This feels like a no true scotsman. I have doubts that the vast majority of digital advertising platforms do anything other than clutter websites, waste bandwidth, annoy people, and pay a small slice of tech employees. I'm open to seeing research on the topic (and I am pretty sure there is some), but what I've read is that most advertising has insufficient statistical power, thus confidence of advertising outcomes being anything but random flukes is low.
It's funny to me that everyone has a "take" on advertising, and yet 99% of the successful B2C brands, including multi billion dollar international ones, continue to advertise. Every platform that starts as ad-free gets pressured to allow ads and most of them acquiesce.
It's not that these companies love throwing their money away. Maybe there's just something they know that you don't?
Maybe it's that getting your product in front of the right people at the right time has immense value. And many platforms have opened up spaces for you to attempt to do that if you pay them for the space. Maybe paying for the wrong space at the wrong time is a waste of money.
Maybe determining the right place and time to get in front of people is a skill as well as an entire profession. Maybe that entire profession can't be reduced to an absolute binary of does it work or doesn't it.
I'm very curious if you work in advertising/adtech, otherwise your "take" is no different than the ones you're criticizing.
I have worked on the data side of a pretty wide range of roles across the marketing/adtech spectrum for over a decade and think their is a lot of good reason to be skeptical of the claims of the advertising world.
Tim Hwang is also an insider in this industry and wrote an entire book (The Subprime Attention Crisis) on the issues with the current state of advertising. I work in a very different area from Tim (he's legal) but I can tell you that book almost bored me with how obvious all of his complaints where.
> It's not that these companies love throwing their money away. Maybe there's just something they know that you don't?
I've seen the data that many of these companies don't. As many others have said, simply dismissing advertising as a "scam" is too extreme, however there are a lot of really big issues in the industry and extreme skepticism of the advertising industry is well warranted.
The reasoning of "if the system is fundamentally broken, then why are so many people participating in it?" is easily dismissed with any of the major financial crises we've seen. This same logic could be falsely applied to the pre-2008 financial crisis "if these ratings are so wrong then why are so many experts putting so much money in them?"
Personally I don't know anyone who works on the "how the sausage is made" side of advertising that isn't at least somewhat skeptical of the whole system.
I work in advertising and know how the sausage is made. However I don't have equity in an ad agency, I don't profit off of promoting advertising. I participate in these conversations to help people understand. Also because they often piss me off.
> The reasoning of "if the system is fundamentally broken, then why are so many people participating in it?" is easily dismissed with any of the major financial crises we've seen.
The financial crisis was about companies making money, which they love to do. Advertising ad spend is about companies spending money, which they hate to do. Unless someone can explain why everyone wants to subsidize advertising agencies and ad platforms.
> Personally I don't know anyone who works on the "how the sausage is made" side of advertising that isn't at least somewhat skeptical of the whole system.
Skeptical of what, exactly? If you use 3rd party impression and click tracking tools, attribution modeling software, and statistically significant testing, I am genuinely confused as to what there is to be skeptical of.
I think the people who say they know "how the sausage is made" and still hold skepticism of "the whole system" are maybe not as knowledgeable as they may think.
In good faith, I am definitely skeptical of a few things. Whether ad platforms are really trying to prevent spam. How 3rd party DSP audiences are built and why they think people are ok with using them having no idea how they are made. Whether or not apps and devices really are spying on people. Whether people are aware of what "privacy" means from an advertising perspective.
But I'm not skeptical about the users that come to my site or which marketing efforts are working or not working.
> The financial crisis was about companies making money, which they love to do. Advertising ad spend is about companies spending money, which they hate to do. Unless someone can explain why everyone wants to subsidize advertising agencies and ad platforms.
Advertising is certainly in the interest of the ad agencies, and the employees of companies whose job is to either manage outside advertising or develop/execute advertising in-house. It's possible there could be a company with a lean team of advertisers, doing just the type of work that makes sense. But within any organization, leaders want to have larger teams because it is seen as a marker of respect. It also allows a leader to command a higher salary.
I don't know if these forces are sufficient to have spun the entire advertising industry out of nothing. But I do know that there are significant forces looking to build up advertising both inside and outside of companies.
I have no idea whether advertising works or not, but I see this "successful businesses do it, therefore it it works" argument applied to so many different things and it always baffles me. Besides not having much substance beyond an appeal to authority, I don't think I've ever seen an example of a company that doesn't engage in some number of financially wasteful behaviors with dubious or at least unquantifiable value.
The vast majority of successful B2C brands are owned by companies like Unilever, or are Apple, etc. I don't think there's an easy comparison between the ad goals and spending of these companies and those of smaller B2Cs trying to get off the ground. Maybe your own justification is comparing Apples to oranges, pun intended, and besides the point.
> 'It's not that these companies love throwing their money away. Maybe there's just something they know that you don't?'
Those companies that have a Sign-up for our email and get 10% off your first order pop-up, you mean?
Those companies paying for clicks to 404 pages or 'this item is out of stock', etc?
Those companies that ask you if you have a discount coupon just before you enter your card details for something you are already buying?
I get your point but I wouldn't assume big companies always know what the are doing when it comes to advertising. Sometimes they employ lots of people and some of those people don't actually have a clue what they are doing.
I agree with your broader point that you shouldn't just assume large brands always know what they're doing but other than the 404 example I'm not sure these are actually indications of companies not knowing what they're doing.
> Those companies that have a Sign-up for our email and get 10% off your first order pop-up, you mean?
I get that this can be annoying but plenty of companies do A/B tests and find that it works for them. I suppose it could mean they're just following some fad and don't know what's going on, but it doesn't have to mean that. This is especially true for companies that have long sales cycles or are in categories where lots of comparison shopping is common. Getting someone into your email funnel can be more important than anything else.
> Those companies that ask you if you have a discount coupon just before you enter your card details for something you are already buying?
Where else in the funnel would you have them apply their coupon? Maybe my perspective is different because we do a lot of offline advertising, but if someone comes into the site off of a print coupon they're going to expect to be able to put it in somewhere and get their discount. If we don't put it in the order flow they're either going to not purchase or we're going to get a lot of customer service calls from people trying to redeem their coupons.
Fair comment. I think we can agree there are case where such things can be used to great effect but that there also are businesses throwing money around and hoping something sticks.
One big mistake businesses make is seeing another business doing something and assuming it must be working. Which is one of the points the OP was making.
I'm sure the executives at these big corporations would love to see stock prices go up if they could find a few extra million dollars per quarter in useless revenue negative activity that they could easily cut while having no impact on sales.
The reason I say this though, is because if they knew how to run ads properly they would have been tracking their results from the start, and would have known much earlier whether they were getting a return on their investment.
If your only way of measuring advertising results is to "turn it off", you're just flying blind, and one can't expect success with a (lack of) strategy like that.
That said, you are not wrong that a meaningful percentage of advertising is being run with similarly insufficient statistical power, and to that I would say those businesses are also incorrect, for the most part. I delineate because at some point, say when you're Apple or Microsoft, you are so big that "brand awareness" advertising takes over performance advertising. For the most part though, I'd say those aren't the types of businesses we are discussing in a context like this one.
Tracking advertising effectiveness is ridiculously difficult and multiple people inside and outside your company are incentivized to overstate impact.
Statistical power for example assumes independence which can be very difficult. Great you spend X million to convince people to buy an AC in March, did you actually benefit or would those same customers want an AC as soon as the first heat wave hit? Spreading demand can be useful, but it’s also really easy to to draw false conclusions from statistics if you don’t understand the domain.
And that’s just one of the many pitfalls involved.
How do you know any strategy is attributable to success or failure without testing it?
Pre/post analysis may be temporally correlated but this isn't proof because you haven't captured a baseline comparison.
A/B and MAB testing are helpful but not magic bullets.
Shapley values (marginal impact) is a nice mathematical outcome to have for multitouch attribution but as usually implemented is only a single statistic and can be a fluke without additional testing.
A phenomenon which reminds me of the canonical survivorship bias story. In WWII they conducted studies to determine where the bullet holes where on aircraft which returned from bombing sorties, in order to determine which parts of the aircraft required armour. It took a statistician to point out that they actual needed to armour those places where they rarely saw damage on returning aircraft, as those parts are most likely the parts where being hit caused the aircraft to not return at all.
Sometimes it requires a bit of a leap of imagination in order to resolve these things.
Causal inference has made a lot of improvements since WWII, and "if" the advertising company knows what they are doing they run effective A/B or MAB testing; that said, statistical power is typically low because of insufficient sample size for individual companies.
You could pool all ads together, but since each advertising company is independent you get into all kinds of weird path dependencies.
While I wouldn't claim to be an adtech practitioner, I did at one point help a few F500 work through conceptual models of multitouch attribution and other statistical issues. These are very nontrivial issues -- proving advertising effectiveness is very difficult!
It's a problem in that those keywords are some of the places where you are at least likely to be generating counterfactual conversions: most of that traffic was probably coming to anyway.
Appealing to effeciency is not an appeal to purity, which is what a no-true scotsman is.
A no true scotsman in this regard would be more along the lines of redefining advertising to not include any activities that OP described, i.e. OP wasn't doing true advertising. GP is not doing that here, because GP is acknowledging that OP is doing advertising, but doing it poorly.
It felt like one because the original comment puts anyone who doesn't willingly support advertising claims as not knowing how advertising works. The classification creates a false dichotomy whose classification is "only a group that does not know advertising would do X."
If you spoke to any growth marketer worth their salt at any D2C company they will have incrementality testing and split tested traffic to prove without a shadow of a doubt that advertising works. The real challenge is scaling without losing efficiency.
>It never ceases to amaze me how many people/businesses have no idea what performance advertising is.
Yikes, that's incredibly unfair and arrogant.
It's amazing to you that, because most people don't have to actually employ performance advertising, they don't know what it is? That someone whose passion is cooking, and decides to open a restaurant, might not have that advertising knowledge? That someone - in the case of the OP - whose focus is writing software that helps research an automotive vehicle's life history, might not know everything you do about advertising?
No you're right, as someone who takes these things seriously, I should hold myself to a higher standard than to paint in such broad strokes. Thanks for checking me there.
Allow me to rephrase from a more compassionate perspective:
I don't expect any of these people to devote the type of effort that I have into this knowledge.
But I do wish they knew this stuff, because with even a little bit of this knowledge, they could have the power to make their own restaurant/software shop/insert_small_business more successful than it otherwise could have been... which may even be the difference between them successfully running said business vs. having to take a job they don't like.
Ultimately, it's a be the change you wish to see situation, I suppose.
This comes across as an arrogant view point. Would you know how to take off the heads of the engine in your car and rebuild it? No? Wow! I'm amazed that you'd have no idea how to do something that isn't your direct line of work.
People running small businesses that are so wanting for ad buys to work for them don't spend years honing their performance advertising skills. They don't even spend time looking it up to know it's a thing (first time I've heard this phrase myself). They see all of the advertisng they are subjected to about why buying ads is important, and so they start where they can.
Instead of making fun of people for not knowing something that they shouldn't need to know about, why not corner the market by providing non-insulting services to get them the results they need? Or at the least, be able to point people in the direction of where to get those services?
Condescension for the sake of patting yourself on the back is just gross.
You are totally correct, thank you— I addressed this to jjulius above, since they pointed out the same thing. Sometimes one must be reminded not to be flippant on the internet, it's all too easy, and I don't want to be that person.
>Instead of making fun of people for not knowing something that they shouldn't need to know about, why not corner the market by providing non-insulting services to get them the results they need? Or at the least, be able to point people in the direction of where to get those services?
You're right. We all know the value of the person who makes complaints without offering solutions.
If anyone reads this and would like some honest help in this area, send and email to the address in the 'about' on my profile, and I'll try to point you in the right direction (It only looks sketchy because it's a forwarding address, I'm sure you understand.)
> why not corner the market by providing non-insulting services to get them the results they need?
That market doesn't exist because it requires buy in from the business, businesses that see the value in targeted and performance driven advertising do it in house because its so valuable, other businesses just don't do it because they see no value in it and they see no value in it because they don't do it.
Advertising works when its targeted but most businesses see advertising as just trying to shout as loud as possible. They take this theory and shout at every one they meet hoping this will convert them to a customer and are amazed when shouting at people has the effect of driving them away rather than pulling them in.
They come to the conclusion that advertising doesn't work not that its there technique, they shouted so loud and at every one how could anyone possibly shout louder or at more people? and when they stopped shouting sales went up! obviously advertising doesn't work.
>That market doesn't exist because it requires buy in from the business, businesses that see the value in targeted and performance driven advertising do it in house because its so valuable, other businesses just don't do it because they see no value in it and they see no value in it because they don't do it.
That goes against the entire concept of the advertising agency though. If advertising is so important, why staff it out to a 3rd party when you could do it in house? If this in house thing was the way to go, why is Maddison Ave so powerful?
Most businesses that take advertising seriously will have someone in house and then out source the specifics to specialists but the larger strategy is done in house. In the UK generalist agencies like av browne have been hurting bad the smaller agencies have been closing.
>That market doesn't exist because it requires buy in from the business, businesses that see the value in targeted and performance driven advertising do it in house because its so valuable, other businesses just don't do it because they see no value in it and they see no value in it because they don't do it.
All that sounds like to me is that the company providing OP's posited "non-insulting services" would just need to make sure they're marketing their product correctly and demonstrating value properly.
Advertising is definitely a lot more complex than simply: spend more money on it -> sales go up.
When tobacco ads were banned, tobacco companies started making more profit, because they had to spend less on advertising. Turned out their advertising was mostly to steal customers from each other, and didn't really lure in new users. So the ban actually helped them.
Short-term, yes. Long-term, I think no? Tobacco advertising typically focused on making smoking cigarettes seem cool and glamorous, and banning the ads may well have been a large component of why it no longer seems so.
> Tobacco advertising typically focused on making smoking cigarettes seem cool and glamorous, and banning the ads may well have been a large component of why it no longer seems so
That's one hypothesis. Another is that we've known for ages that tobacco smoke causes disease[0] since[1]
> Lung cancer was once a very rare disease, so rare that doctors took special notice when confronted with a case, thinking it a once-in-a-lifetime oddity. Mechanisation and mass marketing towards the end of the 19th century popularised the cigarette habit, however, causing a global lung cancer epidemic. Cigarettes were recognised as the cause of the epidemic in the 1940s and 1950s, with the confluence of studies from epidemiology, animal experiments, cellular pathology and chemical analytics. Cigarette manufacturers disputed this evidence, as part of an orchestrated conspiracy to salvage cigarette sales. Propagandising the public proved successful, judging from secret tobacco industry measurements of the impact of denialist propaganda. As late as 1960 only one-third of all US doctors believed that the case against cigarettes had been established. The cigarette is the deadliest artefact in the history of human civilisation. Cigarettes cause about 1 lung cancer death per 3 or 4 million smoked, which explains why the scale of the epidemic is so large today. Cigarettes cause about 1.5 million deaths from lung cancer per year
As someone who has run ads across a variety of mediums, online and offline, some products benefit from being in the public consciousness, others dont. Identify which products or services benefit from certain types of advertising will help enormously otherwise its just throwing good money after bad.
The OP's point 1 fails to recognise the filter bubble though, I think some SEO companies capitalise on this, but it simply works like this, if you keep googling your website, Google will eventually make it one of the top links in the result for YOU, not anyone else and for some website owners/companies, thats enough for them, and it doesnt bring in any more sales or revenue.
I would love to see solid evidence that advertising for an established product is meaningfully effective at increasing revenue beyond the cost to produce it.
This feels like a no true scotsman. I have doubts that the vast majority of digital advertising platforms do anything other than clutter websites, waste bandwidth, annoy people, and pay a small slice of tech employees. I'm open to seeing research on the topic (and I am pretty sure there is some), but what I've read is that most advertising has insufficient statistical power, thus confidence of advertising outcomes being anything but random flukes is low.