because every few years something unusual happens and having a flexible plan to work with makes you come out better than your competitors in the end.
Because it's apparently hard for the people writing the lockdown orders to differentiate between a solo lawn guy or gardener, and a four-dudes-in-one-pickup lawn crew.
well there might be risk for the guy traveling from his house to yours. Also there may be other reasons why they think people can't have the lawn guy come by but they think it might not be nice to say, like people laid off still want to keep their lawn looking good but don't want to pay for a guy to come do it.
Some states are looking at easing restrictions on lawncare/landscaping/etc.
To all the folks saying "4 guys in a truck is low-risk" that's only true if they're the same 4 guys every time and they're not all living with other people... for instance if one lives with a nurse and another with a nursing-home health aide, then, well, not so great, huh.
> In terms of ad spend reduction, How would this compare to regular media advertising spend (TV etc.) ?
TV as deals are often worked out O(months) in advance. I expect they've seen drops in bookings, but you won't see as agile of a reaction to the pandemic in Television.
Even though the deals were worked out, unless the money has already changed hands, I'm betting all the terms are up for renegotiation in exigent circumstances like these. I doubt it's in the interest of the broadcasters to stick it to their customers in these times, if they want their customers to stay alive.
> wouldn't that lead to a higher ROI when people eventually spend ?
There is an opportunity now to invest and come out ahead in the long run. Most companies are conserving and cutting back right now, given the uncertainty.
Yep, many strong companies in competitive niches have become new leaders of the pack when they have combined a financially privileged position with marketing spend in times when others are cutting back.
No, once people have time to really look around they discover many of the channels they were subscribing to are not that great. They them move their viewing to more and other channels.
Also I noticed a number of the youtube channels I use to watch because they have useful information and I was learning from them have now reached the end of their knowledge. Thy are now posting fluff to try and get me to keep coming back, but I don't want to waste my time watching a 30 minute video to get 5 minutes of useful information.
One channel I watch use to only post about 1 hour long videos, now they have cut back and often only post a 5-7 minute video so I keep coming back. One the other hand another channel used to and still posts 1-2 hour long video, I don't bother going there anymore. The host is smart, but he takes too long to get to the point of the video, I have other uses of my time.
> wouldn't that lead to a higher ROI when people eventually spend
That will depend on whether people will have that money to spend economy bounces back. I am not optimistic, restaurants or hospitality industry are going to suffer for a long time.
And Youtube ads are sold upon delivery, I don't think they will be retrospective revenue share, which is impossible (the conversion is intractable).
> What about the massive increase in views from people being stuck at home ? wouldn't that lead to a higher ROI when people eventually spend ?
Not when you're paying per impression? The way to think of this is good old supply and demand. There is a lot more supply of ad slots, and a general decrease in demand. Both of these directly mean lower ad rates.
> What about the massive increase in views from people being stuck at home ? wouldn't that lead to a higher ROI when people eventually spend ?
That would lead to lower ROI as operating costs are increased to serve those extra users. Sure, with more users they'll serve more ads, but as total spend by advertisers is shrinking those ads will go off at bargain prices, it's simple math.
Maaaybe there's a longer window for brand awareness advertising, but for advertising directed at clickthroughs (most retargeting), advertising that doesn't end in a sale is a wasted ad.
Nobody really knows for sure where the economy is headed when we enter the sorta-normal-again phase.
Anything is possible. It might be another Great Depression that takes years to recover from. Or maybe once this external force (quarantine) is removed, things will mostly bounce back.
So those advertising dollars might have a good ROI or they might not. At a time when revenue is down (even if just temporarily) and some companies are laying off employees, it doesn't make a lot of sense to spend money on something that might or might not be worthwhile.
Well, we now know it's not going to get to normal for a while.
France has just announced extending the lockdown one full month. UK has just announced they won't end the lockdown in the coming weeks, with no dates formally given (it was expiring today).
I agree we aren't ready to even start the process of getting back to quasi-normal. But the question was about a long-term advertising strategy for "when people eventually spend".
I'm saying that "when" isn't a given; instead, it's an "if". Companies (whose cash flow just tried up) don't want to spend on "if".
> The whole advertising industry is imploding during this pandemic. I mean, it was falling apart before with privacy regulations and browsers fighting an industry that put all their eggs in the "personalized targeting" bucket, but performance is exceptionally bad now.
There's no long term risk to google and other ad exchanges because the advertisers are in a prisoners dilemma.
If the advertisers collude or trust that the competitors won't increases ad spend, the relative market share stays the same and all companies participating enjoy increased margins.
The first company to break gains market share, so as a result they all "overspend" and google is the only one that benefits.
The worst part is the cost of google's margin is baked into product pricing, so the end result is we pay more to have the companies compete to advertise to us.
OR ads aren't that effective in the first place and the whole industry is a house of cards propped up by middleman making their fat margins convincing people ads are necessary...
I've noticed HN often has two opinions about advertising depending on the day of the week:
1) It's an unchecked, all-powerful evil, making people buy or believe in things they don't want or need by hoarding their data
or
2) It's a giant ineffective scam that stupid companies who aren't led by engineers waste VC money on
The two are diametrically opposed, yet, I've seen the same person argue #1 on Monday when it fits the narrative, and then on Tuesday start arguing #2--blissfully unaware of how both cannot be true at the same time.
Could it be, that both 1 and 2 are wrong, and that advertising spend is simply reduced during recessions in reaction to the reduction in spending by consumers? Why pay money to acquire customers when the customers aren't willing to spend money on new products?
Suppose that if you're peddling cheap junk and snake oil, advertising is effective, because nobody will have heard of your product by word of mouth (no one would recommend it and previous victims are ashamed to admit being suckered), but if you spam enough people you'll reach enough suckers to exceed the advertising expense.
But if you're peddling a popular and quality product, everyone has already heard of it and additional advertising has low marginal utility because you were going to get most of the sales anyway.
This furthermore doesn't get you out of the prisoner's dilemma, because even if buying advertising is only break-even rather than profitable, your competitor is doing it so you have to do it too or they gain a volume advantage over you and use that to kill you on unit pricing. But then you all do it and all that happens is that everyone pays money to cancel each other out.
I appreciate the attempt at reconciling these this contradiction but I don't think it holds up.
For one, if you accept that advertising can sell "cheap junk" or "snake oil" then you've accepted that advertising can sell something. That could just as easily be a useful product no one has heard of so the issue isn't the advertising, it's what's being sold and advertising is effective (which invalidates (2)).
For another, you use the example of a product "everyone has already heard of". You could point to something like Coca-Cola here. But this argument has two problems:
1. There are variations companies make to keep their product "fresh". Think Vanilla Coke, Cherry Coke, Coke Zero (or whatever the current form is) and so on. By virtue of them being new, potential customers won't have heard of them and advertising solves that problem; and
2. A lot of advertising isn't about direct customer conversion but "brand lift". Now companies have dreamed of the ability to accurately measure the brand lift of advertising spend but it hasn't materialized yet.
This is also why common comments here like "I don't ever click on an ad" don't really mean anything. Now you can argue that the ability to make you desire something you don't need is "evil", which is a reasonable argument to have. I think there are cases where this is true, such as advertising to children, and these should be restricted as some countries have done.
> For one, if you accept that advertising can sell "cheap junk" or "snake oil" then you've accepted that advertising can sell something. That could just as easily be a useful product no one has heard of so the issue isn't the advertising, it's what's being sold and advertising is effective (which invalidates (2)).
It can sell something unknown, because then the advertising makes it sound good, they don't know anything else about it, and they wouldn't have heard of it otherwise.
Which is the opposite of what's happening in case 2 when the product being advertised is well known. It's not causing you to hear about it for the first time and if the product is low quality then the advertising is less able to overcome your existing negative impression of it than for something you've never heard of.
> There are variations companies make to keep their product "fresh". Think Vanilla Coke, Cherry Coke, Coke Zero (or whatever the current form is) and so on. By virtue of them being new, potential customers won't have heard of them and advertising solves that problem
This doesn't really explain all the ads for Coke Classic, or for that matter why so much advertising even for new products emphasizes characteristics that are either meaningless or unrelated to the product. There isn't really any information content in telling the customer that a new cola is "refreshing" or showing random people dancing.
> A lot of advertising isn't about direct customer conversion but "brand lift". Now companies have dreamed of the ability to accurately measure the brand lift of advertising spend but it hasn't materialized yet.
"Brand lift" is the prisoner's dilemma thing. When everybody does it they just cancel each other out.
The reality of advertisement for established products is that they need to do it to maintain good will from the media. For example, in the aftermath of the Deepwater Horizon oil spill in 2010, BP spent billions of dollars in advertisement in all kinds of media. It became very difficult for the media to be too harsh on BP, since in the midsts of the Great Recession, they were one or the largest advertisers. Similarly it is very difficult for the media to say bad things about Coke or the Big automakers when so much of their revenue comes from these big accounts.
Another example (this one not in advertisement) is the situation of Bloomberg. They have one of the largest financial journalism organizations and, AT THE SAME TIME, they sell overvalued software to the largest financial companies in the world. One can only guess what can happen to a financial company that stops paying the fees to Bloomberg. Even though there is no real threat (and most certainly this was never expressed by the company), every financial outlet wants to be on the good side of Bloomberg reporting. The conclusion is that having a journalist institution receiving money from companies that they are covering is a kind of moral hazard that very few people understand, unless you are part of the business.
Except, in the real world there's more than just A) unknown snake oil and B) high quality products with perfect awareness.
Your model only includes products on the narrows of each extreme. In the middle is the wide spectrum of most products...the ones that don't meet either description.
Even if you make the exact same product as a competitor, there is no prisoner's dilemma if you're targeting a different niche market to sell that product to. Perfect competition does not exist in the real world. The only thing that comes close might be a commodity like oil or water. But even water can be targeted to different segments of the market.
> Except, in the real world there's more than just A) unknown snake oil and B) high quality products with perfect awareness.
There doesn't have to not exist more than A and B. If A and B both exist then 1 and 2 are each true and the further existence of C and 3 don't change that.
Moreover, even if some additional classes exist, the two examples are still central and problematic, not least because they're more likely to represent a higher percentage of ad spending.
The first because advertising is the only way to sell crummy products, since the only way to get anyone to recommend it is to pay them to, so their incentives to use it are higher.
And the second because the existence of the prisoner's dilemma is what drives up the ad spend on both sides. If you're targeting a niche that no one else is then you buy a small amount of advertising, reach those customers, make your sales and are done. If you're locked in a prisoner's dilemma with a direct competitor, you spend a little so they spend a little so you spend a little more until you're all spending a huge amount. And the fact that you're selling Fords and they're selling Chevys and they're not completely identical products doesn't really matter when they're both still cars.
The presence of pure mercenary advertising increases the global noise floor, which increases the information asymmetry by decreasing the visibility of quality signals.
The irony is that Google sees itself as a company that increases access to information.
You know what that would look like in the ad space? Product testing, reviews, and endorsements. Something like "Verified by Google" (aka Wirecutter).
Instead, Google absolves itself of responsibility via algorithms, steered by marketing folks in charge of their primary profit center.
And we're surprised by the corporate decisions they make?
What nice way of putting it. Google has indeed suppressed quality signals to the point you don't have to bother creating one. Making peoples homepage invisible was hard, some had to be hoarded into the walled gardens. Wait a few years then shut them down with very little effort.
I was naively surprised one time when I see quality writers shout down rating systems. Apparently making a popular quality product doesn't make scrutiny desirable.
Rating systems are universally garbage. They're thoroughly gamed and create their own shadow economy of paid reviews, spam, and bribes to take down negative reviews.
The baby was tossed with the bath water. There are countless possibilities to create a rating system (or a system that describes the qualities of an article) I have only seen a tiny number.
The shortest description of the thought is: The meta data is more important than the data.
Back when google indexed peoples websites the organic ranking wasn't bad at all. People wrote niche articles about original topics, if you searched for one you would find those blog postings. I was often amazed by how specific the content addressed what I was looking for.
How well it works depends on the type of rating. It should probably start with things so obvious they are hard to game. Even self rating could work, something like: professionally affiliated with the topic 0-5 in the range 2-5 you get to provide an url.
I liked parts of PICS3.
I could see a system where we run our own rating service and rate things with a mix of original and unoriginal qualities. You use the bookmark list it generates or enjoy the persons work then subscribe to their ratings and add weight to it. We make collections of such subscriptions and use them the same way. When visiting a page the url (or other identifier) is passed around and a rating is returned. Similarly, people you've subscribed to crawl around the web and we arrive at a set of pages you should probably visit. If there is crap in the list a single click reduces weight on everything that endorses it.
Another way both can be true is that many/most companies just post an ad because they need to to get started, but don't actually optimise how it works. You can easily confirm this by looking at some discussion boards about google ads, where people often ask how to fix a very bad / accidental ad placement decisions which burned through their whole budget.
On the other hand, there are companies with teams dedicated to make their ads as effective as possible and track/raise the ROI.
There's likely lots of companies even in between those extremes which don't even break even on the ads they pay for. (or don't know if they do or not) They may pull the ads and realise nothing changed.
They reached this status due to advertising, Its likely they could drop advertising for a while and coast along fine but eventually that brand recognition will start to drop.
There is also the fact that a lot of products are purchased not based on fixed needs but flexible wants. Maybe I haven't purchased a soft drink in a while and I don't think about it, an advert could make me think about it and make me want it again.
The parent comment was presenting one possible reason to explain the grandparent's observation. They were not trying to perfectly describe the real world, but only to point out that two seemingly conflicting points of view can be reconciled. I think the parent probably wrote their comment starting with the same thought as you: that the real world is more complex than a simply stated opinion.
Saying "your analysis is bad and wrong." comes off as dismissive and I think you should read the HN Guidelines.
> I just skip right to the comments where someone with a math degree itemizes every incorrect statement and then someone with an economics degree tells them why they are wrong about those.
Yeah. Link three.
> Anywhere else this is bad behavior
That's why anywhere else is boring and not conductive to useful discussions :).
Well, we are a collection of people with our own independent thoughts and feelings on subjects, so it shouldn't be a surprise that some people feel the opposite of others are a variety of subjects.
Though, to be honest, I don't think I've heard #2. I think any rational person understands that advertising has some degree of effectiveness. After all, many bright minds from a variety of hard sciences have spent decades of their lives, and extraordinary sums of money studying human behavior for the explicit purpose of selling more shit. Many of the largest companies in the world are advertising companies; before Google and Facebook there was the TV and Radio giants, who were massive, in spite of pretty serious regulations.
None of this would have happened if advertising wasn't effective. At some point in time, people would have realized it didn't work and spent their money elsewhere.
There are two big issues that I see:
1) More views have driven down bids for ad views. The ad industry is largely driven by companies bidding for views, so without a large influx of cash, the spike in views was going to depress ad impression prices.
2) Consumers have less discretionary money to spend, even if they wanted to, so the ROI on each view/click is going down.
Each of those alone would be cause for concern, but combined, they do pose a significant issue for Google, Facebook, and smaller content creators.
I sometimes say something vaguely like #2. And it doesn't conflict with #1. The argument is this:
- A lot of advertising is effective, and a lot the effectiveness boils down to lies, manipulation and general dishonesty.
- Ad attribution - i.e. tracing how much money spent on what advertising resulted in how much profit and when - is a hard problem. It's easy to make mistakes with it, and it's also easy to lie and not get caught.
- Most people involved aren't exactly experts in statistics. That's especially true for small businesses, which don't have money or institutional expertise to hire talent just to evaluate their ad spend.
- Which means people trust they aren't being bullshitted by the very industry that specializes in lies and manipulation.
I've seen this play out in real life myself; I vividly remember working next desk to social media marketers who were clueless at maths. They'd take the numbers and graphs from Facebook's panel, write up stories that made these numbers always sound like everything is going perfectly, and send such reports to the customers who were even more mathematically clueless, and thus incapable of verifying whether the numbers and the story presented add up.
The way I see it: some advertising is effective sometimes, but you don't know which one is effective and when, it's mighty hard to figure that out, and the advertisers have every incentive to confuse the issue for you.
(Note that they'll also happily confuse the issue for themselves, too. The industry consists of a lot of players building their products and services on top of each others' products and services; there's a lot of competition happening, and there's plenty of incentive to use the same advertising tactics within the industry as outside.)
I find myself generally unaffected by advertising and would normally fall into the "waste of money" camp, until I started hanging out more with non-engineering types. Seeing them made me realize A) advertising does work, at least for a critical mass of people, and B) advertising doesn't take away their ability to judge a product, no matter how well targeted it is. I've even found they have a superior ability to judge products and services than I do at times because they intuitively jive with the marketing in a way that my engineering brain doesn't (they can piece together subjective qualities about a product/service being marketed to them, and I just think "show me the specs and price." Both approaches have benefits and downsides).
Sometimes it isn't as nefarious as convincing people to buy a product they wouldn't normally buy, and simply just showing the right people that your product exists.
I find podcast advertising be very effective and targeted without being scammy. I would have never heard about Backblaze, Hover (instead of GoDaddy), Warby Parker, SquareSpace, Linode, Eero, or probably SquareTrade if it weren’t for podcast ads. I’ve used or recommended all of those services.
I also find Overcast (podcast player) ads very useful and have discovered a lot of great podcasts because of it. Marco Arment creates his own ad network so he could control both the content and he wouldn’t have any mystery meat binary blob advertising SDK.
I think a lot of people proudly claim that advertising doesn't work on them because an advertisement has never compelled them to go out and buy that product immediately. What they don't realize is that that isn't the goal of marketing at all. The goal is brand association. Charlie Munger famously says that 3/4 of all advertising works on pure Pavlovian conditioning.
What's interesting in that statement to me is that you don't consider the spec sheet to be advertising. Therefore, you feel that you're "unaffected" by it.
Thank you. The reality is that in 2020 the people buying the ads usually (not always, but more often than not) are expected to account for the return on investment. There’s a little bit of a holier than thou attitude on HN - but if you go deep enough and talk to the people responsible for these budgets, they aren’t stupid and what they are doing is very much scrutinized.
> if you go deep enough and talk to the people responsible for these budgets, they aren’t stupid and what they are doing is very much scrutinized
In my experience, it's not that they're stupid - but they have neither the required math skills, nor the visibility into the whole pipeline, to be able to correctly evaluate the RoI, so they trust their providers in the ad industry a lot. So the correctness of their calculations depends a lot on the virtue and honesty of people working in the industry specializing in lies and manipulation when placed in front of an easy opportunity to make extra profit by being dishonest.
I think you've intentionally been hyperbolic to make two nuanced positions sound like complete opposites.
Here's my take on the two sides here:
1) It makes me uncomfortable that companies can track me online and use info that to target ads (or whatever their business model thinks it needs my info for). There are things about me like my location, identity and politics that are personal and I want to be in control of, not tokens to be sold.
2) Online advertising returns much less than $1 in profit for every $1 spent, so whats the point? Only big tech companies are benefiting from it. The fact that advertisers are pulling back during this economic contraction only proves this - if $1 in ad spending bought you >$1, they'd keep up their spending.
Not everyone will agree with me, but for me, both of those are true.
"Online advertising returns much less than $1 in profit for every $1 spent"
Are you saying (A) no single advertiser increases their profits by more than the amount spent on advertising, (B) that, in aggregate, the amount spent on advertising is less than the additional profit earned by all advertisers, or (C) something else?
It's unlikely that (A) is true.
It's possible that (B) is true but that any individual advertiser would be net harmed if they were to stop advertising (because they can't stop their competitors from advertising).
"The fact that advertisers are pulling back during this economic contraction only proves this - if $1 in ad spending bought you >$1, they'd keep up their spending."
It doesn't prove that. Perhaps they are pulling their spending because:
- they're not selling any more due to social distancing (theatre tickets? massages? dating services?)
- they're not selling any more due to supply constraints or inability to operate their business's physical locations
- the stuff they're selling is stuff people cut in a downturn
Just because a piece of advertising isn't worthwhile when no one can go out and many people have just lost their jobs, that doesn't mean it wasn't worthwhile before.
C. I think its impossible to prove that any given $1 of advertising earns back $1 in profit for any sufficiently complex advertiser.
Targeted ads for largely online companies: If your customer sees an advertisement on Facebook and YouTube, and sees a few sponsored search results on Bing, then opens an ad in an Amazon mobile app six months later and converts, which ad was effective? Which was priced right? Lets assume you can 100% correlate all of this activity. Can you justify spending $X on platform Y will return >$X?
Brand awareness ads for largely offline companies: Your products are largely sold at retail, and you are a large multinational company like Coca Cola or Nestle. Which of your ad campaigns this quarter drove sales? Can you justify spending $X on platform Y will return >$X?
It may be possible, but it's a hard problem. Are the people doing this calculation in your company competent in statistics, or are they just trusting what their ad management tools tell them?
We live in a consumption-driven society mostly driven by aspiration, not need. We are 'induced' into keeping up with the Joneses to a very great extent. This is not a conspiracy theory.
Much of ad spend is a waste because its effectiveness cannot be measured. Marketers will tell you "I would cut my budget in 1/2 no problem I just don't know which 1/2".
And some companies will spend ads on you from you're a kid until you're an adult hoping to lure you into a few purchases (Ford Trucks, BMW etc.).
Both are actually correct. The point of beeing ineffectice is price.. add pricing is so high for most searches/placements that it will cost you 100usd in adds to sell a product with 80usd in margin. Companies will then rationalise this, with an assumption that the “lifetime” value of the customer is > 100usd, or you are paying to gain marketshare etc etc.
It's even worse when it's the same person pushing contradictory narratives.
The exact same person will write 1 in one thread and 2 in another thread.
1. "Online ads are ineffective and don't work. Online ads are a waste of money".
2. "The russians bought Trump's election by spending $50K on facebook ads".
It's hypocrisy based on agenda.
You might have also noticed that when someone they disagree with gets censored, they claim "google/facebook/etc" are private companies. When someone they agree with gets censored, we cannot allow tech monopolies to drive public discourse.
There was a recent submission where france ruled that google must display and pay for news headlines. The same people saying "nobody has a right to google's platform since they are a private company" were vociferously defending france forcing google to carry news and pay for it. No doubt many of them were hypocritical news industry workers.
I think most people are uncomfortable to admit how effective advertising really is on every person, so as a result, they think up multiple reasons to protest its existence, even if they don’t always make sense as a whole. My opinion on this apparent contradiction is that some who say advertising research is dangerous also believe it is inherently ineffective — that the intrusive advertising methods used now are as helpful as general surface-level research on customers — but it’s the treasure trove of personal information that is dangerous to us all, as it is readily available for abuse.
To answer your last question. I work in adtech, sort of. One of the reasons you'd want to pay to acquire customers right now is firstly dependent on your product.
As an example, lets say your product has a conversion time of 6-12 months. If you strike right now and have the right content to keep people engaged over that time period while theyre in quarantine they'd be ready to "convert" right near the end of some of the most stringent quarantine restrictions.
If you don't spend, then you just burned an entire year's worth of leads in your funnel.
They aren’t so much concerned by “people buying what they don’t need” - hardy a major concern of most hackers - they’re concerned about invasive data tracking being used to target ads. So I think you’ve gotten the first one wrong. And there’s no contradiction with the second in that case.
Not sure if this is correct but my hypothesis is that the difference between those threads is that in
A. They are thinking of what they consider an average user (most likely stupid, blissfully unaware of tracking and how companies are controlling him) whilst using ad blockers themselves or relative strong measures to avoid tracking.
B. They are thinking of themselves as the customer to some extent and knowing that they don't ever click on ads as often, it's most likely wasted money.
Again, I am not completely sure but it feels like the person is thinking of different subject in A and B when analysing.
C. It could be that the plan is to make Google look evil in both cases. By robbing both you and companies out of their money and data.
- Advertising as a first-principle works, because our biology is amenable to familiarity.
sheer repetition ⇒ familiarity ⇒ positive bias ("things I know / like / trust / ...", common pattern)
There might be more to it, but that's enough, and proved enough times in many a scientific study afaik.
- Applying the technique to a real-world problem has varying levels of efficiency; whether it's the wrong solution or badly executed.
Heed this naive comparison: not all bridges are good, and some are scams. But there's no question whether building bridges is useful in the first place. The question is and forever will be, what should be the rules for making good enough bridges, safe enough?
Advertising as a domain and market is not a special snowflake in most regards. It's actually boringly common, dare I say predictable.
____
Where it gets tricky. Where first-principles aren't enough because complexity is at a whole other level: advertising is the primary revenue for a bunch of industries, most notably the press (the media) which is otherwise considered "the fourth pillar of democracy", i.e. that quality of information in a democracy is as necessary as government, congress, and justice, the 3 branches of the republic ideal form.
How do you reconcile that the biggest "influencers" of public opinion, the press, is itself mostly influenced financially by the most interest, biased, self-tauting side of the entire economy? Wherein not rational engineers, not sane financiers, not level-headed CEOs or even just Jane and John your co-workers next door have a voice, not even sales who know that lying and deceiving is not the way to build a sustainable business... but marketing, in other words those whose job is to create a Hollywood-fiction of fabled greatness... it's not lying, it never was, it's been elevated as fiction —see: artistic awards for the best ads, superbowl hype, and the actual real cinematographic value of some of that, hands down. Nevermind that the products are asking for real money, however.
And then we wonder why the media has become such a theatrical ongoing masterpiece of sensationalist storytelling. Well, lines were crossed.
Why infotainment has become such a norm that it is now capable of higher quality than "editorialized" (read: advertiser-leashed) newsrooms. “No, Jane, we can't say that. We'd lose ad money, you don't want us to fire people, do you?”
The sheer complexity of that makes me want to duck in quantum machine learning and call it a day on politics.
I don't have a perfect solution, I can only see red lines in law and a certain sense of ethics, like we value life, we should value information. In short, bug is in human code, thus fix as well.
Marketing is all powerful evil. Even if ads don't work.
Some companies are better than others. Instead of "buy my product" they teach consumers they look cool if they buy. We wouldn't be dealing with Apple's BS if people only cared about quality.
Google is a hundred-billion dollar company precisely because it allows advertisers to see how effective their cost per sale (or action) is, compared to TV or newspapers, where advertisers are flying blind.
Measuring the effectiveness of brand advertising on YouTube is more difficult that measuring TV/newspapers. TV and newspapers have higher repetition at an individual consumer level so the "which newspapers do you read?" or "which programs do you watch?" survey questions work. Additionally TV and newspapers have older audiences who are both more tolerant to ads and susceptible to brand advertising. YouTube is not particularly effective for CPA advertising so the technologies from other Google ad products are not that relevant.
This is actually untrue. Have you ever seen a survey in a YouTube ad, asking a question like "have you ever heard of Brand Z?" That's one of several mechanisms for measuring brand awareness lift, seeing the lift in recall over a control group.
Likewise, many advertisers aren't doing brand campaigns, they're doing direct response, that is, trying to get people to directly click to their site and convert.
Finally, advertisers on video sites tend to pay per "completed view" for some definition of completed view, usually at least a significant chunk of the video and not just the first few seconds before the skip button appears.
Why would you need a survey question to track YouTube habits? Google already has that data, why wouldn't they just correlate that to a future purchase you make?
Statistically reliable purchases studies are very challenging. People have multiple credit cards and sometimes pay cash. If you are buying a car you don't put it on the credit card. Additionally, you have multiple cookies/MAIDS that may or may not be associate with the same person/credit card. Even companies with Google or Facebook resources can't get this to work reliably. If it is a direct response advertiser, of course, you tell Google/Facebook that a purchase is made, but these advertisers are not the bulk of the market and many advertisers don't want to give Google that data.
Possibly true, although the ad industry has survived a number of significant transitions (print/radio/tv/digital/placement), plus 2 primary incarnations (direct & branding). Over the same time, the industry has gotten much more sophistication in measuring return on ad spend. All while growing by leaps and bounds.
I certainly conceded it's possible that your statement is true. I'm skeptical of most marketers claims. However, I have to acknowledge the scope of the deception if indeed it is a house of cards.
That's a lot of smart people wasting a lot of money in a lot of different ways over a century of the biggest growth phase experienced by civilization.
>Over the same time, the industry has gotten much more sophistication in measuring return on ad spend. All while growing by leaps and bounds.
The trick is, the ad industry people are the ones who design all the KPIs that determine the efficacy of ad campaigns. So there's a bit of a self-serving incentive there that could be degrading the quality of the information.
There is clearly some evidence that ad spending does help, particularly with building brand awareness and goosing demand. I think the jury is still out on how much and to what extent specific user tracking/targeting strategies work though.
I had a whole company that I sold to an FAANG that only existed because of Google Ads. It solved a very niche technical problem that you could never go and market on a billboard — the target customer was too niche. But with Google Ads I could find them Googling “How to do X to file type Y” and sell them my software right at that moment.
Ads really work. I have a hard time believing there's any company that put effort into having decent ads and found that they did nothing.
The only question is if they are fairly priced. It could be argued that they were overpriced due to over-funded companies overbidding on them trying to growth hack and bot traffic being mixed in.
There was an article written up about ebay and how they paid 20 million$ per year for that first google slot for certain keywords.
Then some consultant came to Ebay and proved, without a doubt that the ads don't work. So, they created a test: they removed the 20 million $ worth of ads for that top slot and watched the traffic afterwards, it was pretty much unchanged! It's because All those people that clicked on those ads, were going to come to ebay anyways, despite the ads, not because of the ads.
Advertisers aren't idiots, they measure the effectiveness of their ad dollars. If they couldn't show a positive ROI they wouldn't keep spending money on it.
I'm fairly confident many advertisers don't have a clue about the effectiveness of their ad spend. This isn't helped by all the dark patterns in the Adwords control panel, every new option they introduce is defaulted in their favour.
Considering how terrible almost everyone seems to be at measuring things generally, or at setting up the conditions for meaningful measurement, or getting buy-in for more effective measurements because they come at some cost and “what Jim’s been doing seems fine” (it absolutely is not) I’m skeptical that advertising folks are somehow much better at this than everyone else, and if they’re not a lot better then they’re still fairly bad.
Actually I always found it quite difficult to measure.
Mainly because selling B2B the person who clicked the ad is rarely the person who raises an order. I can use a proxy like instigating a download but that is far from perfect.
Not $100,000, but if you browse through some forums/subreddits/... about online ads, you'll see a lot of people who want to improve their ads and have no idea if their campaign worked at all in the last months/years. They don't have tracking and don't know how to implement it. There are easily $1000s spent that way by lots of companies which adds up anyway.
And there are also those "I spent $1k in one day by accident with no return, help!" posts.
No, because no one who wants to keep their job would say that.
But take a large advertiser like a Coca-Cola or Procter Gamble - they might run many thousands of ad campaigns a week across all sorts of venues. Their revenue is largely at retail, so there is no way to track directly from an ad campaign to a purchase.
How do you prove the return on any given ad dollar? You cant.
Advertising is effective as long as you have lots of VC money to compete with other competitors by overspending. It's far less effective if the company has to be profitable.
The future of ad revenue will depend on when the VC bubble will pop. As long as the interest rates stay 0%, it's not over yet.
Of course they're effective, how could you even imagine that they are not? All available evidence overwhelmingly demonstrates that they are highly effective, it is the fossil fuel that powers literally all popular media.
I know, it's bonkers that people hold this position when so many startups live and die by their customer acquisition rents.
Do you think startups like Casper and Blue Apron want to hundreds of dollars just to get a single person in the door to buy something and pray they stay for at least 6 months / don't return the thing just so they can hit their break-even point? Like if this was all a house of cards it would have collapsed by now since there are millions of eyes trying desperately to reduce the need for their ad spend.
So yeah, that quirky overproduced Doritos TV ad probably isn't doing all that much but for businesses that don't already have a critical mass of mindshare it's your lifeline.
It's definitely important for Doritos. Walk into a convenience store and you'll see a bazillion brands of chips, most of which are healthier or tastier than Doritos. Yet time and time again people go for the old faithful brands. You stop doing brand advertising, that dries up.
Blue Apron seems like a terrible example - their stock has collapsed by over 90% from IPO. And they were actually doing worse before the covid-19 crisis.
This is only true for established brands, selling products that don’t change, in saturated markets. Even then it’s only partially true, because the markets themselves are always changing (chances are at least somebody in the world drank a coke for the very first time today). It also doesn’t account for the fact that even if all those factors are truely static (or close enough), that product differentiation strategies can still be used successfully (which is again something you see coke doing a lot). That paradigm really only applies to a very specific type of advertising, under very specific market conditions, and doesn’t apply to the majority of the worlds advertisers.
That doesn't work for me. I don't generally buy products I see in ads or commercials because I think that a good product doesn't need advertising. I try to discover products myself and do my own research on them. Whether is about food, clothing, cars, art, books, computers or services. If I can't research it myself, I'd ask someone with more expertise.
The demand fell, supply went up dramatically and there's a new equilibrium.
Very few advertisers are actually in a true "prisoner's dilemma" in the sense that they're fighting tooth and nail in the same market as another company and parsing back advertising will cost them dramatic marketshare. First, a lot of demand is supply constrained - lysol is going to sell their wipes no matter what, so advertisers can easily defect. Secondly, advertisers may be locked in a competition broadly but not in a specific channel. Your youtube channel probably isn't your best ROI or its easy to cut back spend and just invest in your most performant channel - it's often not youtube for these companies.
You are referring to the game-theory model of advertisement spending; but when game-theoretic decisions are made stochastically over time, it becomes a congestion game[1]
In layman's terms (the wikipedia is a terrible layman's description) - a congestion game is one where a particular strategy gets less attractive the more people choose to.
Advertising spending, for example in the context of tobacco advertisements, is actually a pretty classic example of what the person you are replying to said though. You'll have to clarify what you mean by making decisions atochastically and how exactly this ends up a congestion game. If everyone else is advertising their cigarette brand, your optimal strategy is to advertise as well, which is not a congestion game. You just end up with a dominant strategy of "advertise" for a differentiated product, which means it is better for you to advertise no matter what. It can also go the other way in advertising though. For example if you sell some undifferentiated product like a commodity, no individual wants to advertise since driving demand for the commodity helps everyone in the market while you have to bear the cost.
I run a website that gets decent ad revenue (usually around $2,000/month) and so far month to date in April is down 54% versus the same day last month, and March was already down 14% from February. CPC for March was $0.60 but April is only $0.30 so far. Traffic, CTR, and fill rate haven’t changed, just drastically lower CPC.
YouTubers already don’t make a lot of money off Adsense. The shift is already happening with companies working with individual youtubers. An integrated ad from someone you like/trust/have a relationship with is orders of magnitude more effective than a typical YouTube ad.
Expect to YouTube to try and get a piece of this pie as well when there is a “integrated” ads apocalypse when YouTube changes its terms of service.
It’s expensive to store, process, and deliver all this video.
YouTube has been making money off advertisement to kids for years. Now that is being regulated.
I'm shocked YouTube hasn't cloned Patreon for video creators. YouTube needs a tip jar if the content creators are resorting to Patreon, and that was back when the getting was good.
The channel membership thing is YouTube's Patreon clone. But I don't know how far they've rolled it out yet, and it doesn't seem as flexible or popular with creators as Patreon. And the fact that it is tied to Youtube, and thus the same channel shutdown etc mechanisms, will be a big minus for many.
Case in point, after writing this I looked into it a bit more and it does a bunch of things I thought it didn't. Waaay to hidden and unattractive UI IMHO.
Referral/ discount codes seem a lot more effective at finding out if a specific advertisement is working and is paying off so advertisers can better purchase and configure ads. To some degree also the word sponsor has a lot better connotation than advertiser even though they are functionally almost the same thing.
Advertising to kids. Is there any good data on this? I've been wondering if it was truly an effective revenue stream beyond all the anecdotal evidence I hear quite often.
Short term this is all standard. The long term danger for Google and others is when lots of companies realize they probably didn’t need to make all that spend in the first place. That big “reset” is a new normal that advertising dollar driven tech companies will need to adjust to.