Google: End of the Online Advertising Bubble
kalkis-research.com
kalkis-research.com
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".
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.
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.
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?"
"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.
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!
You can control what kind of data Google is allowed to collect about you from Google's settings dashboard : https://www.google.com/settings/dashboard
I call these adds "stalker ads" to convey this very feeling, and it certainly isn't limited to just Facebook.
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.
Nothing is. Ultimately, everything fails.
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.
http://venturebeat.com/2015/12/22/google-is-reportedly-devel...
This is why I have mad respect for Zuckerberg. He's willing to place gigantic bets (Instagram/WhatsApp) when and where it matters.
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...
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.
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.
and no one will ever find out about it, cause GOOG owns the OS on billions of devices.
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.
[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.
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.
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.
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.
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.
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.
> Advertisers in turn pay Google because it makes them sell more.
> Taking the money of the advertisers and not boosting their sales doesn't pay on the long run.
Which is it, advertising on Google boosts sales or no?
No. Please try to understand what I wrote.
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.
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.
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.
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.
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)....
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.
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.
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.
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.
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.
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).
Does it? I don't see why. It's not like you have to manually go through the data.
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.
What exactly is the feedback mechanism to discover this "fact", or refine its expressions and exceptions? This is a self-reenforcing presumption.
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.
Of course the end goal is what you mention: sales leading to profits.
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 know a dozen companies who spend significant ($1m+) a year on Google or Facebook ads and performance is tracked obsessively.
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.
[1] http://www.emarketer.com/Article/How-Much-Industries-Spendin...
[2] https://www.comscore.com/lat/Insights/Blog/On-Branding-Versu...
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.
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?
Perhaps you had a low quality score (below 8), so Google requested a higher CPC to compensate?
https://www.semrush.com/info/phantomjscloud.com
- 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]
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...
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.
> 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.
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.
Some citations:
https://www.quora.com/What-does-the-dot-com-bubble-burst-hav...
A lot of these vendors' business are predicated on large scale and they tend to be reluctant to turn off bad actors.
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.
But that's not at all what he's saying -- he's saying the market for it saturated, and its efficiency has crested.
It's clear it's going to stay because it's an integral part of the economy.
Nor is he saying that it's "going away." Or anything remotely close to that.
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.
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.
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.
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.
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.
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.
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.
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.
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.
EDIT2: find this article: "Facebook’s Unsuspected Growth Driver: Virtual Reality" https://kalkis-research.com/facebooks-unsuspected-growth-dri...
Maybe Facebook didn't pay them, but authors are Facebook shareholders would be my guess.
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.
This guy explains it better than me: https://m.youtube.com/watch?v=PotMuZ7uH4k
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.
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.
[1]http://www.wordstream.com/articles/most-expensive-keywords
That's just one theory of marketing, but all of them assume there are multiple states that lead up to action, often a purchase.
1) you can see which sites (or even specify) which ones show your ads.
2) if you're doing it correctly, you're looking at ROAS (return on ad spend), so the type of site doesn't matter - just how well the ads return.
3) this mostly only relates to people who don't know what they're doing w/ ads.
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.
Most people use the term "conversion" to mean matching some cookies together.
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.
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...
I'd absolutely want to hear about this.
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.
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.
I'm reading a David Foster Wallace article from 2004 in which the exact same thing is happening to the radio ad industry.
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.
> One can only imagine the dreadful returns for outsiders, companies like Verizon or Walmart.
I can't speak for Verizon but Walmart has a very smart and sophisticated ecommerce team. They aren't outsiders by any means.
This always seemed completely unsustainable to me.
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.)
http://blog.aloodo.org/posts/thank-you-for-supporting-fraud/
E.g. hit insurance company that is not paying for their claims.
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.
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.
[1] http://money.cnn.com/2016/05/03/investing/twitter-stock-all-...
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.
> 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.
Take a look: http://postimg.org/image/58dmkvjkx/
(BTW, this is not the first time I see repeated retarget ads)
(Same site on incognito gives the same repeat ads error: http://postimg.org/image/b89qoca8x/)
"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.
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.
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)
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.
There are a LOT of teams at Google that do cool things that contribute absolutely nothing to their bottom line.
So, haven't they solved this problem - or at least mitigated the risk to shareholders - already?
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.
>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.
The adblocking is a problem though.
An awful lot of the content out there exists because there's money in it (or at least the hope of money). And most of what pays for that is ads.
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.
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.
http://techcrunch.com/2016/05/03/adblock-plus-teams-up-with-...
Seems like one feasible solution :)
I've been using it for months now, and while it's not 100%, it's pretty nice to see cat pics instead of ads.
I'm sure some would, but I also suspect most wouldn't.
There's also the question of "instead, it will automatically track their browsing activity...". That would be enough to put off a lot of people.
scnr