"Facebook on the other hand, has a better control of who is actually seeing its ads, and will benefit from the turmoil by gaining market share."
Did they pay you to write this?
Google ads in search will always be valuable because you can advertise nail varnish to people who have just searched for "buy nail varnish".
This is also about the millionth post I've read which assumes that companies simply throw money at advertising and don't run any statistics of their own. Simply, if you spend a lot on an ad campaign for a product and your sales don't go up, you notice that and rethink your next campaign. CPM and all that are at best proxy metrics for the thing you really care about, "are our profits/sales up".
Google ads in search will always be valuable because you can advertise nail varnish to people who have just searched for "buy nail varnish".
Google and Facebook both have the problem that their business model is predicated on having thousands of small advertisers bidding on ads. That's what they leverage to generate profit. In any market that's dominated by a single entity that smaller companies won't compete with for ad space, both Google and Facebook lose the ability to make money.
When the majority of people who want to buy nail varnish bypass search entirely and go straight to Amazon, Google and Facebook have a huge problem. The same is true if developers go straight to Stack Overflow, people looking for rooms go straight to AirBNB, people moving around cities go straight to Uber, etc, then Google and Facebook will have no one to sell ad space to any more.
I'm not about to suggest Google and Facebook are doomed; they both have talent enough to think of ways to meet these challenges. I would however suggest that they are not too big to fail.
Of all the things that might happen, users going directly to websites rather than through google/facebook is by far the least likely.
Whats more likely to happen is that someone will come along with better search with less advertising (just like Google did), or someone might build a better social network with less advertising (just like facebook did). There's as much precidence for these things reoccurring as there is for users increasingly searching rather than using the url bar.
Rather than using the URL bar, I think it's more likely that people will just open their Uber app, flight booking app, shopping app, etc. I don't think that is an unlikely development.
If they already have the apps installed they're "converted" customer who don't really need advertising anymore. But how to get them know the app and install it in the first place? Ads impression is a common way beside recommendation from friends.
Additionally, most advertising are about pushing people to buy product like snacks, beer or cloths. I doubt many people really install a Zara or Gap app or put the website in their bookmark.
If we assume that different search queries are better served by different engines then I wonder if it's not possible for someone to develop a "thin" search engine that would do semantic analysis of the query and then redirect it to one or more sites, or show results side by side...
Facebook is trying to head that off by having app integrations in Messenger. The whole new bot craze too. Wonder if Google will jump on this train via Hangouts.
I've been down on Hangouts due to it's bugginess but pretty much have to use it due to Project Fi. I they came out with something as rock solid as WhatsApp but with bots I would be on board again.
Same here. I'm forced to use hangouts, due to having Project FI. But google hangouts drops calls, and also does annoying little things like compressing images sent via SMS.
Most of the time, people seem more likely to Google for "amazon nail polish" than actually visit the site. Of course, company-name keywords usually mean that the ad and the first hit are both Amazon.
I observe people doing this all the time. Especially people who are less technical than you or I.
Convenience trumps accuracy and people want a list of offers they perceive to be competitive, not a list of search results. Millions of people look on Amazon first, or Cheapoair, or Hotels.com, the list goes on.
I disagree completely. People trust sites like Amazon and prefer them if they have already registered an account or are Amazon Prime members. When you want to buy a new CD, do you just google for the band name or do you head to amazon.com (or your preferred music site)?
>When the majority of people who want to buy nail varnish bypass search entirely and go straight to Amazon
Do you even do this? My guess is the majority will never do what you're setting out to believe. Strictly speaking of Amazon, they don't even have the best prices these days.
If a purchaser is really price conscious then they'll turn to price comparison websites, everyone else will go directly to their favourite store, where 'favourite' is driven by services like Amazon Prime that add value rather than being anything to do with brand loyalty[1]. Either way, Google is not part of the equation.
[1] I have a Prime account because having it for Amazon Video and Amazon Music is far cheaper than paying for Netflix and Spotify. The fact I now go to Amazon by default to buy things because I get free, quick delivery is a bonus for me, and a big win for them if I'm paying more than other places for things I guess.
I constantly do this, so does my wife. Even if we don't end up buying from Amazon, we'll read lots of reviews and often figure out what to buy from there. And for me, if I don't buy from Amazon, I usually end up going straight to eBay after that.
> Google ads in search will always be valuable because you can advertise nail varnish to people who have just searched for "buy nail varnish"
Yes, how dumb is that? A few weeks ago I googled for a company I was going to interview with. Since then the ad spaces in my web pages have been filled with ads of this company, which sells IT services for logistics.
I'm a sort of atypical consumer - not very willing to spend money on gadgets, for example; but I'm surprised nonetheless that with all this talk of "big data", they can't do a better job at figuring out the things I'm really interested in and instead keep bombarding me with ads related to any random search I've made. That's silly and a big waste of money.
When a random person searches for a company, it's probably > 100:1 odds that they're interested in the company's product, not in a job at the company. That's why companies put their products on the landing page and not their job openings.
You have to understand that whenever you do anything as a consumer in modern corporatism, you are part of a numbers game. The company does not care about you, they care about the aggregate "you" that represents the average of millions of consumers. If 100x as many people search for a company hoping to buy its product, then it only becomes rational to spend engineering effort if the opportunity cost of losing the one customer who is job-searching is 100x greater the lift that can be achieved by fine-tuning the product-buying case. Retargeting would have to be pretty tapped-out for that to be the case.
I face a similar problem - as an entrepreneur, when I Google a company, it's usually because it's a potential competitor that I want to learn about. As a result, my YouTube & AdSense feeds are filled up with ads for competitors. Which is kinda handy, in a way, but probably not why those competitors are buying ads.
> When a random person searches for a company, it's probably > 100:1 odds that they're interested in the company's product, not in a job at the company. That's why companies put their products on the landing page and not their job openings.
What exactly is the feedback mechanism to discover this "fact", or refine its expressions and exceptions? This is a self-reenforcing presumption.
I'd arrived at it by estimating that the average person will end up comparison-shopping for about 100 different products or services during the time that they hold a job, but will have only one job. If you assume 2 years at a job, that's about 1/week, which seems reasonable, counting all the gifts you buy, restaurants you visit, trips you plan, service providers you look up, products you evaluate for work, etc. Wouldn't be surprised if it's even more.
For any given business trying to optimize their website, it's a lot easier than that. Just look at the traffic flows in Google Analytics. If everybody hits the landing page and immediately clicks on "Careers", maybe the focus of your landing page should be on the job opportunities available. If they don't, you're probably right to focus on the product. If a significant number of people visit "Careers" but not enough to move it to the front page, you may want to exclude visitors to it from your remarketing campaign. (A sibling comment indicates that this is trivial for both Google and Facebook ads.)
That more sites don't do this - when it takes all of about 15 seconds to diagnose in Google Analytics and a couple minutes to fix - is probably a good indication that the economic losses from this situation aren't all that significant.
>
When a random person searches for a company, it's probably > 100:1 odds that they're interested in the company's product, not in a job at the company
Really? There are companies that have very few customers that pay lots of money for very specific machinery or services. Customers which might be banks, large businesses or large manufacturing companies. How many among the visitors of their websites are the decision makers that are evaluating their products and those of the competition in view of a purchase? You say 99%.I say 1 out of 1000.
There are, but again, we're talking in averages, and we're looking only at transactions where Google makes money. If a VP at a bank buys some financial software for $10M, it's great for the vendor, but Google still only makes about $10-20. If an engineer at the bank searches for software to make their job easier and clicks on the link, Google still makes that $10-20, but no sale happens (immediately). The financial software vendor has folded the costs of those clicks by non-decision makers into the lead-gen cost of their product, and I would bet that there are 100x more clicks from engineers, managers, and salespeople interested in the product than there are from VP decision makers (or people interested in working at that firm, for that matter).
And that 1 out of a 1000 person might buy a product/service worth millions which makes the marketing and acquisition costs worth it.
You're looking at this through personal assumptions and ignoring all the data when this entire industry is completely data-driven and calculated in decisions.
Of course. I'm not saying that the advertisers are wasting their money. I'm saying that it seems that both the advertisers and the ads network could have made more money with a better targeting. At least in my case, they've wasted the cost of the impression and the potential gain from showing a more relevant ad in that space. And this is probably happening millions of times a day.
It is, but the cost of better targeting gets exponential more expensive.
Also people complain about targeting and tracking and delete cookies so there's that whole situation (which really only hurts them by giving them worse ads).
What magic data is there? As I said, there are privacy concerns which are already limiting the quality/quantity of data available and leading to more generic ads. Outside of that, it takes ever more data and the required storage, processing and algorithms to derive exactly what your intent is.
You can look at any algorithm problem and see the decreasing returns (netflix recommendations are a good example). This industry is not full of idiots, there are thousands of data scientists and researchers working on this. If it was that easy, it would already be done.
1) The company might be better off capping their impressions to you.
2) The company might be better off focusing on setting their remarketing pixels further down the funnel (unless you entered their funnel as part of the process).
3) How do you reasonably expect the company to treat you differently than they do actual leads? I'll assume the majority of traffic that goes to their website is interested in their services and not researching for a job interview, so unless there is some way they could reasonably figure out you're not interested and exclude you, I don't think what's happening here is that wrong. Marketing to people who already visited your site is almost certainly going to be worth more money to advertisers who are prospecting based solely on your interests.
Statistically, based on limited information, re-marketing to groups of people who have already visited the site (or merchant, for offline marketing - I've done this in meat-space too) will beat the pants off marketing fresh leads.
I do agree with the impression cap comment and bumping the tag down deeper into the site / funnel, although a really strong job hunter would read the full product description (like any serious prospect)....
I don't understand why the job of figuring out how to place the ads best should be a concern of the company, instead of Google itself. Google knows basically everything about me, including where I work and what type of job I do, I'm surprised they can't do a better job at placing their customer's ads.
You have to understand how ad exchanges work (and what they are) and what intermediaries there are.
Ad Exchanges handle the actual delivery of ads. They have a massive inventory of ad slots available on a massive amount of websites and it's their job to fill those ad slots up while making as much money per ad slot as possible. Google (Doubleclick) is not the only display ad exchange [1]. There are quite a few other ones like OpenX, AppNexus, Microsoft, and so on. You can directly buy on these platforms but it's generally better to use a Demand Side Platform (DSP) because they provide a wrapper around these platforms and you can manage bidding, targeting, etc. in one place. They also offer various programatic techniques like real-time-bidding (RTB) that can end up costing you less than you'd spend directly in an exchange. Lastly, some exchanges operate in such a way that small advertisers can't utilize them. It's a human-intensive process that involves spending a lot of money, signing and committing to insertion orders, etc.
Because of this stuff, most people are now using DSP's. The DSP's buy large batches of inventory from the ad exchanges and it's their job to maximize the revenue they get for their purchased inventory. As an advertisers, I can set up my campaigns in the DSP, which might involve setting targeting options, setting up remarketing pixels on my website, etc. With RTB, I set a maximum bid amount (in CPM) in my campaign and when it comes time to serve an ad, if the ad slot matches my targeting or remarketing preferences, I compete in an auction against others and the highest bidder gets the impression.
In almost all cases, the ad exchanges are going to make more money (by means of providing value to end-advertiser) selling to people who are setting their own targeting preferences rather than trying to guess. Within the targeting options presented to advertisers, there is lots happening in the background by machines that are doing things humans can't. Ad tech is pretty sophisticated, even if it sometimes seems that it's not. Ad tech has created much more value for advertisers than it's lost when it isn't perfect.
[1] Many people may think Doubleclick is the exchange but that might be because Doubleclick is the most common ad slot you see on a webpage. However, that ad slot is a different product, Doubleclick for Publishers (DFP). You can drop in inventory for any exchange (or even hardcode an ad in cases of a direct buy) in DFP, so it's displaying ads from other exchanges, not just Doubleclick.
Maybe because they don't 'know' in the way you seem to indicate; Google's not a person, making those inferences is hard - clearly the state of the art is very much advanced from even 5-10 years ago, but how do the algorithms know that you don't also want to buy things from the company you applied to? That's not a simple inference, given a (by necessity) limited graph without human capabilities
What Google knows about you, or Facebook for the matter or any other buyer, can be used for targeting and as user features in the ML model which is used to determine the price the buyer is willing to pay for a given impression in the auction.
Most advanced buyers with actual ML in their buying algorithms do this. But ML works in statistical averages on the behavior seen across all users visiting a particular site. At that point the buying process works by figuring out the expected value of a new impression and bids that value, the expected value depends on how the advertiser values clicks or conversions or impressions, so as long as the cost of the impression is lower than the marginal value an algorithm will continue to bid, and potentially win, because it's worth it.
And you can do all the A/B tests you want and you'll see that this is actually true, capping frequency. or choosing to not show an ad because the position on the site is not great, is not a good idea, the right process is to determine a price that, all things considered, is the maximum price (proxy for value and risk) you are willing to pay to be shown in that bad slot that adds marginal value for the advertiser, and marginal value is measured however the advertiser wants.
Thanks for bringing some sanity to these comments. These sorts of articles tend to bring out those who know absolutely nothing about the space or how it works. That said, this reminds me I need to build an exclusion list for our jobs page ;)
They're not wasting money in showing me that ad, its cost is negligible. They're wasting the money they could have made by showing me a relevant ad. For example, there's tons of books I might be interested in buying, and they might be able to extract that information from my browsing habits. It would be an advantage for me as well, to get suggestions about things I might be interested in.
Showing me nail varnish ads when I already told google that I want to buy some is not even advertising, it's just paid search.
It's hard to infer you want to buy books from a search about nail polish, mixed with whatever else is in your history.
There is also the question of who's willing to pay for ads, and for much are they willing to pay. They have to pick from what's available. I see a lot more ads about stuff that is costly and profitable, i.e. photography gear, car rental, insurance.
Google knows where I live, what job I do, where is my office, at what time I go to work in the morning, and almost every page I visit on Wikipedia. It even knows where I parked the car the last time. Is it possible that with all this information it can still mistake me for a potential buyer of that company's product?
I think that ads tend to be about costly stuff (if that is true) because they have to discount their own low accuracy. You can make money by showing me ads for goods worth only a few dollars, if there are enough chances that I'll buy them.
> Google knows where I live, what job I do, where is my office, at what time I go to work in the morning, and almost every page I visit on Wikipedia. It even knows where I parked the car the last time. Is it possible that with all this information it can still mistake me for a potential buyer of that company's product?
Why would you expect them to be able to? Algorithms aren't mind readers. Just because a human could look at all those individual data points and reach that conclusion doesn't mean a computer could.
So they're able to infer where I work (the address), my type of job (based on search, stackoverflow is my first result in 50% of my searches) and where I parked the car- but they can't infer my role or the company's business?
But you have to ask, why would Google go to all the trouble of being your personal experience curator? Google is not in that business. They are interested in showing you the highest value ad that they can, and obviously that's nail polish.
Because Google gets money from advertisers. Advertisers in turn pay Google because it makes them sell more. So the more Google is able to provide me with ads that make me buy something, the more the advertisers will pay Google. Taking the money of the advertisers and not boosting their sales doesn't pay on the long run.
How is Google figuring out which Wikipedia pages you visit? I just checked with Firefox's Network Monitor and the only connections are to Wikipedia or Wikimedia domains.
Because most of the pages I visit on Wikipedia are Google search results. Internal Wikipedia links are not tracked by Google, but those are somehow less important (they're related to the first page I visited anyway).
Udik and his responders are talking past each other a bit. Udik is talking about Google + their advertisers as if they were a single entity, and it is dumb for "them" to advertise stuff he's not interested in.
However Google and their advertisers are not a single entity at all. It is efficient/smart for the advertisers to do retargeting (although a cap and funnel adjustments would make it even smarter) and it is efficient/smart for Google to take the money and run the ads.
Udik, ultimately and in the long run I agree with your point; smarter advertising infrastructure will uncover the lost value that you are pointing out. However, given the current structure of the advertising market and state of existing tools, neither Google nor the advertisers immediately stand to gain by changing their approach to people like you. We're in a local minimum/equilibrium.
My biggest gripe is when I explicitly search for a product instead of using their URL and the first ad is the same as the first result. If I go to Google and type in "TeamViewer" the first ad is for TeamViewer, the first result is for TeamViewer... I hope they're not paying for that.
They have to. If they didn't then Teamviewer's competitors could purchase that placement and the next time you search for TV you'll get Citrix or someone else. It might not lead you to click on it but now you'll know you have 2 choices.
Most sites that do retargeting do it based on number and stats. They know that if a rando that visits their site (but doesn't buy anything, doesn't sign up for a new letter, doesn't click on contact me) will convert at X percentage if they show him an ad.
So they do the math to figure out what that looks like after impression 2, 3, 4, 5, etc... somewhere there's a point at which the cumulative conversion percentage doesn't go up or goes up so slowly to not justify the cost and they stop.
So what seams like a big waste of money to you, seams like a profitable business decision based in fact to them.
Certainly this seems like the way it should work. In order for it to actually work like this it would require the marketers to actually understand retargeting rather than believing the hype spread by ad networks, and it would require the inventory to be delivered through systems which could provide adequate tracking.
Click-though is often not the expected success criteria for these ads though, instead they depend on overwhelming you with reminders until you crack. This has two consequences, the first is that successful campaigns are absolutely designed to annoy you and not give up at a point which is decent, and secondly the tracking becomes extremely weak, with high rates of inferred success where the retargeting ads may not have had a positive influence at all.
I run remarketing campaigns. One thing they can do is exclude people who visit job related pages. Its small but saves a few bucks (and annoyed interviewees).
More importantly, in my opinion, is that Google can serve ads to people who are simply researching something, which is quite often significantly prior to the time at which they're ready to share with the world, if it's even something worth sharing.
Nearly everything is affected by a search for information. Not everything is appropriate or desirable to share with your friends/family. Facebook may make up for this slightly by having the ability to process private messages (whatsapp, facebook messenger, private groups) but I would conjecture that Google has them, perhaps fundamentally, beaten on the advertising front.
> This is also about the millionth post I've read which assumes that companies simply throw money at advertising and don't run any statistics of their own.
Well, anecdotally, they do.
We just took over PPC advertising for a chain of regional businesses. When we got access to their existing PPC accounts, I found that they'd spent about $75,000 over the last year on PPC, and nearly all of it was wasted.
The only conversion path on their site was phone calls, and they didn't have any sort of conversion tracking in place.
Initially, I expect they got some real clicks and calls. But then over time, without any focus on conversions, they just kept optimizing for the cost per click. That meant leaving the search network for the display network, and focusing in on poorer and poorer sources of clicks. Until over the past several months, nearly 100% of their clicks have come from what look like very shady websites and mobile apps.
They cut their CPC by about 75%, but in the process, I expect nearly eliminated any ROI. $75,000 down the drain.
To be fair, I do think Google's AdWords Express tool is a good antidote to this behavior. Someone with very little PPC experience could setup an account, and run a successful campaign. And once you're spending enough, you typically get a call from a Google employee offering you tips on your campaign, and I've found Google's reps to be generally helpful.
But people who don't take understand the AdWords platform, or can't be bothered to learn, can throw away tons of money on spammy or outright scammy clicks in AdWords.
> If you spend a lot on an ad campaign for a product and your sales don't go up, you notice that and rethink your next campaign.
Most people who spend money on ads just want to be seen as the kind of people who spend money on ads, or else they just want to make their boss happy in the short term by telling them that they bought ads on Facebook or whatever. The chain of accountability is very diffuse, and most results don't really get tracked.
I think it was the CEO at BMW who said that if he only showed you BMW advertising the day before you bought a car, they'd go out of business because no one would ever buy a BMW. The brand only works because they start showing you the ads when you're three years old, in hopes that you'll buy one when you're 35. And when they sponsor TED or whatever it's not because they think anyone there is going to go out and buy the car, it's to prove that they're a luxury brand by showing that they can afford to spend a lot of money on advertising that everyone knows isn't going to work.
If you look at brand vs direct response, you can see that it's roughly split among digital advertising.[1][2] But as Seth mentions a lot of people use direct marketing to try to do branding and so don't bother carefully measuring their funnel, and most non-digital advertising skews toward brand advertising because it's obviously harder (or impossible) to measure. And digital is less than a third of total advertising.
Also look at companies of the Uber/Handy sort, who spend huge on direct marketing purposely at a loss in hopes of later creating some sort of lock in through network effects. In that case it's part measuring and part gambling in a way that's not straightforward to classify.
Yeah, I don't know too many companies spending more than paltry amounts of money ads who aren't closely monitoring performance. $1m+ is probably overstating the line at which most companies want to see performance by several multiples.
I can tell from first hand experience interacting with most of the top 100 e-commerce european players show that statistical knowledge is sparse at best.
Many players only pilot their activity through basic indicators such as CPM, "our sales are up".
Many marketing teams still operate their business with "gut feelings" rather cold, hard facts & statistics that "us" tech types tend to use...
CPM can be useful to approximate broader brand advertising. Companies like Coca-cola, Budweiser and GM want people to see their ads a certain number of times, in order to develop lifetime habits. It's not about specific clicks, or even immediate purchases. CPM is the best way to approximate this.
Of course the end goal is what you mention: sales leading to profits.
Facebook has this capability. Write a status or on a friends wall about topic X? In messenger? Just as good if not better than a Google search in intent land. That + demographics is even more powerful imho.
Facebook Ads are much more targeted than Adwords. When it comes to targeting, Adwords is actually really bad bad. Outside of Search they can't compete, and even for Search ads you can't do proper gender and age targeting with your ads. Don't even get me started on Mobile.
This article may be hype, but the Google Adwords monopoly is very real and I wish it died.
I run a SaaS startup (PhantomJsCloud) and tried adwords. No advertising competition, and targeted very specific actionable search queries. Google charges upward of $5.00/click. I can understand they want to cut spammers saturating every random search query, but how am I going to get a positive RoI on that kind of cost?
Honestly, if the competition for those keywords is that weak, I'd go for an SEO blitz. I pulled a SEMRUSH profile on your site (other tools exist, I just like that one)
- Identify keywords you want to target, with decent search volume and not too many strong competitors. Use those words in your headlines and article text
- Start a blog and bulk up your articles; knock out 4 - 5 1500+ word articles on the problems you are solving and which audiences would benefit from them
- Share those articles on social media
- Your site could benefit from additional back-links (you've only got 14); look at your major competitors and see if they are getting links from highly reputable sources. Reach out to those sources and offer them a reason to link to you. Avoid links from spammy sites and low-end blogs (do NOT do the $5 link building package on elance or wherever)...
[There's a ton more, but that will give you a running start on respectable SEO]
AdWords determines your ad's AdRank by its Quality Score (expected clickthrough rate, ad relevance, and landing page experience) in addition to your cpc bid.
Perhaps you had a low quality score (below 8), so Google requested a higher CPC to compensate?
thanks for the input, yeah I think I need to do more "inbound marketing" before attempting adwords (display). I have a 4 to 6 quality score, and nothing is displayed unless the CPC is astronomical.
Have you done the calculation on conversion rate you would need at your current SAAS subscription cost to find out how much you could afford to pay per click?
yeah, and it's a lot less than $5! basically I had to stop adwords display ads. It doesn't seem to be usable by startups with non-traditional keywords, at least until I SEO the site more (then will try again)
so you're saying facebook couldn't scan the pictures people post up, see that a user's finger is not painted properly, and thus start displaying the appropriate ads?
If I walk into a store, the assistant asks "Can I help you?" and I reply "I'm looking for a crimson-coloured nail varnish" and then she says "Sure! We have a new line in this week, can I show you?" then I'm more than happy to let her show me. That's what google search ads feel like.
If I'm sitting in a restaurant having a conversation with a friend and a person from the next table leans over and interrupts to say "I notice your nails aren't painted properly, can I interest you in our new line of nail varnish?" then my first thought will be something like wouldn't it be cool if something horrible and painful happened to this person. Even if I was considering trying a new line of nail varnish.
That's what targeted facebook ads feel like.
>If I walk into a store, the assistant asks "Can I help you?" and I reply "I'm looking for a crimson-coloured nail varnish" and then she says "Sure! We have a new line in this week, can I show you?" then I'm more than happy to let her show me. That's what google search ads feel like.
Is it though? Because I always thought it felt more like a used car salesman crossed with clippy.
"I see you're trying to paint your nails, would you like to buy some nailpolish for that?"
A used car salesman who you spoke to once at a party and who knows a couple of facts about you which they refer to in every damn sentence.
"Hey so last time I saw you you talked about nail polish, I've got a friend selling some... Did you want cheap tickets to a nail-painting seminar? There's a nail & manicure kit on Amazon!"
Only it wasn't even you at the party, it was your friend that did one Google search for nail polish months ago and now you're forever The Nail Polish Guy.
At least with Amazon, when I search for a gag gift, I can tell them later to ignore my page view for recommendations. I would love ability for same with Google.
Yeah, these days I use a private window if I'm searching for anything that would throw off my normal profile. That plus adblock means it hasn't been an issue for a really long time so maybe it's better these days.
I just always found it really annoying when I'd spend a couple of days researching a purchase, and then for the next month I was getting ads for the thing I'd just bought. I don't need one of those any more, I've got one!
That's arguably an implementation issue rather than a more fundamental issue. I.e. it can be fixed, and we all know that Google is not going anywhere anytime soon.
> Your insecurities analysed and used against you in real time.
if there's a way to make money off someone's insecurities legally, you can bet that it's gonna happen. I do worry, but i think worrying isn't going to stop it from becoming true.
I thought this article was poorly researched and the conclusions don't follow from any of the data presented. The narrative is basically just a disgruntled "old man yells at cloud" screed. Then I saw this:
> This is a re-run of the online advertising crash of the early 2000s, when the proliferation of banners and pop-ups destroyed any value these ads had (and led people to install pop-up killers, just like with ad blockers today). It took one Google to come up with contextual advertising to bring the market back to life.
What is the author claiming here? Really? The dot-com bubble was due to advertising? Huh? Perhaps he means something completely different, because the real dot-com bubble had everything to do with actual online businesses, a ton of credit, startups, and vapor. It was not about advertising.
> I thought this article was poorly researched and the conclusions don't follow from any of the data presented
Seriously. A whole paragraph and graph about how click prices were declining and no mention of the move to mobile? Just some assumptions pulled out of his ass about how ads suddenly rapidly declined in quality in those particular years? (never mind that both desktop and mobile ad prices were growing, with the overall decline attributable to the shift to mobile usage).
There's a lot of crap on the Internet but it's pathetic that HN has finally stooped low enough that such low quality drivel gets frontpaged by uncritical up voters.
High CPMs were part of the bubble. Not the primary core of the bubble but it did support a lot of companies.
In the run up to the crash CPMs (for just impressions) were very very high, but after the crash they dropped 10x fold. This wiped out many companies that were dependent upon these fat CPMs for their continued existence.
Arguably if the various vendors in the ad bidding lifecycle chain did more to combat fraud and only show 90% viewable ad (the tech exist) this would lead to lower volume of impressions and higher CPM since everybody is competing for the same audience.
A lot of these vendors' business are predicated on large scale and they tend to be reluctant to turn off bad actors.
This is one of the worst articles I've ever read about adtech and is clearly written by someone who has never worked in it and knows nothing about it.
It's all summed up by this at the end of the article:
> Q: It’s all baseless speculation.
> We base our research on subjects that are gaining traction in the overall news flow. We have found 94 articles about "ad fraud" over the last 5 years, only looking at influential, qualified sources (http://11wall.st/?to=2016-05-04&from=2011-05-04&query=%22ad+...). So, no, we’ve not dreamt this up, this is something real that the media is talking about. This is the whole point: as coverage of online advertising’s shortcomings grows, people will start to grow aware of it, and will start to question the system.
The "news" coverage is similar to this article in that it's about 20% accurate and 80% sensationalist stories. Also 94 articles is like a week of normal trade press output so it's not even a big number over 5 years.
Advertising and marketing technology is one of the most data-driven and results-oriented industries around. That's just fact. It's been like that for decades. The reason there are hundreds of billions being spent is because there's so much control, flexibility, efficiency, scale and accountability available today that can drive sales and massively improve a company's revenues.
Adtech today is bigger and better than ever because even when things change (like mediums, platforms, audiences, technology), the industry always adapts just fine.
Anyone thinking advertising doesn't work should look at how exactly the successes of the favored Silicon Valley companies have come to be, because outside of making a decent product, it's all marketing. In fact, two of the biggest companies in the world today have been built around advertising and it's clear it's going to stay because it's an integral part of the economy.
That last paragraph are my comments on the general tone of the post and this HN thread. That's why it starts with "anyone".
Regarding the article though:
> online advertising efficiency has been decreasing for years
> Alphabet/Google, who has 90% of its revenue coming from online advertising, will see its business scale back to the levels of 2010-2011, while its share price will crash to the $200-$250 area
> Awareness for fraud and the inefficiency of online ads grows past the point of no return over the next 2 years. The whole sector crashes as clients reduce spending and demand better reporting and transparency.
This is all very poor conjecture derived from reading a few dozen "news" articles. None of this is or will be true based on the facts and progress of the industry today.
What a load of BS. From all the demand side platforms I've dealt with, Google is by far the most serious about fraud prevention. They realized early on that while fraud boosts their short term revenue, they'd have a massive PR problem afterwards if this stuff continues.
Nobody's vetting both publishers and advertisers as extensively as Google, their automatic ad verification and fraud prevention algorithms are top notch.
On top, even though "Online" is slowly declining for sure (though not as massively as stated), everyone seems to ignore that both Google and Facebook more than made up for the loss of online with mobile ads that are orders of magnitude harder to block on the closed smartphone ecosystems.
Whoever paid for this piece, it's someone who very obviously has no clue at all about Adtech.
The DSPs I've used address a lot of the concerns here -- fraud, what sites show your ads, etc. on top of what they do for optimizing spend, targeting, remarketing, and making your life easier. However, the article is treating the DSPs are a leeching intermediary. As long as the intermediaries are adding value, their existence isn't a negative and many of the intermediaries the author mentions aren't necessary.
> Google is by far the most serious about fraud prevention.
I agree - they've had 'Verification' in DFA > DCM > DDM and the associated tools and reports keep getting better. And if you have ReportBuilder skills, you can really ID and find discrepant/fraudulent data.
I've always been a bit baffled by why it's called ad-fraud online, but nowhere else.
You don't call it fraud if your TV ad is aired and I miss it because I'm making a cup of tea. No matter how many viewers you were told the show has.
It's not fraud if I don't notice your roadside billboard because I'm focusing on driving. No matter how many cars you were told drive by.
Advertising has always been a crapshoot with a lot of supposed "TV viewers, magazine readers, eyeballs, etc.", but those figures have always had an assumption of "nobody knows which advert works". That's why an advert's success is generally measured solely by the increase in sales after it has been displayed (ignoring brand ads for the mo, although arguably they're the same).
It's the same when I've placed internet ads with Google myself. I place the ad, if I get more profit than the ad costs, it's a success. The % of ad clicks that are actually real does not matter. If the ad costs more than I make back, I stop the campaign. As Google run an auction system, if enough people stop bidding, then the ad price will go down and my campaign might become viable again. Either way, I'm not being defrauded anymore than I am by people making cups of tea during an ad break...
I think the only reason why people like to call it fraud is because the internet has given advertisers for the very first time, some hard(-ish) data on how many users are being influenced by their ads. In reality, it's just the old crapshoot, but with a little more accuracy than before.
What they describe is arguably fraud beyond what you describe. Ads placed on ineligible websites and fake views/clicks. This is comparable to a TV station selling ads for 8 PM and showing it instead at 11 PM, or selling ads based on fradulent Nielsen ratings.
Perhaps, although an alternative analogy for ineligible would be to compare an advertiser going after an adult market by airing the ad at 9 PM, but finding out there were still some kids watching at that time. It's all wasted views as far as an advertiser is concerned. The only difference is that offline they couldn't track it. (I'd also point out the computational absurdity of perfectly monitoring eligible websites for their content type - nigh on impossible).
As for fake views, they're already factored into the price as far as I'm concerned. If say 90% of views were fake and I'm paying £1 per click, all that would happen if you could magically crack down on fakes would be that my cost per click goes up to £10 as it's a far more valuable ad service.
As I mentioned above, the real equation is whether my ad generates more profit than it costs. The only difference between online and offline is that advertisers can finally track the percentage of viewers who are not actually looking at their ad at all. That % has always been there, offline or on. As long as your ad is profitable, keep running it.
I'm not too familiar with how Television ads work, but online advertising has a clear-cut billing model based on very dubious measurements.
When an advertiser decides they want to bid CPM or CPC they want impressions and clicks from real people, not bots, crawlers, mis-clicks, hidden ads that still count as an impression but is difficult for anyone to actually see, etc etc. Then there is the whole problem with view-based attribution - or attribution in general. The fact that a 1d view attribution is commonly accepted is ridiculous when you think about it, particularly in re-targeting.
I was under the impression that ad fraud was more seen as how those sites put 6 iframe windows of ads one on top of another so while they were all loaded and "seen" by visiter, only one of them was visible. The main thrust of ad fraud was "this ad cannot possibly be seen by a consumer". As with all things, some may pervert the definition for gain but on the whole: you'd call it fraud if you paid for a billboard and the company put up your ad but then plastered somebody else's ad on top of it.
Yeah, and the world would be better off without that, but it's incredibly hard to detect.
My point however, is that it is already factored into the price. When a TV station says this show has 10 million viewers, the advertisers understand that it's actually only 5 million who are going to be watching their ad, because of channel flipping, fast-forwarding, cups of tea, etc. It is already an understood factor in the pricing. Whereas online, they don't appear to want to make the same concession towards bots/iframes and so on.
You could argue, particularly for free-to-air TV channels, that anyone not watching the ads is breaking the "social contract" and defrauding the station. That's the exact same argument that Wired makes when they block adblocking readers.
There's always a percentage of your ad buy that will go completely unseen offline. It's no different online.
None of what he wrote applies to any of the large advertisers which comprise 95%+ of Google's ad revenue. I can see some of it applying to tiny inconsequential mom and pop advertisers.
Of course performance/direct-action advertisers would not bid per impression if they wanted clicks or conversions (they would bid for clicks or conversions), and if they were a brand advertiser they would pay for views and monitor brand awareness metrics (https://support.google.com/adwords/answer/3499086?hl=en). And they would also monitor their placement reports and filter out low quality sites if they wanted. And YouTube is growing rapidly and that is not ignorable.
Also, Google search ads still account for most of Google's ad revenues.
IMO this is a very sensationalist article which greatly exaggerates advertiser ignorance and platform mischief.
"A special case must be made of Facebook, as we believe that their platform is harder to crack, and they have a better ability to track their users, and fight ad fraud."
LOL, this is one of the most blatantly money article I ever read. No facebook data AT ALL, yet author claims Facebook is superior and immune to those problems he mentioned, because apparently he believes.
EDIT: this company, "KALKIS UAB", if you throw to Google search only 4,580 results get returned.
Maybe they want to convert some Google shares to Facebook shares, but who is going to believe an article like that. As there is a lot of fake liked pages on Facebook, I don't think Facebook is immune to Ad fraud.
The writer attacks impressions over clicks as more expensive and less worthwhile, but misses entirely that advertising isn't about making you click (few really click), it's about awareness.
The writer also notes that Google is putting ads on lower quality websites, but forgets that their search ads comprise the lions share of their ad revenue. Google.com isn't becoming a lower quality website.
I'm curious if this is actually statistically true specifically in regards to google ads which has active user exploration as opposed to tv/radio/magazines which has passive consumption.
To me, the "awareness ads" are campaigns typically created by CocaCola/Pepsi, beer, DeBeers diamonds-are-forever, Viagra-you-should-asky-your-doctor-about-it. The ads typically feature vague and generic "lifestyle" vignettes and will not have a "call toll-free 1-800 to order" at the end. Like you said, it's all about brand awareness. It's also the type of ads that get aired during the NFL SuperBowl.
But many google ads are highly contextual with the active web surfer already and partially in a "sales funnel". Examples would be a search for "plumber" or "computer RAM" which means the customer is primed to buy something now. I read previously that the vast majority of google ad revenue comes from small & medium businesses and not the Fortune 500 giants like CocaCola and Budweiser. Those small & medium business care very much about "click through" rather than just "awareness impressions." (Side note: Looking through the most expensive adwords list[1] seems to bring up business sectors that rely more on click-through-&-buy-now rather than awareness-&-delay-buy-later.)
Hopefully, someone more knowledgeable about these 2 types of ads can confirm which one contributes the most revenue to Google.
I can't confirm anything about revenues, but anecdotally we've noticed as a team over the last couple of years that our Google ads have moved slowly from the more action-oriented ones to awareness campaigns. I have no idea the marketing value behind those sort but I have to think they're doing something, Chevrolet especially seems to crop up a lot, and we aren't a car site of any sort.
It's not just awareness but also constant reminders to buy things that have been left on your shopping cart. One can see such contents not only on sidebars of websites, but also on apps like TrueCaller which are mixing ads more effectively as part of their content.
In no other medium other than online are you expected to immediately purchase or find out more after seeing an ad. For example, look at the ads on the edges of football matches, for big companies the decision to put an ad there is more about the cost of not being there than anything else. You're seeing a similar decision being made with Google search ads, as sites battle for top place on a Google search.
Online ads may not be perfect, but the decisions behind buying ads are more complex than the writer suggests. It's not all going to disappear when someone reveals all in a blog post, give advertisers more credit than that.
There are ways to get close to a true value of viewthru to compare to clicks, especially as you start spending more. Throw a small % of your creatives in your campaigns to a non-profit. See how those banners perform compared against your brand (they use same targeting, remarketing, etc) and you can write off the spend on the NPO banner.
This is a nothing article. It looks like a professionally researched paper, but it is just a bunch of opinions without evidence. The graphs look like they could be providing evidence of something, but they don't back up the authors opinions in any way.
1) Not necessarily. Most exchanges allow the publisher to supply their own domain, either explicitly, or because the real information comes from JavaScript that the Publisher can subvert and control. This happens.
2) Many (most?) markets don't have direct response, making measuring return very difficult.
3) That's basically everybody. If you know someone who actually knows what they're doing with ads, then I've got a bridge to sell you.
I've worked with ad networks dealing with online gaming. While I am not ready to buy your bridge I saw people that were very good at what they did running campaigns that had sometimes way over 20%
conversion rates. The compensation structure was revenue share 30-40% for life of the player. People who knew what they are doing were making 50-60K per week. From that experience I formed an opinion that people who know what they are doing with ads are working for themselves concentrating on very lucrative niches.
If you mean new sales, then that's interesting, and you should say that. Anyone who can get 200 new users out of every 1000 ads can certainly do something I can't do, and I'd like to hear about how.
Most people use the term "conversion" to mean matching some cookies together.
It's way less drastic in the context of ad network it means a % of users that reached the landing page and then completed signup deposited no less ten X money played Y rounds in the next 30 or whatever days. Still even 5% given the industry was considered decent so >20% is very good.
I don't know if you're trying to be confusing, but you're being confusing. You might try using plain language like, "For every dollar of advertising I spend, I generate two dollars of sales per year." Or adjust as needed.
If you meant 200 sales out of 1000 ads, then that's very impressive, and as I said: I'd like to know more.
However:
If you meant 20 sales out of 100 visitors, then I'm not impressed.
That means there were 80 people out of 100 people clicking on a button that says "spend X dollars", who didn't mean to spend X dollars, and you're just excited because it was less than 95 people.
Moreover, it doesn't tell us anything about what your cost is to acquire those users is, or even if the sum of the spend was less than the sales generated from those users. I again, become worried you're either incompetent or trying to intentionally mislead me.
I have no intention of confusing you. I mean 20 "sales" out of 100 visitors. I was a tech lead for the partner network so have no skin in trying to impress anyone by results of external partners. To me a 20 year old dude making 50-60K per week is pretty impressive, I can't speak globally of what was the cost of traffic acquisition for all of them but for the guys I knew that was their net profit on +- 100K payouts.
Right, so as far as the advertiser is concern, this is still in the "may or may not be working" space.
The fact that a company working in digital advertising can get hundreds of thousands of dollars in "payout" without having to actually justify their value to the brand's bottom line, alludes to exactly what this article is about:
Google is offering a diminishing opportunity for brand exposure, and as those "payouts" get bigger, legitimate publishers are receiving less for their content (because they're competing with scammers), and advertisers are getting less sales (because they're buying more from scammers).
The article then predicts that those payouts you're enjoying are about to go away because Advertisers are soon going to realise it's all crap.
Of course, people have been predicting this for a long time...
They are not working for a company they are working for themselves, they place ads that drive
traffic to gaming properties and receive a share of profits. They put their own money at risk for traffic acquisition, if they are wrong they will loose money. So basically they generated enough sales to receive a 100K profit share payment from partner network to them for a given week and spent 40K on ad inventory netting 60K profit.
I know that the pay side is true because that's what I saw on our end, the cost side is based on what a partners claimed was true I have no hard data on it, except given age and lifestyle it looked believable. It's not like they would share their strategies. The whole point I was trying to make is that from this anecdotal experience I personally came to the conclusion that best people in this field are probably working for themselves and focus on some lucrative niches.
It's very difficult to understand what you're saying, because you're not coming out and saying it.
I've seen tiny two-man trading desks pull in a million dollars a month from a single customer, so I hope you're not suggesting that the volume of money means that they're actually providing a million dollars of value to the advertiser.
What you're describing sounds like many affiliate and CPA programmes, except for the part where they're paid on new sales on users returning for thirty days.
If that's true, then it sounds like the advertiser is actually receiving value, and yes: someone who knows how to use advertising to actually generate new sales absolutely does know what they're doing.
I don't know why they'd keep it a secret that they're successful: Every brand in the world would want to hire them. The biggest agencies in the world would 10x their income immediately just to get them to come in the door.
I mean, who wants one million when you can have ten for less effort?
The thing is though, I've never seen that, and you're not coming out and saying it. I don't know if that's even what you actually saw, and as you can see, it doesn't "make sense".
It's my experience, these "paid signup" companies fall into two categories: One where three-to-six months later they turn out to be chargebacked stolen credit cards, or it's actually drug money that's being washed.
You can live like a dude on that kind of money, but it doesn't mean that the advertiser is actually receiving that value.
They are definitely providing value and are more effective then internal teams promoting the properties (we tracked both) (the chargebacks are accounted for in calculating what they get paid). It's a partner/affiliate type setup. I think one reason they concentrate on this space is because say e-commerce affiliate programs are generally CPA and here they earn profit share for lifetime of the players they bring on. I do not claim the strategies they use are applicable to any market with same effectiveness.
As a user I hate ads (or how they are displayed) but I'm interested hearing about a new restaurant opening nearby, new groceries being sold, new computer hardware etc. New restaurants tend to be advertised before movies at the cinema here, or I have to walk around to see if there is one. New groceries tend to be aired on TV or posters inside the grocery store. New computer hardware tends to be reported by tech news.
A central place for new products largely driven by a community + pay to keep ads up longer (or something) would probably be one of those websites I'd go to for my daily product news.
Ads will shift from the annoying, low-quality banners and sidebar images to "native content" and "submarines" - ads disguised as objective information written by whatever website you are on. The industry will evolve, and ads will continue to annoy/prey upon people and make the ad ecosystem money.
I'm reading a David Foster Wallace article from 2004 in which the exact same thing is happening to the radio ad industry.
The whole article seems exaggerated, Though the CPC prices have been rising at a very fast pace, there is a possibility they might get corrected in future.
On the other hand, the amount of money/funding in the market and a considerable amount being spent on advertising as its one of the easiest paid method to get traffic on your site.
Facebook on the other hand is bullish on mobile traffic, also since it being a relatively new the CPC's are cheaper there., but i dont think they have much more control as to who sees their adverts, fake clicks and profiles are everywhere.
The only area where both Facebook and Google are not market leaders is the programmatic side of advertising. Since it is so fragmented, there have been a lot of smaller players (trading desks and DSP's) taking advantage of that. Since these are relatively smaller companies they dont have such sophistication of fraud detection as google or fb leading to people gaming the system and loosing trust in them.
This article is total crap. Just speculation. They should at least get their facts straight:
DoubleClick was not acquired in July 2009 it was April 2007.
I love so called "articles" that rely on aggregated news.
We are seeing the opposite of what this article claims. Conversion rates from Google traffic are good and ROI there is steady. Facebook traffic quality on the other hand seems to have steadily deteriorated over the last few months, and our ROI there has plunged.
I never really understood the advertising business model. It seems like a reasonable approach for some companies and services, but somehow it has become the cornerstone of the tech industry. Free services with ads.
This always seemed completely unsustainable to me.
Advertisers don't bear the costs of fraud. Intermediaries don't bear the cost of fraud.
Fraud is priced in. It drives down the value of all ad inventory in the market.
The costs of fraud end up being borne by legit publishers (who have to compete with fraud for the same ad budgets) and with copyright holders (whose work gets copied onto bottom-feeding sites.)
What if there was a version an offensive version of AdBlocker? Instead of just hiding ads it would simulate clicks based on your individual preferences.
E.g. hit insurance company that is not paying for their claims.
Disappointed. There is a bubble, but it's not the one portrayed in the article.
The bubble I see is that Google's been riding a YoY double-digit increase in clicks for many years...exceeding the growth of impressions. They've done this by yielding more and more real estate (for searches that they can monetize) to ads versus organic results.
I say there's a bubble, because for the most part, there's no real estate left to yield. Which means the YoY growth will now slow down to match impression growth.
YC realized this a few years ago. Very few of the newer YC companies are ad-supported.
Twitter is in trouble. Their stock hit an all-time low yesterday.[1] Twitter has a fundamental problem - all their ads get in the way of what you wanted to read, and they're small-screen oriented.
I'll start by pointing out that this article makes no sense whatsoever for large businesses and agency-managed campaigns, where expertise and scale mean CPC and CPM are analytical tools and not goals. When you have enough expertise to integrate data and attribute results, it makes no sense to optimize for anything other than ROI/CPA.
Now. Both Google and Facebook get a lot of revenue from small and medium businesses. SMBs often have short budgets, little expertise and limited work-hours to dedicate to online advertising, so it's not at all uncommon for them to concentrate all or most of their effort into a single platform.
For that reason, both Google and Facebook have a constant incentive to constantly innovate in formats, targeting options and channels catered to long-tail small pockets.
The problem with this article is that it mixes large and small. The over-crowded web display network caters mostly to big fish (common-enough exception: small fish by proxy, through retailer campaigns). Am I saying SMBs running web display campaigns is unheard of? Not at all, but clearly that's not Google's strongest proposition. For SMBs, that would be Search. App display and exclusive channels (such as Gmail's promotions inbox) being the next logical step.
Now I work at a fairly specialized agency so I can only guess what my online advertising portfolio would look like if I were an SMB or a boutique agency with off-the-shelf solutions for SMBs, but I honestly don't see Google being ruled out or even majorly threatened for most use cases by this inflation in the web display network.
Large companies and agencies will keep otimizing display campaigns for ROI/CPA. Small businesses (and their agencies) will flock around either Facebook or Google Search mostly, as they already do.
Forgive me if someone already pointed this out but:
> What makes this trend worse is that users who install ad blockers first, tend to be the more sophisticated and the more affluent ones.
Do they ever cite any kind of source or demographic data to support this statement? It follows the logic I'd go with in my own head but I'm curious if this has been documented somewhere.
While I agree with most comments and I think the "prediction" on this article is rather exaggerated, I do think the whole industry needs adjusting, is ripe for disruption if you wish. Companies will figure there is a better way to spend ad dollars. Coincidentally, take a look at this retargeting error on my local newspaper today, does SendGrind knows it just paid for printing the same ad 3 times? Did it on purpose? There is nothing else to put (space was not sold) so might as well put 3 of the same?
For those of you that weren't able to make it through the entire report, there's this gem:
"90% of Google's revenues come from advertising. We expect Alphabet’s share price to go down by 75%. We get this number by revising its earnings down by 30%, stripping its 30x PE off its "growth premium" down to 15x, and factoring in the reputational damage."
The authors clearly assume that most of Google's ad revenue is from advertisers who don't track how much they spend on media relative to how much they earn -- when in fact their entire business model and the ad auction model they created is predicated on this. If the cost of driving a user to your site from a Google search results exceeds the expected value of that user, advertisers can adjust their bids accordingly.
I like how the primary data points used to justify the dire prediction is "news flow," a metric that's never really explained ... which is then used to give very specific probabilities.
I agree with all your analysis on the ad fraud, there is definitely a bubble and there is a shit ton of fraud going on and it's costing everyone money. Where I disagree is the effect that a cleanup would have on Google, people aren't going to just stop paying Google, the portion of money that was going to shitty intermediaries will go primarily back to Google. Bids may go up, fake views may go down, but sales should remain the same for the same budget.
"Q: Google’s ads on its search engine are legit.
We mostly agree. The search engine is an amazing asset for the company. The CPC on google.com has risen year after year"
So... isn't that like most of Google's profits? Seeing as how they're both publisher and ad network they get 100% of the advertisers spend.
Does losing a fraction of a significant minority of even revenue warrant calling GOOG at $250? Ridiculous.
To me this all sounds like: play stupid games, win stupid prices
Add an unholy amount of tracking and obtrusiveness to ads, get ad-blockers
Have no check for advertisers and ad-publishers, get fraud and malware on the networks (and more ad-blocking)
Then get ad-brokerage and arbitrage as posted a couple of days ago, seems like a prime example on how BS jobs flourish (because if there's something even more stupid than HFT this is it)
It's a law of the Internet - anything that can be gamed for profit, will be gamed for profit.
Trad media may be dinosaurs, but they're much harder to game. You can't pretend to improve the return on a double-page glossy ad in a famous glossy magazine by hiring a Cambodian click farm.
I'm wondering if we're going to see a move back to print.
I wonder if Amazon ends up being the biggest existential threat to Ad-driven revenue for FB and Google. One could certainly picture a world where Amazon is so efficient at hovering up a large enough market share of the online retail world to dry up the mom and pop end of the market who buy cpc ads.
Ads won't die, the way they are served will change. You can look at Instagram who are serving ads natively in their feed and they perform well. Lots of other products are doing the same. Ad Blockers can only block traditional ads in web browsers, they won't affect the native ads in apps.
Not necessarily true, you could set up an adblocking app that changes the host file to block out those served up by ad networks. There are some that already do this, such as adguard, which has a program that blocks ads across your entire system, no matter if it's in a native app, or not.
I just disabled our ad campaign on one of the online ad platforms mentioned in this article. We market to tech audience who are probably 90% covered with adblock. We're seeing some odd page paths from users who visit our sites through paid clicks. Very different from qualified lead paths.
I can't say much about whether the claims in this article are valid or not, but the day that Google publicly cuts a huge percentage of their workforce will be a very sad day.
There are a LOT of teams at Google that do cool things that contribute absolutely nothing to their bottom line.
Its not directly to hurt google, but it is a play to make themselves a consumer electronics company rather than an ad company, and as a consumer I'm much more likely to stick with a company that has those incentives rather than google who's bottom line would improve if all privacy would be destroyed.
It seems to me that they shot themselves in the foot when they accepted Google's 1 billion offer to keep their search bar on iOS. That right there bypasses any ad blocker and provides Google with much more consumer insight and metrics than any ad could ever do.
My take is that they restructured into Alphabet to protect for eventualities that google (the core legacy business) may not be the revenue driver forever...
So, haven't they solved this problem - or at least mitigated the risk to shareholders - already?
The only ways in which I can see the online advertising bubble popping is by opt-out adblockers on devices such as the iPhone, or by much more intelligent adblockers (which may use AI to detect ads).
The more damning thing are the statistics. One of the great things about advertising on the Internet is you get lots and lots of feedback on how much "work" your ad has done (nominally page views and clicks) and you can compare your sales before and after advertising to understand how valuable it is to you. But chart 6 (https://kalkis-research.com/imagecache/532f1ae2393a0502f601a...) is the bottom line. If advertising more doesn't get you more sales, then you won't use it. And that means Internet advertising has to change.
Check out enbrite.ly they have a good tool to fight ad-fraud. The team grew up at Live Jasmin, you can imagine the volume if fraudulent activity in that space...
I agree that Google's model is a bit of a bubble, but red flags appeared in the first paragraph:
>Google's clients have no clue their ads are being displayed on worsening quality websites.
Well, actually most of Google's money comes from search advertising, not Adsense. And most smart PPC manager very rarely, if ever, advertise on Google's extended network. Google also makes most of its money from PPC, not CPM.
I think you could still do ads, but they would have to "come home" to the actual site, and the site itself would be responsible for negotiating ad sales. I think this would be the best bet for small advertisers, in the long run. Yes, there's no chance that small advertisers could afford to advertise on a large site, but most small advertisers want a more-targeted site, anyways. I tried to buy super-targeted ad-space late last year, and it is nearly impossible to buy ad space directly from smaller web sites. They either a) don't do ads, or b) only use a larger ad provider. I think a lot of smaller sites are giving up a lot of ad revenue by not managing the ads themselves (regional competition vs. global competition, as one example).
Not with the same quality nor with the same consistency.
While there are some great bloggers that might cover this, it's usually people that are starting to do that to have an "head start" while waiting to be able to do that full time.
Most bloggers also still run ads to offset some of their costs and they usually provide commentary of news that are reported by more traditional news outlet.
Without those incentive I don't see many bloggers, especially intelligent and high quality one that will keep going or that will be able to have the system in place o handle an "internet hug" by a site like reddit or hackernews.
Then we'lll go back to watching TV, or playing smartphone games. Most publishers satisfy the problem of boredom in the office place. They don't provide anything that is critical/unique.
Publishers writing content 'for free' and trying to push ads to you is like a wealthy man throwing money off a bridge, and scolding at us for not praising him in return. We never demanded it from him, it was just thrown at us.
I think it is pathetic that our economy rewards businesses which have somehow placed themselves such that they generate the most views. There are so many industries doing valuable work, but just don't have the eyeballs on them. Why should they receive less compensation, and be in a more uncertain position from a business point of view?
Did they pay you to write this?
Google ads in search will always be valuable because you can advertise nail varnish to people who have just searched for "buy nail varnish".
This is also about the millionth post I've read which assumes that companies simply throw money at advertising and don't run any statistics of their own. Simply, if you spend a lot on an ad campaign for a product and your sales don't go up, you notice that and rethink your next campaign. CPM and all that are at best proxy metrics for the thing you really care about, "are our profits/sales up".