[tomrod]

> they never knew how to run ads to begin with

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.

[jklinger410]

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.

Just some thoughts.

[time_to_smile]

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.

[jklinger410]

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.

[gnicholas]

> 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.

[hnaccount141]

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.

[dundarious]

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.

[dazc]

> '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.

[importantbrian]

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.

[dazc]

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.

[chillacy]

> Those companies that have a Sign-up for our email and get 10% off your first order pop-up, you mean?

I've seen this type of thing improve conversion immensely at a startup I worked at, and it sets up the starts of a drip marketing campaign.

Many of these are the natural results of A/B testing and experimentation, which is why many companies arrive at the same result.

[jklinger410]

What is the opposite of argumentum ad populum? No one likes this thing because I do not like this thing.

[tomrod]

Bandwagon.

[jklinger410]

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.

[dazc]

Many of these business go bust - so yes, maybe they should do just that?

[taeric]

To be fair, many of the most expansively marketed companies pretty much exist for the sake of marketing, it seems.

[jklinger410]

What is the benefit of them funding an entire industry of marketers if none of it works?

[taeric]

Depends what you mean by "doesn't work."

Though, I suppose it often matters what you think of as marketing. Is it marketing for Coke to license their image to shirts and other products?

[tetsusaiga]

I appreciate your thoughtful criticism of this.

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.

[Retric]

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.

[tomrod]

You hit the nail on the head, for the record. Thank you!

[tomrod]

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.

[cj]

> 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

Part of the problem is your brand keywords will typically show up as being one of your best converting keywords.

[VBprogrammer]

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.

[tomrod]

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!

[staticautomatic]

A problem in what sense?

[jefftk]

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.

[bduerst]

>This feels like a no true scotsman.

It's not though.

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.

[tomrod]

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."

These are hallmarks of a no-true scotsman.

[yen223]

I like that this comment has no-true-scotsman'd the idea of no-true scotsman.

[jgurewitz]

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.