
How Zuck's Old TA Helped Facebook Master Mobile Ads - evilsimon
http://www.wired.com/2015/09/zucks-old-ta-helped-facebook-master-mobile-ads/
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danso
> In many ways, the story is unique to Facebook. Not every company is built to
> put a someone like Bosworth in charge of ad products.

As Steven Levy described it in his book "In the Plex", back when Google needed
a money-making scheme, their engineer Eric Veach unknowingly re-invented an
auction system that had been devised by a Nobel Prize-winning economist, as a
way to prevent automated bots from gaming the Adwords auction system:

> _Eric Veach particularly disliked one aspect of the Overture auction system:
> the fact that advertisers were bound to pay the amount they had bid, even if
> the next lowest bidder had offered significantly less. “That means that
> advertisers always have an incentive to lower their bids [in subsequent
> rounds],” he says. (This was known in the auction world as “bid shading.”)
> As an example, he would cite the case where an advertiser bid 50 cents and
> the next highest bidder offered only 40 cents. Clearly the high bidder would
> be unhappy, because the optimal bid was 41 cents, and the winner was stuck
> with paying nine cents too much. A cottage industry of software vendors had
> provided programs to automate bid shading on Overture, so winners would keep
> submitting slightly lower bids, and losers would edge up. “I wanted to avoid
> that cat-and-mouse game,” says Veach._

> _So Veach devised a different model: the winner of the auction wouldn’t be
> charged for the amount of his victorious bid but instead would pay a penny
> more than the runner-up bid. (Example: If Joe bids 10 cents a click, Alice
> bids 6, and Sue bids 2, Joe wins the top slot and pays 7. Alice is in the
> next slot, paying 3.) It was incredibly liberating because it eliminated the
> fear of “winner’s remorse,” where the high bidder in an auction feels
> suckered by paying too much. In the Google model, no one would feel like an
> idiot for paying a dollar a click when the competitor below them bought a
> slot on the same page, positioned just a few pixels lower than their ad, for
> only 10 cents a click. In that case, a winner would get the prime position
> for 11 cents._

Levy, Steven (2011-04-12). In The Plex (pp. 89-90). Simon & Schuster, Inc..
Kindle Edition.

[http://archive.wired.com/culture/culturereviews/magazine/17-...](http://archive.wired.com/culture/culturereviews/magazine/17-06/nep_googlenomics?currentPage=all)

[https://books.google.com/books?id=V1u1f8sv3k8C&lpg=PA406&ots...](https://books.google.com/books?id=V1u1f8sv3k8C&lpg=PA406&ots=BSqO6xhpfA&dq=google%20in%20the%20plex%20vickers&pg=PA89#v=snippet&q=nobel&f=false)

~~~
klochner
I'm a bit skeptical that he somehow managed not to stumble across the most
seminal result in auction theory [1] while devising the google system.

    
    
        [1] https://en.wikipedia.org/wiki/Revenue_equivalence

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workinads
I worked directly with Boz over many years at Facebook and found him to be
just a bully. Boz rarely takes the time to understand the nuances (unless you
can distill them down to an 8th grader's level) but is quick to form opinions.

I'm a little surprised that he hasn't left already. He's mostly checked out at
this point.

~~~
throwaway972
I also worked with him before I left FB a year ago and agree with this
completely. It's also generally incorrect to credit one single person with any
large-scale success. Many people worked hard on the ads product and
contributed meaningfully. I doubt that it would have gone significantly worse
without Boz.

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finkin1
What I found most interesting:

> "In other words, he (Bosworth) wants to show advertisers when an ad directly
> results in a sale—even if the sale happens inside a brick-and-mortar store.
> To do this, Facebook is working with companies who gather data about in-
> store purchases, including an outfit called Datalogix. These companies
> collect email addresses and phone numbers from buyers; using these unique
> identifiers—the email addresses and phone numbers people share with
> Facebook—Bosworth and team can match ads with purchases. They can do this
> not only with Facebook ads but with ads posted on other sites, thanks to
> Atlas, an ad-serving system Facebook purchased from Microsoft that lets
> businesses serve all sorts of ads across all sorts of sites."

It seems like there's this whole world of data consolidation companies I've
never heard of (like Datalogix) that have somehow managed to get retailers to
agree to sell them customer data and then they package it and wholesale it to
other companies like Facebook to help them better target ads and/or see the
results of their ads.

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mandeepj
It is worth sharing this old post here while we talk about facebook ads
[https://news.ycombinator.com/item?id=4312731](https://news.ycombinator.com/item?id=4312731)

Facebook and Google are running a big fraud using lot of bots to suck out your
dollars. I have used both the platforms to running digital ads. By now, I have
completely lost trust on digital advertising.

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rokhayakebe
_“We used to have a bunch (25) of different formats for e-commerce, but one of
them was clearly performing the best, so we eliminated the other ones. Why
would I let someone buy something that I know wouldn’t perform as well as the
other ones?”_

The focus it must take to make such a decision. Applauds.

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hellbanTHIS
I'd like to know if their ads are really successful at creating new customers
or if Facebook users are like my Grandma and just click everything.

