37 votes

The new dot com bubble is here: it’s called online advertising

9 comments

  1. [4]
    Deimos
    Link
    Just read through this article now, I think it was a great one. There are absolutely a lot of questionable beliefs and practices related to online advertising, and it's being actively perpetuated...

    Just read through this article now, I think it was a great one. There are absolutely a lot of questionable beliefs and practices related to online advertising, and it's being actively perpetuated by the people involved in it because their jobs and companies are dependent on everyone continuing to believe online ads are as effective as they say they are. A lot of the data seems to be cherry-picked or manipulated to "prove" effects that they went in specifically looking for proof for.

    There's a blog I follow called The Ad Contrarian that's written by a former advertising exec, and he's extremely skeptical about the value of online ads. Here's one of his recent posts on the same sort of "deliberate cover-up" theme: A Conspiracy Of Silence

    It has some terrifying implications for the tech industry as a whole too, because so many of the internet-based companies are heavily dependent (either directly or indirectly) on massive amounts of money continuing to be invested into online ads.

    18 votes
    1. [2]
      NaraVara
      (edited )
      Link Parent
      I went to a friends' wedding and his wife was an editor at a major (Condé Nast imprint) fashion magazine and all her friends were from print and online media. When I told them I was a data analyst...

      I went to a friends' wedding and his wife was an editor at a major (Condé Nast imprint) fashion magazine and all her friends were from print and online media. When I told them I was a data analyst they looked at me like I was some kind of wizard. It was a very weird feeling to have all these extremely attractive and fashionable people holding court with me like I was the coolest person in the room.

      But it turns out they basically live and die based on metrics, and everything I read about the metrics they use are really dumb. Just chock-a-block full of validity issues and seriously tenuous assumptions being made before conclusions can be considered generalizable. It's insane. Assumptions are never checked or validated. It's like they just wanted to find some way to prove or measure a thing and as long as they have any measurement they go with it because they assume bad metrics is better than no metrics. But that's wrong. . . bad metrics can very easily be worse than none at all. Gut instincts might lead you wrong or might lead you right as a matter of chance, but actually bad metrics can easily drive decisions that are always off the mark. Taking a chance on being off is preferable to that.

      But none of these people really understand data (or even the theoretical limitations of statistical inference). They just want a nerd to tell them what the situation is and they don't want to hear caveats. Caveats make you sound like a little pussy bitch bro! You gotta be more confident! Ugh. . .

      15 votes
      1. cfabbro
        Link Parent
        "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

        "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

        7 votes
    2. patience_limited
      Link Parent
      Thank you for the Ad Contrarian link; I think he best summed up the situation in the post, "Our Principal Problem is Principles". There's little or no validated underlying theory of how...

      Thank you for the Ad Contrarian link; I think he best summed up the situation in the post, "Our Principal Problem is Principles".

      There's little or no validated underlying theory of how advertising works. Lacking any systemic framework, it's all plausible storytelling and tribal allegiances to the various narratives about best ways to reach and manipulate customers. So all outputs are essentially fad- and faith-based.

      It's interesting to me that the notion of ethical advertising is given little attention. Unethical, deceptive advertising is often excused with a hand-wavy, "Well, no one believes it anyway," a tacit admission that advertising doesn't work.

      3 votes
  2. [2]
    patience_limited
    Link
    It's worth reading the article's commentary - De Correspondent's membership seems like a thoughtful bunch at this point. While the economics of advertising aren't so worthwhile for established...

    It's worth reading the article's commentary - De Correspondent's membership seems like a thoughtful bunch at this point. While the economics of advertising aren't so worthwhile for established brands, the commenters make the following points:

    1. In a competitive marketplace, you must advertise to avoid losing customers to competitors who advertise. The example of Google's keyword search auctions is a case in point.

    2. There are significant advertising returns for the introduction of a new company, product, or service, though these returns drop off with repetition.

    3. Data on advertising effectiveness from very large, ubiquitous businesses is not necessarily applicable to small, local, or unique ones.

    4. While the article mentions Cambridge Analytica, and Instagram influencers, there's no discussion of any literature specifically analyzing the effectiveness of Facebook-style social graph-targeted advertising, rather than search or banner ads.

    One commenter wrote:

    I think that it is likely that the response to "idea" target marketing (such as done by Cambridge Analytic) is dramatically different from that to "purchase" marketing, especially when the goal is to sow doubt rather than persuade to take action. Introducing a compelling novel seemingly plausible part-truth into a discussion can derail/capture a person's thinking if they haven't yet formed a committed opinion.

    If the part-truth aligns with a pre-existing concept (even a weakly-held one) confirmation basis will give it significant weight and move the person along the spectrum toward inflexibility.

    When, in a 50%+1 winner-take-all system, a population is split into fairly equally-sized camps, protecting even a small number of your soft supporters from defection, and eroding even a small number of the other side's soft supporters can have a dramatic effect on the future (e.g. Brexit and Michigan). Spending a lot of money on advertising with even a modest chance of swaying 2% of the "market" is worth it when that small increment leads directly to a 100% "market-share".

    15 votes
    1. bbvnvlt
      Link Parent
      Agree. I found myself nodding along while reading the article, untill I started thinking of all the things they weren't discussing/how limited their analysis is.

      Agree. I found myself nodding along while reading the article, untill I started thinking of all the things they weren't discussing/how limited their analysis is.

      4 votes
  3. Rez
    Link
    Whenever I search for something on a device without some form of ad block, I always make a split second decision to click the ad link based on whether or not I dislike the company. So it's...

    But if that link weren’t there, presumably they would click on the link just below it: the free link to eBay.com. The data consultants were basing their profit calculations on clicks they would be getting anyway.

    Whenever I search for something on a device without some form of ad block, I always make a split second decision to click the ad link based on whether or not I dislike the company. So it's gratifying to know that this appears to be a big part of why the online ad industry is a shadow. I've heard of this issue with online advertising for a few years now but haven't really seen anything come of it. I've kind of held out hope that it finally blows up and takes with it the predatory motive behind so much online data collection.

    7 votes
  4. [2]
    dotsforeyes
    Link
    As a consumer who knows nothing meaningful about economics, this was an interesting read that I'd like to understand more. Given that the issue of privacy and ad marketing wasn't the focus, when...

    As a consumer who knows nothing meaningful about economics, this was an interesting read that I'd like to understand more. Given that the issue of privacy and ad marketing wasn't the focus, when it talks about debunking the advertising influence of online ads, should I take this as good news from a privacy standpoint?

    As the article said, it brings up the moral dilemma of the convenience of a "free but with ads" online system that many major players use. If we assume that ads are manipulation and big companies are pouring money into manipulation that doesn't work, even when they know it doesn't work, isn't that a boon for consumers who get the free stuff minus a chunk of the manipulation?

    6 votes
    1. Litmus2336
      Link Parent
      I'm skeptical too. I work at a company that does "free with ads" services and customers love it compared to paid services. Lots of people complain about ads, but then refuse to pay real money for...

      I'm skeptical too. I work at a company that does "free with ads" services and customers love it compared to paid services. Lots of people complain about ads, but then refuse to pay real money for a service. In terms of negatives for our software, "number of ads" is high, but the biggest positive is "totally free". Kinda makes you wonder.

      7 votes