We are sold on the idea that they work, because someone clicks this ad, we track them, they buy the product, and we attribute the sale to that ad.

But we don't know whether the customer would have bought anyway. And some research suggests that, for the most part, they would have.

Steve Tadelis at Berkeley wrote a paper in 2013 demonstrating little to no efficacy of nine figures of ad spend at eBay.

http://conference.nber.org/confer/2013/EoDs13/Tadelis.pdf

This may not be true of all ads - ads for little-known brands, for example, may reach people who would have never heard of it. But the bulk of advertising bought by large brands may largely be a waste.

Advertisers still spend money because almost nobody is getting paid to rain on the parade. There's an endless stream of ad agencies, paid search marketers, marketing department staff themselves, CMOs, media properties, ad nauseam who are all invested in continuing marketing spend. A CMO will almost never declare that his department is useless. So they continue to make the case for their continued relevance.

You can certainly waste a lot of money doing it too. Getting the right message in front of the right user at the right time is a lot harder than people think it is.

The above is where there's a lot of smoke and mirrors in ad tech. But for advertising as a whole, it's not a massive industry because it doesn't work.

Guess that's why we need those brightest minds of our generation on the problem, as the saying goes, right?

That sentence gives me extreme Matthew McConaughey-in-Wolf of Wall Street vibes. After seeing you wrote that, I immediately assumed you very likely work in advertising. Sure enough...

I have no clue whether anything you've written there is accurate or not. Either way, this whole thing and this whole industry just looks, sounds, and feels gross and intrinsically empty. I get a much better and more wholesome feeling from the cryptocurrency industry, even.

Greatest minds? Maybe there are some, you'll find them everywhere. But I'd worry that the greatest minds are toiling away in academia chasing grants or working on things that they don't want to work on.

In the paraphrased words of Don Draper (Mad Men character), nobody grows up wanting to be in advertising. It just kind of happens.

The core of advertising is just getting some message about your product or service to a relevant audience.

A lot of companies offer that service, some more effective than others.

But yes, I started an ad-tech company that supports indie news publishers. Before that, I was offered a great gig at Yahoo (when it was still kind of cool) where I got into it. I honestly didn't seek it out but I guess I liked it enough to stick with it.

It's certainly hard to compare entire industries apples-to-apples. The worst parts of the cryptocurrency industry are definitely worse than the worst parts of the advertising industry. However, I personally feel like in an "average", "net", or "expected value" sense, advertising may be worse. But maybe it isn't; either way, all I was trying to say is I really just don't like advertising or ad tech, and I wanted to use a rather extreme comparison to viscerally convey that. (Perhaps a little like a kind of "bullshit-industry" analogue of Godwin's law - my comparison was somewhat tongue-in-cheek and bad faith, basically, but also kind of not, because I do like some aspects of cryptocurrencies while I like zero aspects of advertising.)

>that supports indie news publishers

Sure, and maybe someone else could've started one that supports starving children. (The originally posted article similarly mentions that one of their reasons for working on ads is "I give half of what I earn to the most effective charities I can find, and the more I earn the more I can give".)

These all feel like cop-outs to me. I could significantly support independent creators or starving children by running a cryptocurrency Ponzi scheme, but it still doesn't make it positive on net. The difference is that you and the article author simultaneously say that you feel like the work is inherently positive, too, which in my book just makes it delusional rather than dissonant or contradictory.

So I absolutely don't think you're at all behaving knowingly unethically; just unknowingly. I think part of the issue here is that it's generally only a tiny bit unethical, so it takes a lot for it to add up to being a-lot-unethical, and humans (including myself) usually aren't so good at perceiving these potential cumulative effects when they're upstream of it all.

>The core of advertising is just getting some message about your product or service to a relevant audience.

At the same time, I can't not acknowledge this. How can I fault a small business owner for wanting people to know they exist? There's some cognitive dissonance of my own, here. And at the moment I'm resolving the dissonance by disliking the advertising and ad tech industries rather than disliking businesses who place ads. (As long as the ads they place aren't annoying, deceptive, or malicious in any way.)

Maybe my opinion on all this will eventually shift a bit, though, because a lot of it's certainly more emotional than logical. At a very deep, subjective level, I just strongly dislike advertising and everything about it. It gives me nothing but negative feelings. Most of the cryptocurrency industry gives me negative feelings, too - but the industry as a whole doesn't give me nothing but negative feelings. Some part of it gives me neutral or positive feelings.

Not to get off track, but ultimately it's a subjective position. I could easily take the view that anyone working for Facebook is actively helping erode the privacy of internet users. Or, that anyone working for Google is furthering its anticompetitive agenda and stifling innovation on the open web.

Without my platform, there are some towns and cities across the US that wouldn't have a local news outlet or reporter to follow local government and uncover corruption. I have case studies on my website where the publishers say it themselves.

From someone else's point of view I could be deluded, but from my standpoint, I'm doing something very positive. I don't think someone has to actively seek out the most cynical perspective on their line of work.

Can you provide some pointers to that data (as the parent did for the contrary position)? Forgive me, but it seems you work in advertising, so I'm not sure if you're the most unbiased person to assert something like this without evidence.

But with many parts of digital, you can show certain pages of your website exclusively to those who have clicked on ads (ie. hide those pages from regular browsers).

In this way you can directly measure the direct effects of the advertising spend.

There are many businesses, including three that I own, that have grown as a sole consequence of social media advertising. We have not promoted these businesses in any other way (no SEO, no trade shows, nothing).

I'm not going to share my advertising accounts with you; I'm just going to ask you to trust that when I get my laptop out and show my results to my 'marketing skeptical' friends, they stop being skeptical.

Actual words, from one of these friends: "wow. That is like a money printing machine."

Consider for a second: how many advertisers that are actually succeeding are going to publicly call attention to their success? Would you?

The only hint is Facebook and Google's revenues. They go up, and I am one of the people who makes their revenues go up.

spoken like a true used car salesman

I'd like to be proven otherwise, so, here are my key points, which you didn't contend with:

-> It's possible to completely isolate the effect of advertising spend, thereby making the effectiveness (or not) measurable.

-> I pointed to growing revenues on Google/FB's platforms, two platforms which make isolated measurement feasible.

In terms of _externally_ verifiable facts, that's the best I'll be able to give you.

The rest, you (and others) have to take on a/ good faith b/ using basic logic, that I'm telling the truth.

Yes, I believe this is true. But also, I've heard that payouts per impression are going down precipitously. Desperate news sites are chock full of heavy ads because each impression pays less and less. Popular Youtube channels increasingly run their own integrated promotional content instead of depending on youtube ad revenue which keeps falling, even as viewership rises.

It's reasonable to suspect that as ad performance becomes perfectly measurable, payouts to content creators will asymptotically approach zero, because most ads don't work. Consumers spend most of their time looking at ads that don't work at all. That the occasional well crafted and placed ad does work isn't much consolation.

Direct sold digital advertising (OG, cutting ad networks out) is a different story.

Imagine, for example, that HN said they would auction off a single ad slot beneath the navbar to the highest bidder for the year.

How much do you think that would command? Do you think there could be sincere branding value (and actual performance) for the advertiser? I think it could be worth north of 1MM just to promote open jobs at a company.

If it was a clean, tasteful ad, and it was simply to support the cost of running HN, I'm pretty sure most of the audience would put up with it.

The common perception of digital advertising is network advertising. But the type of advertising that is the least annoying and most beneficial to both the advertiser and publisher is direct sold.

Though I don't doubt that you are right on the whole, this is a poor argument; homeopathy and other snake-oil are a massive industry as well.

That being said there’s plenty of waste due to politics, bureaucracy, bad tech and general mismanagement. It’s important to separate the concept from the implementation.

Are we being 5D-chess'd and it's working on all of us subliminally and subconsciously and we just think we're immune? Or is there some other huge population of people out there it's working on who actually somehow are real manifestations of the unfathomably-cringeworthy-to-utter "sheeple" / "NPC" trope or something?

One area I can see is more subtle word-of-mouth kinds of influence (organic or astroturfed), where someone may see a lot of their friends or people they admire using and recommending something. I can definitely be influenced in that way in some cases - that's kind of how interest in almost anything works, isn't it? (For a non-profit example, would I have become interested in Rust if I didn't see it positively mentioned thousands of times on websites I use for the past decade? Probably not.) But for traditional ads like banners and commercials and billboards, I perceive zero efficacy in my own case.

>It's in your TV shows, your news articles, your Instagram feed, your word of mouth, your everything unless you are in the forest

I think I, and some decent percentage of HN readers, may kind of be "in the forest". I don't watch TV, I don't read news articles, I've never had an Instagram account or any kind of social media account (besides more "pseudonymous" social media like HN and reddit), I have comprehensive ad blockers, etc.

I also don't really buy products. I buy food, maybe I'll upgrade to a new laptop or phone every 4 - 5 years, but otherwise I don't think I really "consume" new things.

The only thing I can think of that ads have consciously made me do is pay to get rid of them. For example, I pay for YouTube Premium so I can never see ads. (Ad blocking gets tough for mobile devices and casting to other screens.) They got me there, because I watch a lot of YouTube (which I acknowledge is kind of "the new TV") and in some ways it's the best $12/month I've ever spent. It doesn't cover video makers including sponsored content, but I use crowdsourced browser extensions to identify and skip those.

The great misunderstanding of this industry is that what ads you see are just as important as the ads you don’t see, which allows for profit maximization.

In your circumstance, it may be true that bank transactions are farmed and analyzed to be additive to data gathering on the web, which in turn is additive to the offline data gathering offered by various companies. Every transaction made is analyzed for location, merchant, purchase category, amount, date & time, and more.

Most of the other commenters who are claiming and linking to articles that ads don’t work aren’t in the industry. This is an important distinction because what we’re talking about here are the machines that crunch all this data are considered trade secrets and/or intellectual property. Also, slightly off topic, but it’s important to understand that ads != marketing. Ads are a child component of marketing. When you look at the overall function of marketing (of which product management is a discipline, no matter how desperately some attempt to align it to technology), then consider how much of a factor data analysis and operationalization of data is a driver of success for Fortune 500 companies. Almost any company in consumer technology (e.g. FAANG), consumer healthcare (CVS), telecommunications (AT&T), FMCG or retail (Walmart, Costco), and retail banking (Chase, Wells Fargo) are using these techniques to build better products, sharpen communications, and win new customers.

It’s like CGI graphics in movies. If it looks good then it just looks good and you definitely notice when it looks bad. Your average TV show probably has half the stuff on the screen being CG in some way but millions of watchers never know.

In a lot of Tech industry firms, the in-house expertise just isn't there to do this stuff and that possibly breeds skepticism. I've had fairly junior members of my teams head out to FAANG who've been shocked at how limited the depth of knowledge is.

On the other hand, brand recognition I do believe has value but is hard to quantify.

I also never click on an internet ad EXCEPT if it links to a price -not to buy.

Take paid Amazon reviews for example. This is advertising, just one of the most scummy possible forms of it. It's effective because people like me look to reviews to provide a third-party take on whether or not a product is any good. If I have a choice between two otherwise equivalent products, I'll pick the one with better reviews. But usually this just means rewarding the company that paid more to "advertise" on Amazon.

I realize you're probably talking about "real" organic mentions, but those are growing increasingly harder to find. A good example is the last time I bought headphones. I got suckered by a bunch of small review sites that had either been paid or gotten free samples in exchange for reviews. I bought two pairs, and when they arrived the sound from both was distorted. One pair broke within a few months. It was clearly trash that had been pumped using fake organic marketing. When I went back to find the sites that had provided the reviews in the first place, a few of them did mention (in very tiny print) that the reviews were paid. Me, suckered by advertising?! More likely than you'd think.

Back in the day, Johnny Carson reading an ad was convincing to the median consumer because they could be led to believe that the ad really was an endorsement of the product. That doesn't work any more, or not nearly as much at any rate. The basic strategy hasn't changed: it's still an attempt to find someone the consumer will trust. This is why, in my opinion, ads have always been and always will be bad, an attempt to subvert human rationality. Johnny Carson endorsing a product didn't mean that the product was good, it meant he was paid to endorse it. A review site endorsing a product nowadays doesn't mean that the product is good, it means they're paid to endorse it. In both cases the breakdown between what the consumer believes is happening and what is actually happening is the very thing advertising is trying to create, its raison d'être.

The niche ones have mods which allow genuine dissent as well as other recommendations from competing solutions.

Smart marketers don't try to get you to buy from an ad click. They want to move you one step down the funnel, which is usually getting your email/contact info if it's the type of product that has a longer nurturing process and sales cycle.

I have a pixel on my thank-you page. I manually delete placements and optimize creatives and angles and funnels and demographic targeting until it goes from making no sales to ludicrously profitable. This is an entire industry you know nothing about.

Big brands can be dumb but they do mostly have the tools to not be.

Literally every ad I say to myself "wow, that is actually something I would consider buying" and in certain instances, I have. Outside of Instagram it is exceedingly rare that I would purchase something based on an ad.

And from my anecdotal experiences, I have to agree with both you and what I see on HN in that regard. Not only they get the advertisers right up my alley, they even get the exact products I want to click on.

For a specific example: I don't get easily baited by random no-name "hip" clothing startups (that are mostly just alibaba dropship sort of places), so instagram keeps giving me ads for Adidas products as well. And the thing is, not only does it get correctly that I am likely to be interested in Adidas products, the specific products from Adidas that get suggested to me in those ads are the exact kind of products from Adidas that I would be interested in. Which is very impressive and surprising, given how wide the range of Adidas products is, and how most of their general stuff isn't super appealing to me. It is hard to describe to the point where I am struggling myself to define what exactly I am looking for if I am navigating Adidas website. But somehow Instagram ads get it right on target most of the time.

The only time when those ads let me down big time was when I saw an Adidas tracksuit advertised with the design I just liked a ton. Without looking at the details, I ordered it, only to realize a bit later that it was in "kids" section of their website, and I have no kids (and neither do I fall under the typical "people who might have kids" demographic by any metric; e.g., I don't search for any items even tangentially related to children, not a part of any FB groups that are heavily populated by parents or children, etc.). But damn, I would be lying if I said that Instagram didn't get the exact idea of what I wanted perfectly correct, sizing issues aside lol.

According to their algorithm, you do now.

Movie plot: Two people meet up, have fun, then go their separate ways. 9 months later she has a kid, dad doesn't know. But FAANG knows...

The problem with "plausible movie plots" is they are often overrated in terms of % chance of happening.

With linked graphs and relationship trees, it doesn't seem impossible "The Algorithm" could figure out you have kids before you do, or at least base it's Advertising results on a % chance guess.

On the other side there are Google Play ads with mouth open guys - I'm never going to play one of those vile games, ever.

https://www.reddit.com/r/AndroidGaming/comments/cv4ezs/mouth...

I've seen things go from saying things in a conversation to targeted advert on Twitter, for example, in under 1hr routinely (although not always). Many of my peers have reported the same. While I've reproduced this on multiple devices (Android + iPhone) over many tests, I've been unable to isolate the app(s) doing this and how it works.

It's baffling how it's done and at scale, but somehow a few organizations seem to have extremely advanced adtech in production.

It seems to me that Facebook is extremely good at targeting me with ads (via Instagram) for products I might be interested in. I’m also much more likely to talk about products I’m interested in. I’m also much more likely to notice the spooky scenarios where the ads match what I was talking about, but not so likely to notice the ads unrelated to my conversations.

There are so many ways we could detect such surveillance. Power consumption, network usage, mic activity indicators, etc. but I still have seen no such evidence.

What do you think could be going on?

My feeling here is that it's just like when someone in your family buys a particular make/model of car, you start noticing the same car on the road and are surprised that you never noticed how many of them there are.

That same ad for a set of Bose headphones might show up in your feed once a week, but one of those days you just happen to have a conversation about headphones with a friend, and it feels weird.

The paranoia in me sometimes wants to believe that my phone is listening to me all the time and is extracting ad keywords from everything I say, but I have a hard time figuring out how it would work.

Uploading voice clips, even using a good compressor like Opus, would still be noticeable. Maybe not by me, personally, but someone would have noticed that by now. Doing on-device voice recognition is possible (uploads of compressed text might not be noticeable), but my intuition is that would be a huge drain on the battery if it was running all day, processing everything it hears.

But who knows. Maybe it is possible, and there's a novel, but secret technology that enables it. It's a little far-fetched, though, I think.

Unfortunately, this topic tends to be routinely brushed off as coincidence and I believe it's partially because the level of surveillance underway would cause panic and outrage, if it becomes widely known. Although I have have exposure to adtech and ML, it's difficult to grasp how this sort of activity is being done at scale.

My current theory is audio may be heavily compressed prior to occasional uploads to a trusted domain, which could be obfuscated by cloudfront or similar service. It's also possible some on-device speech to text is happening, which would make the files trivial to upload. That said, on device ML itself would be a quite a feat, especially to be running on mobile devices with high degree of accuracy to isolate keywords to be used in prod, for ad targeting.

Possible explanations that I have seen for inaccurate targeting:

1. Some folks have a ton of money in their budget to spend on marketing, and they frankly don’t care about optimizing their targeting. In some cases, this is a shrewd decision, since the benefits of marginal optimization don’t really justify the cost of optimization. That said, in most cases, it’s just sloth or ignorance combined with the knowledge that they better spend their ad budget or else “bad things” will happen.

2. Lots of people call themselves digital marketers. Most of them who are employees suck, and I mean suck really bad. The reason is that if you are really good at digital marketing, it’s pretty easy to roll your own small business that, at a minimum, makes enough money while still having a lot of latitude in terms of free time or financial upside. Most companies are not willing or are not able to pay highly competent digital marketers what they are worth. Regardless, these employee marketers who suck tend not to do well at optimizing targeting.

3. Most digital marketing agencies suck at targeting. This is largely a byproduct of #2 above. The owner of an agency or the lead marketer might be really good, but they often delegate to people who are not. Streamlining the work of the underlings turns out not to be that important for most of these agencies.

That’s my 2 cents. I would love to hear other opinions.

Granted, incumbents are likely to score high on organic search results. If somebody new comes up with a better product, which can deliver more value at a lower price, the page rank algorithm isn’t going to do much for them. But the newcomer’s superior unit economics mean they can afford to bid higher for an ad, which allows them to get market share from the incumbent. In that sense, ads can make the market more liquid, and speed adoption of improved products and more efficient manufacturing or business processes.

The ad publisher does end up capturing a big chunk of this value, and it’s valid to ask if that’s fair and if we as a society should allow it.

Instead I get ads targeted at people who share my IP. I can often tell what my girlfriend has been browsing for from the ads I'm hit with, for instance, which is somewhat creepy.

I've had ads for medication that I'm prescribed, or could be prescribed, play on other people's devices when they use my network. It's likely targeted because I don't get ads for other types of prescriptions at all at home.

I'm also pretty sure of some of the medical conditions my friends and family have based on the ads I consistently see in their homes.

On top of that, plenty of marketers are absolutely clueless about how to go about their strategy, mostly because unlike previous generations (in online ads), they don't grok the underlying tech at all.

If that's all there is to it, I expect there's a lot of needless work being done under the covers.

Although for me, it's a 50/50 split between topic-related and ads that appear to target a generic male audience, which is a very good guess for some topics.

Advertising is throwing darts at the board with your eyes closed, whenever it lands somewhere on the board and nets you point is good enough for most.

Typical conversion rates are under the 1% threshold so you accept that a lot of your spend is not efficient but when it is, you make your money back and some, if you are any good at it.

Some podcasts use "dynamic ad insertion", where the ads are inserted when you download the podcast rather than when the podcast file is created and uploaded. [0] Discovered my podcasts were tracking me when I traveled and then heard ads for an out-of-state regional chain after I returned home, clearly because I had downloaded the episodes while traveling. Overcast added privacy & tracking info, to show whether each podcast uses dynamic ad insertion or (possibly) tracks IP etc. [1].

[0] https://themarkup.org/ask-the-markup/2020/10/08/podcast-priv... [1] https://9to5mac.com/2020/09/03/podcast-privacy-alerts/

If the web were 100% ad-free, it would still exist. It would still be growing. People would still spend countless hours working on computer programming. People would still be endlessly tinkering with the internet. This is reality, I saw it in the 80's and 90's. However, they would not be, as the author is today, asking for forgiveness, pledging to donate half their "earnings" to charity. Online ads may be an efficient way to make money but it also may be the only efficient way to make money from such "work" (experimentation, fun). The folks who are profiting from online ads will say anything to avoid that reality check.

The emperor may indeed be naked, but the amount of money and infrastructure these companies have to bury the truth is enormous. They will not allow the world to ever again experience a web without pervasive advertising. The person who started the web already had a real job. He did not try to make money with online ads. That world was fun while it lasted. There were so many possibilities.

Thanks to this author's "work", the possibilities now appear to be mostly dystopian. Compare this post "Why I work on Ads" to the original paper from Brin and Page that described the influence of advertising on web search as undesirable and a primary motivation for creating Google.

http://research.google.com/pubs/archive/334.pdf

"Half of my advertising budget is wasted. The problem is, I don't know which half."

Me neither, but marketing is significantly about awareness, not just the clicks.

If you've seen it, it is at some level "in you", and the brand has (fractionally) been built.

I know this doesn't apply to all ads by any means, but it's important to remember that advertising also works this way.

But I do click ads in my work, if the top (ad) link on Google is something relevant I might click it if I don't care for the company. I try to avoid clicking links for companies I really like since I work in a very ad heavy industry and know how much CPC can cost.

a. A $300 billion dollar industry is based entirely on a delusion.

b. You are an outlier.

Given that some industries (or movements, ideologies, etc.) could credibly be based on delusions, what do you think is the upper limit for how big such an industry could get?

I've seen the thesis that all this advertising revenue - even if poorly spent - subvents large portions of exciting research in deep learning etc. at the likes of Google and Facebook. So all that talent wouldn't entirely be lost to advertising.

Google / FB just say they show your ad to a XXXX million people. You owe them $XXXX.

"We suspect X million people watch this TV show (based on highly inaccurate Nielsen ratings) and then stayed around for the ad break, pay XX dollars."

"XXX people passed by your billboard, XX saw it, X people visited your website and made a purchase, pay XX dollars."

Plus you can go watch TV and see that it's actually been on there. Or walk down the street, or pick up a newspaper.

There's definitely accountability. The problem is that you can't always blame FB or Google because maybe your targeting is off, your ad copy sucks, you dumped the user off the front page of your website and they bailed, etc. There's a lot more to performance and accountability.

And it seems like unless you go to a lot of trouble, you're essentially relying on the ad network's own metrics for efficacy... Which when you consider the sheer quantity of money at stake, seems like it will end in a massive fraud at least once. I could be wrong about the perverse incentive though, it seems almost too obvious so I would assume that people who know the ad industry better than me would have a response to it.

There's a whole ecosystem of "buyside verification vendors" that advertisers contract with to validate that they're getting what they paid for. Buyers don't just take the seller's word for it, or at least enough of them don't that shady sellers are kept in check.

The most successful ads looks very similar to the organic content and tend to have very similar targeting mechanisms. Search ads that look like search results. Product ads on amazon that look like product search results. Facebook ads that look like Facebook posts. In my experience all those ads are quiet close to content I'd like and I've clicked on quiet a few without realizing it's an ad.

Now-days "Ads" are a watching you.

Now advertisers can track you directly where/when you go, without your permission. Your search and purchase history forever remembered, your location verified, your friends identified.

With such level detail we will soon have custom pricing to maximize profits.