
We Have No Idea If Online Ads Work - hownottowrite
http://www.slate.com/articles/technology/technology/2014/06/online_advertising_effectiveness_for_large_brands_online_ads_may_be_worthless.single.html
======
michh
I remember reading the tobacco industry was actually secretly grateful when
the EU banned them from advertising.

As I remember it, they were in a stale-mate. The market was pretty much
divided up. Most people were loyal to their brand and that was that. Despite
that, they were spending a massive amount of money on advertising even though
their market shares remained unchanged.

The reason was that if one of them stopped funnelling massive amounts of cash
into advertising, they would lose a big chunk of their market share to the
others. So they were all paying mostly to maintain the status quo.

With the ban on advertising, the amount of money saved greatly outweighed the
revenue lost as others couldn't advertise either so it really only affected
new smokers rather than convince current smokers to switch brands.

I see a similar thing happening in my line of work. In our niche of e-commerce
every player of importance works with the same online marketing networks and
paying rather a lot per sale or click.

There's a whole lot of sites out there which basically exist to infest organic
search results, send traffic to us and our competitors and collect their
referral fee from the advertising network. They add no value[1]. Without them,
the customer would have been similarly divided amongst the competition as well
without having to pay for it. Yet, if we stop paying them, we'll lose a lot of
business as our competitors will continue to do so.

Disclaimer: this is all as I understand it and in no way my employers opinion
or persepctive ;)

1) Some do, by providing extra information or ranking the shops by what's best
for the consumer (price, reviews) rather than the most cash-per-click.

~~~
tobinfricke
NB, while tobacco ads are banned from TV, they are still everywhere on outdoor
advertising, at least here in Germany. Actually, I went on a "street art tour"
that turned out to be sponsored by a cigarette company, and they were _handing
out free cigarettes_. So: tobacco advertising is alive and well in Germany.

~~~
michh
Oh, over here that's been banned as well. I thought it was an EU thing but I
guess it was our government. They're even banned from sponsoring events.

~~~
theGimp
That is the case in Canada too. Tobacco companies have been banned from
sponsoring events since sometime in 2003.

------
hawkharris
This reminds me of a fascinating article in The New Yorker called "Twilight of
the Brands." [0] The author's basic argument is that brands have historically
filled an information gap. Before the Internet, when consumers didn't have
tons of on-demand info about products, brands were a compass that pointed them
in the right direction. If the last Sylvania TV you bought worked well, you
might buy another one without hunting down reviews for the new model.

Now that product info is ubiquitous, the author says, the role of brands and
traditional advertising is declining. So, when I hear critiques about a
particular form of online advertising, I think about the broader, more subtle
ways in which websites influence our purchases. Companies are starting to pay
more attention to online forums and social sites, which are more persuasive to
consumers than traditional banner ads.

[0]
[http://www.newyorker.com/talk/financial/2014/02/17/140217ta_...](http://www.newyorker.com/talk/financial/2014/02/17/140217ta_talk_surowiecki)

~~~
superuser2
One place where marketers have gotten around this quite adeptly is Windows PCs
and laptops.

Try searching for reviews on a laptop you find at Best Buy. There are none.
The model number is 10+ random characters and completely meaningless.
Comparison shopping between laptops on the basis of reviews is impossible.
Consequently, they have you buying on 1) brand and 2) specs, which is right
where they want you, and completely ignoring things like build quality and
MTBF of parts which might be revealed by long-term reviews.

This is one of the (many) refreshing things about Apple. Macbook Pro _is_
Macbook Pro until the next refresh.

~~~
Nursie
Ummm... I love my MBP but it's no way 'the' Macbook Pro until next refresh. I
got a choice of two form factors and multiple hard drive/SSD, processor and
RAM configurations.

The build quality is great, but don't pretend for a moment Apple don't play
the specs game.

~~~
blairbeckwith
I think you know this isn't what he meant.

------
raverbashing
The premise of the article is naive at best

You can use web analytics to measure a conversion rate from ads. Hence user
clicks ad -> sales happens (in the best cases). That's Internet Ads 101

In fact, with online ads the "if it works" part is much more measurable than
for other medias

"Last year, a group of economists working with eBay’s internal research lab
issued a massive experimental study with a simple, startling conclusion: For a
large, well-known brand, search ads are probably worthless."

Once again: "For a large, well-known brand"

Well, so do you mean that pumping ads for something everybody already knows
(and already gets massive advertisement everywhere else) doesn't work? Color
me shocked.

~~~
omonra
The point of the article is that the sale would happen regardless of the ad.

Ie showing an ad on Google to someone who types 'Ebay' in the search string is
a waste of money - since Ebay shows up as the first natural result anyways.

~~~
droopyEyelids
However, this leads to the other flaw in the argument, where eBay has been the
company most famous for abusing Google's ads, and using them in a completely
nonsensical way.

[http://www.searchenginejournal.com/how-not-to-run-a-ppc-
camp...](http://www.searchenginejournal.com/how-not-to-run-a-ppc-campaign-
inspired-by-ebays-adwords-fail/61025/)

I'm sure you've noticed that a search for any noun called forth an ad for
eBay. You're enticed to "buy Dog Vomit on eBay" when your dog is sick. And
then, even if it was something eBay plausibly sold, when you clicked through
it'd take you to a generic eBay search page or, often, a landing page that was
not useful at all.

~~~
rfergie
It is very unfortunate that the extremely interesting ebay study is being
ignored by the SEM community because ebay has some bad adverts.

The methodology and findings should be something that advertisers look at and
learn from (i.e. that traditional methods of tracking do not always do a good
job of showing value) but instead people just like to point fingers and call
names

~~~
blauwbilgorgel
It is not ignored, because eBay has some bad adverts. It did attract
significant attention more than a year ago (the study was conducted in 2012,
and media reported on it in early 2013).

"eBay has no idea if online ads work" would be a better title. Or "eBay can't
get their online ads to work".

If you looked at eBay's search advertisements in the last years you probably
have seen very ridiculous ones, like:

    
    
      Love.
    
      Buy it cheap on eBay
      Low Prices. New and used.
    

This is a significant waste of money, and seems endemic at eBay, not a rare
occasion. Though it is too easy to point at this and discard the entire study,
it is a relevant prior.

As a control they take MSDN/Yahoo vs. Google. The control should be a
different advertiser, not a different advertisement network.

In the paper they mention removing the term "eBay Shoes" from their keywords,
because they rank organically for that. They should have never added it,
because it is a bad keyword for them. They should advertise on the brand name
shoes they are selling. This ties back to the bad adverts by eBay: Fixing your
mistakes and seeing change, is different from performing a controlled
experiments on a healthy advertiser.

They muse about "the types of consumer that may already be informed about the
advertiser’s product". This adds a few problems: those customers may have been
informed through the very advertisements they now claim don't work. Suddenly
shutting down advertisements does not negate the effects of running
advertisements years before that. The paper does not investigate the effect
that ads have on brand recognition and brand trust. Usability tests show
people clicking on advertisements first, because then they expect quality and
a simple commercially interesting proposition.

I do think the problem they are describing "some customers may be so aware of
a brand, that advertising to them becomes worthless" is valid. Maybe ad
networks could help here and implement a form of "demarketing" next to their
"remarketing" options: Once a user has enough knowledge of the brand, stop
advertising. But a better (and currently available) method could be to apply
remarketing and give these power users tailored advertisements. An example
could be a buyer's program, promoting a new product from a well-purchased
brand, or a referral bonus. To continue offering them advertisements like
"eBay shoes" does not make much sense.

~~~
rfergie
I am aware of the significant attention this paper got about a year ago. In my
filter bubble (and I am in a massive filter bubble with regards to this kind
of thing) the attention was similar to the rest of your comment - focusing on
ebays failures of execution rather than the failure of measurement.

Other advertisers do not make the same mistakes as ebay with regards to
landing pages, adverts or keywords selection but many make the same mistakes
when it comes to measuring their advertising value.

Now, perhaps the errors caused by faulty measurement are not as important for
other advertisers and I can see why this might be the case (for the reasons
you list about how ebay is running their PPC) but what should be an
opportunity for the SEM industry to look at how their work in valued and
measured has instead turned into something else

> As a control they take MSDN/Yahoo vs. Google

They also used a geographic split as a control. E.g. if in the past areas A
and B have performed similarly then pick one of them at random to stop showing
ads in.

AdWords geo-targeting combined with this technique is a way for other
advertisers - regardless of scale - to run similar tests. But we won't see
many doing this because of the attitude that it is ebays execution that sucks
rather than their measurement

~~~
blauwbilgorgel
The paper sure is interesting and should add value to the debate and
approaches to SEM. To discard it by scoffing at eBay's execution would indeed
be your own loss.

My biggest take-away is the saturation of advertisements and the effects it
can have on running ad campaigns. Yours seem to focus on the common
correlation-causation misinterpretation, and faulty measurement approaches.

I do think there are enough problems with the paper to not grant it the
authority to speak for an entire industry (as Slate put it). eBay is just one
(and a very big and unique) advertiser in this arena, and every move it makes
(even to measure it) changes the entire ad network.

> They also used a geographic split as a control.

Thank you for this correction.

Aside: The problem with eBay's non-profitable advertisements seems to me a
beautiful problem: The paper authors subscribe to the benefits of saved costs.
I do not think that the marketing department of eBay subscribes to this
benefit. For them, and external ad agencies, the more ads your run, the more
clicks you get, the more you get rewarded, the better your monthly reports
look. People at eBay's online marketing department must be smart enough to
realize that many of these ads were worthless to the company, yet it was worth
it for them to empty the monthly budget on a list of generic keywords.

~~~
rahimnathwani
_People at eBay 's online marketing department must be smart enough to realize
that many of these ads were worthless to the company, yet it was worth it for
them to empty the monthly budget on a list of generic keywords._

I read somewhere that alleged cookie-stuffers claimed that eBay's staff knew
about the cookie-stuffing all along, and encouraged it so long as it increased
the sales attributed to their own work in courting affiliates.

If true, these are both cases where incentive design (and measurement) are as
important as people's skill with their craft.

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

------
pretzel
There are ads and then there are ads. One of the things that the company I
work for, Qubit, does is to validate that the tracking tags that vendors put
on people's websites drive an uplift. We talk about one of our clients doing
it here [1]

While blindly targeting people using search engine "promoted searches" may not
work for every impression, this does not take into account the ads that you
see on other 3rd party sites - which is probably what people think of when
they talk about "ads". Google's version of this is AdSense (as opposed to
AdWords).

This is something that is quite easy to test, and we have seen that some
really do work and some not so much.

But driving someone back to a website with an offer on something that they
have added to their basket but not purchased, is one way to be sure that you
are getting people buying after seeing your content. The problem then is to
make sure you aren't cutting into your margins too much...

[1] [http://www.qubitproducts.com/content/video/arcadia-video-
cas...](http://www.qubitproducts.com/content/video/arcadia-video-case-study)

~~~
frik
> But driving someone back to a website with an offer on something that they
> have added to their basket but not purchased, [...]

People like useful recommender engines (e.g. Amazon.com).

But not so personalized _smart_ ads that _follow_ them on every website the
visit. What's wrong with the static ads that fit the targeted website
category?

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

~~~
julespitt
Willing to share where you advertise and why? I've got lots of friends and
relatives doing comics online, would love to have a little specialist
knowledge to help them out.

~~~
egypturnash
Mostly just Project Wonderful, an ad network that mostly sells ads on web
comics. It's pretty easy to drop a couple hundred into a broad campaign, dink
around in your analytics to see what sources give you engaged traffic, and
drop some more money onto those specific places.

Also your friends and relatives may want to check out webcomics.com; I don't
agree with everything Brad says about Making Comics On The Web but for the
most part his site is full of a ton of great advice that's well worth the
yearly fee.

~~~
julespitt
Thanks! Was curious if Project Wonderful worked, given how remarkably cheap it
is. Targeting specific comics works best, got it.

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

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

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

~~~
esw
It's called remarketing. If they're showing you an ad for a product you
actually bought, they're doing it wrong. It's supposed to show you an ad for
something you looked at, but didn't buy.

~~~
unclebucknasty
If it's not being done purposely for reasons others have mentioned, then I
wonder if it comes down to the company's integration with Google. Presumably,
Google wouldn't know if a sale took place unless the merchant somehow notified
them. I'm guessing this might be with a pixel, script, or similar on their
order confirmation page.

So, if the merchant failed to implement this, Google would never know to stop
showing the ad.

~~~
nl
No, the merchant stops bidding for the as once you complete the purchase.

~~~
corin_
Generally speaking, no. The cookie pools of users to retarget will be stored
not by the merchant but a third party (either the company serving the ads, or
a middle man). When a user gets tagged they'll stay in the pool of people to
re-target either until their expiration date is hit, or until they are
removed. So the merchant would have to notify (automatically) that a user
should be removed, not just chose to stop bidding on that user.

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

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

------
dcnstrct
As someone who leads an analytics team in the advertising industry I have to
say this title and the studies they are referencing are not accurate to the
entire industry at all.

Advertising absolutely works when done right. The effect on brand
consideration, shopping behavior, and incremental purchase value can be
quantified. The most sophisticated advertisers spend a lot of money to
accurately track and ensure their campaigns are lifting their desires metrics.

Now to the eBay study they reference. That study is specific to eBay, a large
brand that has spent hundreds of millions a year on advertising for many years
and is a top web property visited by a significant percent of the online
audience. For eBay it turns out brand search marketing largely does not have a
contribution as most of their shoppers are likely going to buy anyway.

Trying to generalize that to a brand that did not have the amount of equity,
natural SEO rankings, and established shopping behaviors would be foolhardy.
Additionally if you dig deeper into the eBay study they did find a positive
effect for the small percent of users that are new shoppers to eBay. They just
happen to be a relatively small percent of the audience reached with the spend
given the large size of eBay.

In the digital space there is a huge variability in performance based on the
type of ad, the nature of the targeting, the product being advertised, the
creative message, etc. Trying to generalize to all online advertising without
controlling for the kind of brand, product being sold, current marketing
positioning, and campaign objective seems a bit naive.

In our work we find huge variability in performance even within the same web
property dependent on the placement of the ad within the site and the unit
being served. We measure how long the ad was on the page, how many users
actually hovered over it in view, and then the incremental lift of exposed
users compared to control group. Turns out if you properly optimize to
maximize true ad viewing and engagement you will see lifts in brand response,
digital visitation, and shopping metrics compared to the control.

In fact I'd much rather have money for digital advertising any day over old
fashioned ads with the limited tracking possible. I know how many people saw
our spot on the YouTube home page, how long they spent interacting with it,
and can tell you exactly what they were interested in. For that TV spot I
don't know if you were watching, skipping, going to the bathroom, looking at
your phone, or any number of other factors which could diminish effectiveness.

TLDR; online advertising works when done correctly and absolutely can be
measured

~~~
kitsune_
I've said this before on here, but online advertising is incredibly dumb. If
you consider all the info Google and Facebook have on me, it's a really sad
state of affairs.

I bought a new bicycle and religiously researched this topic and consumed a
ton of cycling videos. What ads do I see on YouTube? Cars. I don't have a
driver's license.

I once bought a NI Maschine Midi Controller. YouTube then showed me video ads
for the NI Maschine Midi Controller for over a year after the purchase. Great
business for Google, not so much for Native Instruments.

During a vacation in South Korea, I had logged into Facebook to post a
picture. Facebook then showed me Korean ads in Hangul for over a month after
my return. They have all the info on me, where I was born, what language I
speak, where I live, where I work. Hilariously bad.

And so on.

~~~
chupy
Those three can be explained easily:

1.If you have never visited a car company's website then it's just that Google
categorized your profile wrongly and only the car companies are bidding for
you when it comes to show an ad. 2\. Just a company wrongly retargeting
converters (people who have bought a product) with the same product that they
have bought. 3\. In Real Time Bidding [1] for Facebook, their information
about the user is very much lacking [2] so depending on the advertiser that
bids you might get very bad ads.

[1] [http://en.wikipedia.org/wiki/Real-
time_bidding](http://en.wikipedia.org/wiki/Real-time_bidding)

[2] [https://developers.facebook.com/docs/reference/ads-
api/rtb/#...](https://developers.facebook.com/docs/reference/ads-
api/rtb/#bid_request)

------
nyrulez
Ebay is known for very ineffective campaigns, which they tried to justify by
publishing "papers". They basically claimed that the fact that search results
exist, makes the advertising next to them mostly ineffective. There are so
many issues with this argument, it is not even worth starting. But yeah this
circle jerk has been going for a while. Also to claim that if it did not work
them, it won't work for anyone else is a bit of an over generalization.

You will also find papers stating the exact opposite and how to get great
returns and stuff. Everyone it seems gets a different experience from the same
platform and then they justify it by publishing white papers. Just like
anything else, it is never black and white. But black folks want everything to
be black while white folks make fun of the black.

Also check this more detailed analysis that goes a bit deeper:
[http://www.wordstream.com/blog/ws/2013/03/13/dear-ebay-
its-n...](http://www.wordstream.com/blog/ws/2013/03/13/dear-ebay-its-not-
adwords-its-you)

------
wildwood
They're a bit vague when describing the "I-was-going-to-buy-it-anyway"
problem, but it sounds like they're mainly talking about PPC ads on search
engines stealing from SEO links on the same pages. (Some of it seems to be
talking about stealing sales from the direct channel, which I have no idea how
to handle.)

If your website is already tracking ad performance on a per-ad basis (i.e.,
tracking all the clicks on that ad, and keeping what you pay per click below
what you're getting per click), then optimizing for only the paid search
traffic that's incremental, and not cannibalistic, is pretty straight-forward,
conceptually.

For a given ad's keyword, instead of optimizing only for the results you get
from PPC traffic, you treat your PPC bid as an input that affects sales across
PPC and SEO traffic for that keyword, and optimize accordingly.

There are a few extra steps and decisions that need to be made before full
implementation, but this is the basic idea. It's actually not too bad to
account for.

~~~
davemel37
There are other reasons to advertise in search engines on your branded
keywords.

For starters, you have account wide and campaign wide quality scores which
impact how much you pay per click across your entire account. Having branded
keywords which will have high quality scores can help lower all your costs.

Secondly, your competitors can advertise on your brand even if its
trademarked. Owning the top position is cheaper for you and a good idea.

Third of all, You would think a brand would want to own as much of the search
results page as possible. It will drive up clicks even on your organic
listings.

There are also many case studies that show paid search for branded keywords
getting more traffic than just organic listings.

I'll search for a product and amazon all the time. I would just easily buy
that same product from Walmart if they had it for less.

Branded search does not mean they will buy from you anyway. It could mean
that, but it certainly doesn't guarantee that.

------
wz1000
This is a classical example of a Prisoner's Dilemma [0] The conclusions drawn
by the author don't seem to consider the fact that if Ebay doesn't buy ads
next to it's own name, Amazon would. As with a Prisoner's Dilemma situation,
if all parties(In this case companies with substantial recognition and brand
loyalty) stop buying ads, they would stand to make the maximum profit.
However, this opens them up to the possibility of losing clicks to a
'cheating' competitor, thus driving them into essentially an 'ad war'. [0]
[http://en.wikipedia.org/wiki/Prisoner's_dilemma#In_economics](http://en.wikipedia.org/wiki/Prisoner's_dilemma#In_economics)

------
BrandonM
This topic came up in a month-old submission about why eBay lost many of its
organic rankings in Google's Panda 4.0 release. Some of the comments from that
discussion seem quite relevant to this one.

[http://news.ycombinator.com/item?id=7788804](http://news.ycombinator.com/item?id=7788804)

When Slate refers to eBay research, is it based on methods that allowed ads
like this gem?

    
    
        Vomit sale
        New & used Vomit.
        Check out the deals now!
        www.ebay.com
    

([http://www.wordstream.com/images/panda-4-ebay-2.jpg](http://www.wordstream.com/images/panda-4-ebay-2.jpg))

If so, can we really take their findings seriously?

------
davemel37
Advertising by definition is Arbitrage. Leveraging a disconnect between the
value of the audience and the cost to reach and engage them with content.
Efficient Markets dictates that over time advertising will become less
effective. It is the natural progression of all advertising.

Here's an article I wrote a while ago about how content marketing and native
advertising are the same thing converging on a point where modern day
advertising stops working... [http://www.adotas.com/2014/05/surviving-the-
adpocalypse-what...](http://www.adotas.com/2014/05/surviving-the-adpocalypse-
what-will-you-do-when-the-current-model-stops-working/)

~~~
gerbal
One of the flaws of many advertising strategies is that it assumes the main
flaw of the market is imperfect information. However that requires a rational
consumer. And Consumers are not rational. Selling ideas is as important as the
good itself.

Take most car advertising for example. A significant portion of the ads are
from dealers advertising sales. Those are classic attempts to correct for
imperfect information on the part of the consumer. But the other portion of
the ads are all about how you should feel in a given car.

When you see an add for a luxury sedan combined with platitudes about
performance, speed, and engineering or a truck and cliches about America, the
goal isn't to sell you on the merits of the vehicle, but to sell you on a
concept of a brand. The ideal targets for these ads aren't actually consumers
currently in the market for a new car, but the people who just bought a new
car. The people for whom the shine is starting to come off the rose. If you
sell someone the idea that yes their purchase makes them special, then they
are more likely to be happy with their decision, more likely to repeat that
decision later, more likely to be a unwitting brand ambassador.

~~~
Spooky23
That's the thing I always saw as lacking with online advertising -- there's no
brand placement.

Online ads always seem to me to be focused on transactional response "Wow, I
can use this weird trick to buy a vitamin, sign me up!"

Billboard/display advertising is really effective at this. I happen to know
that a particular orthopedic medical practice that I wasn't familiar with has
a walk in clinic until 10PM every day to fix broken bones, etc. That's
effective advertising!

In contrast, I've been a heavy internet user since 1994. The only product I
can think of that I actually learned of via online advertising is those X10
video cameras that dominated pop-up/under advertising a decade ago. That's
pretty sad for advertisers!

~~~
cbsmith
> Online ads always seem to me to be focused on transactional response "Wow, I
> can use this weird trick to buy a vitamin, sign me up!" Billboard/display
> advertising is really effective at this.

Heh. For the most part online branded advertising is spent on display ads.

------
cm2012
As someone responsible for $xxxxxx monthly spend in online advertising, it
clearly works. We measure it pretty much from end to end.

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

Do you know how much profit you would have earned without the advertising? How
do you determine that (if you can say)?

That is, without the ads, some customers would purchase more or more
profitable products; some would purchase the same, and some would purchase
less. But how would it net out -- and more interesting to me, how do you
measure that?

~~~
cm2012
Yes. If we stop advertising we stop getting sales proportional to the
advertising spend. Most people arent coca cola.

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

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

------
marincounty
I think some idiotic consumer products will always require advertising--like
soda, candy bars, figh fashion, etc.?

There are some industries like auto insurance where I think it's a waste of
time. Every year I call around and get the cheapest insurance. I face had good
luck with Mercury(last 4 years). Esurance only quotes for 6 months--that's why
they seem cheap.

As to Internet advertising; my biggest grip lately is having to watch a ad
video before the intended video.(I turn down the volume and look away for 20
seconds).

I have a feeling Google tracking works too well. I am waiting for the day
DuckDuckgo is King. I don't like to be tracked. I don't like my house
photographed.(Google put up previously requested blurred homes, cars, persons
without any notice. If you think you have a blurred out house--check again.)

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

------
Shivetya
Well far too many online ads do the exact opposite with me, as in I tend to
avoid the advertiser and/or their product. This usually only occurs when the
ad is presented in some fashion which inconveniences me in the task I am using
the site for.

Unobtrusive ads, more power to you. Pop up on me, find ways to circumvent
blockers against such, or hide parts of the article I want to read, you get
mentally flagged.

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

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

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

~~~
room271
I think people are being harsh in the down-votes here.

I suspect most people (HN people) hold pretty strongly the belief that
everything _can_ be quantified. However, within reasonable limits and current
stats and science, lots of things _in practice_ cannot - yet at least.

A lot of advertising probably falls under this. To verify effectiveness we'd
need, as the article notes, to control for so many other factors that it would
often be too difficult.

So we often guess, or leverage past knowledge and apply it to what we hope are
similar circumstances.

If you take the point to be that marketing is not a hard-science, than it's
true. Some cases sure, but plenty not.

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

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danmaz74
There is one very important point that I didn't see in the article, nor the
comments. By not advertising in search, incumbents would make it less
expensive for newcomers to put their offer in front of the incumbent's
customers. This can be very risky.

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bowlofpetunias
Discuss advertising with anybody and you'll come to the conclusion that
apparently advertising works on _other people_.

Who those "other people" are, no idea. I strongly suspect some people really
are just statistics.

~~~
Gustomaximus
Other people here. I've been working in online advertising for 10 odd years
and have seen advertising working and not.

This Ebay example was great showing both sides; bidding for their brand term
was a waste of money as they are a brand leader not in a defensive strategy.
Finding new customers was profitable. It seems they let the former get out of
hand and dominate their spend mix.

I see similar situations of excessive wasted spend all the time as companies
target the wrong metrics (note: there always is some). Until this study I
would bet my house the PPC team at eBay were being largely judged by 'CPA'
type metrics. Every year they would have tighter goals in a market that is
getting more competitive so they go for cheap wins that look good on paper
i.e.grab customers already coming in as you know they will convert. I see this
at almost every company.

Profitable advertising absolutely does exist but like anything, you need smart
people running the program and you can't surround them with targets that make
them go for the wins that look good in the short-term reports. As much as we
monitor more advertising remains part art, part science. And I say that as a
guy that likes his data more than most.

Anyway, if you're being told ads only work for other people you're talking to
the wrong people. I love my marketing and what it can do for a company when
run well. If you have any questions I'll happily talk your ear off.

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

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

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

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

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

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

~~~
frandroid
The point is that the ads don't work for the advertisers; clearly, they've
worked well for the platforms selling ads, e.g. Google.

~~~
lukasm
Yes. The advertisers are more and more aware of that.

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

~~~
1stop
Yeah we do: Coca-cola <\-- The product offers no value other than "brand".
(Brand is advertising).

~~~
hackuser
> Yeah we do: Coca-cola <\-- The product offers no value other than "brand".
> (Brand is advertising).

It tastes good. How is it different than any other form of pleasure that is
sold, such as (non-artistic) video games, alcohol, any luxury good, fashion,
etc.

EDIT: ... or World Cup soccer, on my TV now.

~~~
1stop
No one would ever wake up and go: "I need/want coke" (without advertising).

------
davemel37
There are media productivity companies, like MarketShare that cost a boat load
but accurately track every possible interaction with an ad and brand to see
what actually works.

If you use a company like this and a DMP (data management platform) you can
track ads and measure on a scale this article doesn't seem to even know
exists...

It might cost you a few million to close the feedback loop accurately but
there are companies that can correlate an unclicked banner impression to an in
store offline purchase...

