Your alternate hypothesis is that the companies collectively spending hundreds of billions of dollars per year on advertising are not getting anything for it? Why don't you take a swing at proving that?
Folks already have, at Microsoft, Yahoo, and Google.[0] The issue isn't showing lift, it's having sufficient power to know the test you ran isn't cherry-picked or BS.
Also, the onus to prove the claim that digital marketing has an effect is not logically on the interlocutor, but on the claimant.
Knowing many marketing folks across many industries, their incentives aren't usually tied to incremental lift but rather gross channel volume. So if they can cannibalize from more effective sales or advertising channels they do so, without qualms.
I've heard the claim like grandparent comment has made before for years. Yet, when pushed, it is suddenly a golden cow. This is concerning, precisely due to the figure you cite of billions of dollars.
No, I'm asking for proof that it works over alternative baselines. If people already decided to purchase a product offered, the ad sets up a costly, unnecessary channel.
As was stated by another in this thread, prisoner's dilemma leads to unintuitive economic outcomes.
If you're saying it's an arms race, sure, nobody's denying that. But that doesn't mean that it doesn't work, it just means that in general and over time particular markets are mostly at equilibrium.
What he is saying is, the fact that hundreds of billions of dollars get spent on advertising IS the proof.
That's the evidence. Companies don't waste money for no reason. And so the only reason that they could be spending this amount of money is because it works.
So yes I'd say that this type of argument counts as a "proof".
I agree entirely that it's a total waste from the societal perspective (which is why I say we should ban it). But it can be very effective from the individual advertiser's point of view. That's true of any arms race.
I believe that tomrod is claiming the latter is also false.
Advertising is a classic case of the prisoners dilemma.
In short: Advertising is very effective and worthwhile if you're the only one with a product in that space. As soon as others enter it just becomes an arms race backed by mountains of money with questionable results.
Why spend all the money on questionable results? At risk of coming off as glib, perks. I worked in a field tangential to advertising and all of the money is very useful for throwing parties, signaling success and status, being able to invite clients to large events thatyour advertising is involved with (think superbowl), etc.
For some reason HN at large prefers a more conspiracy leaning attitude toward advertising which you can see in the top comment right now: "Anyone with a credit card can start changing how people think and act." This perspective believes that advertising is like a brain ray that persuades people to do whatever they say - that targets have limited agency over their own thoughts. It's very appealing to assume everyone is a gullible sheep (except yourself, naturally) but that's not the reality behind advertising spending.
You already have the insight. "Signaling" is just as much advertising as anything else. It's well-studied and the money spent in maintaining status-quo is just as important as growing a new product.
Thank you, this is a fantastic encapsulation of my point.
The proof that digital advertising does anything but set up a costly lead channel is still a bit lacking, and your plausible assertion shows why that may be the case.
That doesn't seem like a sufficient story to explain most kinds of advertising. What perks do all the local grocery stores get from mailing me leaflets about what's on sale?
That just falls into the standard example with the prisoner's dilemma. My perks example was just explaining what the billions are buying instead of influence/persuasion.
