Hacker News Reader

Comment by manigandham | Hacker News Reader

This was a superficial analysis at best. Adtech produces petabytes of data every day proving that advertising works. There's a reason why two of the most valuable internet companies sell ads.

The problem is knowing exactly which formats and campaigns are working down to the dollar, but part of that is just the reality of fuzzy attribution and it's only getting harder as privacy regulations get stronger. However you can definitely tell the difference when turning everything off, and if you can't then you were advertising to the wrong people in the first place.

Uber's mistake isn't that advertising didn't work, but rather that they didn't vet their vendors or even bother doing any checking and optimization of their own.

View on HN

The implication here is that money spent on ads is largely wasted.

Companies like Uber and Ebay have turned off all their adspend and saw little to no change in their acquisition metrics. You can argue that they were just doing it wrong. But the point is that, if even they are doing it wrong - and getting nothing in return for the millions they're spending on ads - then it's very likely most others are in the same situation.

You are right that this doesn't mean _all_ advertising is useless, there are absolutely profitable usecases. But the larger points still stands: most money being spend on advertising right now is likely not returning anything.

We now have some strong precedents being set. I believe this will cause more major companies to run the ultimate experiment: turn off all ads and see what happens. It's too early to tell, but it's not impossible we'll see adspend drop significantly across the industry once everyone finds out they're just burning money.

Why the ad spend isn't working is a critical detail. It's definitely not most money but yes there's a lost of waste because it's a 12 figure industry with lots of politics, perverse incentives, thousands of vendors, and a complex global supply chain.

Fraud is a special case because it's criminal activity and has nothing to do with advertising. It happens in every industry but it's especially easy with online technology spanning multiple countries and data that can be easily faked. Uber was exceedingly oblivious here but I wouldn't extrapolate advertising efficacy from these examples.

Reply on news.ycombinator.com