Does internet advertising work? (2020) | Hacker News Reader

Does internet advertising work? (2020)

freakonomics.com

24 pointshackthemack35 comments

My wife and I have a small life style business, selling a physical product. We make a nice daily profit using Meta ads. X dollars go in, X*A dollars come out, A > 1.0. When not running ads, it's just tumbleweeds.

I also have a digital daily browser puzzle. I've grown the user base quite a bit by running one simple ad on Reddit with amazingly good metrics.

In the past I worked for F2P mobile game companies. Their business is based on running successful internet ad campaigns.

Could you share more about the reddit ad you run? I also have a daily browser puzzle. I haven't done any paid ads but have considered it.

Could you share what you spend vs the players you attract? Any tips or tricks?

EDIT: Oh wow, you make Clues by Sam! It's a great puzzle and one I regularly see people gushing about. Great job!

Thanks!

My ad is just one image and some clickbaity headline. The image is very simple, high contrast, designed to pop out. I'm targeting all kinds of puzzle subreddits. I'm getting just about $0.15 cost per click in US. The budget is quite small, but this helps reaching out to new audiences who spread the game further to their friends. The majority of the growth is still organic, but ads do help. I'm still not sure if it's a net positive though, since I don't have strong monetization in the game, and don't do any fingerprinting of users, or much analytics at all.

Thanks! That’s great info.

If you’re up for it I’d be interested to chat and learn more about Clues By Sam and how you monetize it.

I make my own daily game and would be happy to share what has and hasn’t worked for me: https://tiledwords.com

If you feel like chatting send me an email at paul@paulmakeswebsites.com

No worries either way. Cheers!

Ah, Tiled Words is great! Well done. Did you know Netflix launched a daily puzzle platform, Puzzled, around the time your game came out, and they have a similar game called Bonza (which they acquired, the game exsited as an app before that)? I found it an interesting coincidence.

Thanks!

Yeah I learned about Bonza (and Puzzled) after launching Tiled Words from someone on Reddit.

Definitely some interesting gameplay overlaps!

I would love to hear your process for picking a successful ad campaign. I tried doing meta ads for my mom’s business and it didn’t really go anywhere

The best ad we've had was made by an influencer we hired to do an ad. She knew how to grab the attention of our target audience, and speak to them.

But in general we just slap all kinds of videos there. Some perform 2x better than others, impossible to guess whuch ones, but in the end the range of success isn't massive. I haven't marketed many different kinds of products, but here's my take: If an ad is giving something like 20% return on ad spend, getting to 100% can be tough by just improving the ad. What matters more is that it's a product that is easy to sell. We sell escape game murder mystery magazines. Murder mysteries in any form are simply very easy to sell.

Nice to see this being top comments. For a long time Ads were nearly universally seen as evil on HN ( and wider Silicon Valley ) and the topic discussions will always be downvoted, flag or becomes a moral compass argument.

I guess HN is healing.

I still find ads questionable, even if I rely on them. If I spend, say, $100 on ads, after printing and shipping, I make, say, $10 dollars in profit. Meta just made $100 dollars in profit, thanks to my hard work that earned me a fraction of that. It's hard to swallow and fathom what an amazing business they're running.

Same goes for F2P games. They pour millions (billions) into marketing games, with crazy small profit margins. When a mobile game company earns a million, Meta earns 10 millions (or more). Apple opens up the platform for 3rd party appstores with only 15% cut instead of 30%. Where does this new profit margin go? Into ads. Now companies can afford putting more money into ads, to outcompete others. Others follow suit. Instead of a million, the company now earns 1.01 millon in profit. Meta earns 11 million.

This isn't the ad platforms' fault, but I still find it somehow wrong.

Edit: typos

I understand your argument, but part of this comparison is between Net profits and Revenue. While it cost Meta close to zero to have that ad space, it does cost meta money to run their platform. It is the same with any good old classified ads, or even free newspaper.

Meta dont actually dictate the value of ad space, they are largely market driven. Even though Meta may try to manipulate it to their advantage. Had they not been able to provide positive returns for those ads, they would not been able to continue and charge those price.

Also I think this is somewhat US specific. I dont know if that is still the case but US digital ads works really well. And they cost far higher than European or other part of the world.

I started listening to the podcast, but first they made me listen to several ads.

One was for a company that survives by selling ads - basically this was an ad selling ads! Given the title of the podcast, I assumed this was some sort of meta-joke, but evidently not.

So the sponsors of this podcast apparently believe that internet advertising works.

I hadn’t considered the irony of an ad-supported podcast questioning their own livelihood, good catch

It works very well for the HUGE players who sell it, Google, Meta, Amazon and not many more.

It can help a small advertiser get a small number of customers to try out their offering.

It does not and will not create brands. If you disagree, please tell me about brands created by “Internet advertising” in the current century.

That is sort of the inferred conclusion of the podcast, it is a bit of a racket by the big players.

I wrote a very short ebook on the subject some 10 years ago, 15 Questions About Online Advertising.

It should be available for free on Apple Books, Google Books, Kobo etc, or for 0.99 on Amazon.

The goal of advertising is to hammer you with the same content again and again until your brain associates something with the product. Like shampoo associated with what you see everyday in the advertisement.

However in order to do this, whether you are selling or buying, you have to have the scale. And the scale of big players is now too big to compete.

And even if you do, your infrastructure will run on any of these big companies who can do anything to your traffic to keep their business and later pay fines for unethical practices that are minor compared to the profits.

Gymshark, Warby Parker, Casper, Liquid Death, Olipop.

Many 21st century consumer brands have been built by internet advertising. Seems like you do, based on your comment about your book, but in general I feel like many people who say stuff like the comment above don't actually work in marketing or startups, particularly non-tech physical goods based ones, or have even run their own ads on these platforms.

I've never seen an internet ad for any of these. I saw a physical ad for Casper once.

I think it's safe to ask for a citation for this claim.

It is trivial to find them online, just search the company name and then "ads". I assume you don't go on TikTok or Instagram or if you do you aren't part of the target market to be served these ads.

https://www.facebook.com/ads/library/?active_status=all&ad_t...

https://adlibrary.com/brands/gymshark

The fact that they have online ads does not mean that they became big because of them. That's that the original claim was.

Sure, but in this case they did, they are well known case studies in the world of direct to consumer marketing.

(PDF warning) https://www.researchgate.net/profile/Thomas-Arsenis-2/public...

The paper says that influencer marketing was new in Gymshark's case. It doesn't claim that this works repeatedly. Was it lightning in a bottle, i.e. Gymshark got lucky because it was early, or is it a consistently smart strategy?

Also, influencer advertising is a different beast, it's not standard advertising. More like PR or testimonials.

It is repeatable to some extent, again, if you know what you're doing. There are guides online.

https://youtu.be/7JtttjbTRAQ

https://www.demandcurve.com/growth/run-ads

I second your request.

I don't live in the US. I am familiar with Warby Parker and, to a lesser extent, with Gymshark and Liquid Death, but it needs to be proven that they became well known thanks to online advertising.

I have no idea who/what Casper and Olipop are, to be honest.

How can one "prove" it? I don't have access to their ad account, only what the founders and executives say publicly. Gymshark for example grew with influencer marketing on Instagram and TikTok and then having their own ads and media on said platforms. These companies are all well known case studies and have many sources online with a simple search.

https://www.researchgate.net/profile/Thomas-Arsenis-2/public...

Dollar Shave Club.

I didn’t need their product/service, but I only remember them a million years later because their original ad swept across the internet like wildfire.

Ground News?

Anyway, Google, Meta and Amazon don't sell the king of ads that make brands. But there exist branding ads on the internet.

> But there exist branding ads on the internet.

Which ones, for example?

There are plenty of people out there publishing all kinds of content that will announce your company if you contact them and they like what you do.

Advertising isn't just B2C, it's also B2B. The companies that make everything you buy (from the food you eat to the electrical wires you install in your walls) needs raw materials and machinery to produce anything. While there's trade shows and good ol' fashioned handshakes and whatnot, one of the main ways to sell B2B is just camp the top Google result spots by giving Google a lot of money to be the first result for the names of business inputs (or the names of your competitors, if you want to be cheeky).

When you hire a non-technical purchaser, when production line 13's full-body discombobulator breaks and the maintenance guy says "we need a new full-body discombobulator", the purchaser has no idea what a "full-body discombobulator" is or who makes it but they'll Google "full-body discombobulator" and they'll click [Buy Now] on whatever link shows up so that production line 13 can continue printing half a million bucks an hour.

internet ads are largely a story of parasitic exchanges using information asymmetry to suck as much surplus out of the middle as possible.

https://june.kim/advertising-journey/

Why internet advertising won't work? Google and Meta got big based on selling ad online and they have been doing it for 10+ years.

If you know what you're doing and have lots of money to spend, you can get great returns on online advertising, especially because the platforms know how to target very specific niches of customers. But, most people don't know what they're doing and end up wasting their limited budget then conclude it doesn't work for them.

Many consumer brands as I mentioned elsewhere were built off online advertising to billions of dollars in revenues and valuations.

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