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Comment by tehlike | Hacker News Reader

I worked in ads. You individually is not what makes advertising useful or lucrative. Aggregate numbers do.

How many people see ads on tv, and buy the thing they saw right away? You guessed it, it is probably less than a percent.

There are so many impressions in the world, from billons of users. You cannot expect each of them to do meaningful conversions. On a super off the cuff calculation, assume each user see 100 ads a day, 2b users makes it 200b impressions. If each user generously converts once a day, that is 1%. If they convert every other day, it is 0.5% per impression.

I particularly left clicks out went straight to conversions. Usual flow goes like this: query, matched query, impression, click, conversion... The funnel is super large and drop offs are huge.

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Is the ad industry ever going to say that mass-data collection doesn't work?

They're always going to say it works.

Data works, makes things efficient. Doesnt mean making people buy things easy.

It works (Has a positive RoI) up to a particular spend/impression, and doesn't work after a particular spend/impression.

The purpose of all the data collection/targeted advertising/remarketing, is to increase the efficiency of these ads, and to increase the threshold when it goes from 'works' to 'doesn't work'.

To put it another way - I can't think of many businesses where showing ads for 1 cent / 1000 impressions would not be worth it. I can't think of many businesses where showing ads for $1000 / 1000 impressions would be worth it. Depending on the business, there's some inflection point between those two numbers. More targeted advertising makes the implicit promise that the inflection point for <your particular business> is higher, then in an untargeted advertising platform.

What incentives would the ad industry have to defend a practice that isn't popular and doesn't work?

What incentives are there to claim that their company can sell your company access to their secret sauce which greatly improves some metric which is notoriously hard to measure?

It's very easy to measure the success of online advertising campaigns, because you can directly measure how many people your ads are reaching and which of those people end up buying your stuff.

Even if it weren't, I still don't see the incentive. If you don't think that it matters what your secret sauce actually is, why use mass data collection rather than something more popular?

I was all geared up to play devil's advocate here, but any response I could formulate seemed to distill down to data being extremely powerful, and so undermined the thesis.

Still though, if Facebook has solved the "50% of my ad spend works, I just don't know which 50%" issue for companies like Mercedes Benz and Coca Cola then that would be mighty impressive.

No it is not easy to measure. You can measure immediate success, but not delayed success. I just bought my first order for a product that I last saw advertised on facebook a couple years ago. At the time the product looked interesting but didn't fit my needs, but a couple years latter and I remembered them. Since I've moved and used firefox directly to access their website it will be very hard to put my order with the ad (they have probably closed the books on the original ad where I'm marked as a click but no buy)

Are ad-hating HN users ever going to say that ads might work sometimes, instead of relying on random anecdotes and 0 data or facts from an extremely small and biased sub-population who is never the target of advertising campaigns anyway?

Or are you really arguing that >$500B businesses like Google and FB are complete fraud?

I hate ads, but I agree with you. I hate them because they work. Or at least, all this money wouldn't be flowing into the industry if it really wasn't working. Maybe FB is fraudulent due to the accusations in the article (inflating numbers to advertisers), I don't know; that's unrelated to the issue of giant, innovative tech companies basing their entire business models on advertising things to their non-paying users, and visitors, and also anyone else who ever visits pretty much any other website on the Internet.

Advertising isn't fraud. Neither is data collection. It's just unfortunate. I wouldn't even be surprised if many Google and Facebook employees agree it's unfortunate. They're probably thinking: what else exactly can we do to sustain all these non-paying users?

It's really not even the data collection that bothers me so much as the fact that it's being used for such a... dumb purpose, I guess. The best minds of our generation are dedicating their life's work and all of their brainpower to thinking about how to get people to see or click more advertisements. What a waste.

I didn't claim that ads don't work... far from it: I've seen how easily people are persuaded to part with money so I believe ads DO work!

What I have issues with is using masses of data to persuade someone to buy something having any more significant ability to make them part with their cash than doing it contextually.

I realise I said "measureable effect" and I kind of meant that in my original statement but I also mean measurable enough that my privacy is traded for an extra fraction of a percent.

By way of example, lets say a contextual banner ad at the top of an article for the new Hyundai i30 Fastback N (I just bought one of those :) with a discount code to buy one might persuade 10% of people to click and 10% of them to buy. (Illustrative figures, don't throw your back out over their accuracy)

If adtech companies hoover up data across the web about my buying habits, browsing habits, sexual habits etc. can they legitimately say they can make a measurably larger percentage of people buy that car (or handbag, shoes whatever)?

And if so, what kind of numbers? Is it 10.1%? 30%?

And is that trade-off worth me allowing them to do that?

That's my issue with ad tech.

The issue isn't making a larger percentage of the people buy, it is a larger percentage of the people advertised to buy.

Alcohol companies don't want to waste their advertising money on people who belong to a region that doesn't consume alcohol. Car companies don't want to advertise to the poor with bad credit - by contrast scammy used car dealers want to advertise to those with bad credit and not reach the rich.

Of course there is a real downside to this: you will miss someone who should be a target because they look like the type of person is not. The person who just left his restrictive religion. The poor person who is starting what will turn out to be a successful business. Thus big companies often to have a component of ad budget that reach everybody without concern for who buys - just to make sure they don't completely miss someone worth targeting.

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