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What do we really know about the effectiveness of digital advertising?

Posted by skybrian
Tags: advertising, long read
https://thecorrespondent.com/100/the-new-dot-com-bubble-is-here-its-called-online-advertising

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Title
The new dot com bubble is here: it's called online advertising
Authors
Jesse Frederik
Published
Nov 6 2019
Word count
3954 words

1 comment

  1. skybrian
    Link
    From the article: [...] [...]

    From the article:

    Picture this. Luigi’s Pizzeria hires three teenagers to hand out coupons to passersby. After a few weeks of flyering, one of the three turns out to be a marketing genius. Customers keep showing up with coupons distributed by this particular kid. The other two can’t make any sense of it: how does he do it? When they ask him, he explains: "I stand in the waiting area of the pizzeria."

    [...]

    Economists refer to this as a "selection effect." It is crucial for advertisers to distinguish such a selection effect (people see your ad, but were already going to click, buy, register, or download) from the advertising effect (people see your ad, and that’s why they start clicking, buying, registering, downloading).

    [...]

    The benchmarks that advertising companies use – intended to measure the number of clicks, sales and downloads that occur after an ad is viewed – are fundamentally misleading. None of these benchmarks distinguish between the selection effect (clicks, purchases and downloads that are happening anyway) and the advertising effect (clicks, purchases and downloads that would not have happened without ads).

    It gets worse: the brightest minds of this generation are creating algorithms which only increase the effects of selection.