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Comment by durnygbur | Hacker News Reader

Why would ad companies need research labs?

At the minimum: to find more effective ways at getting people to purchase those products being advertised. There's been a lot of interesting research done on recommender systems and data mining that have been fueled by the growth of the ad-funded Web.

Eventually, though, once a company gets large enough, it needs to diversify in order for it to not be totally dependent on one revenue stream, lest it find that stream disrupted in the future. Apple used to be strictly a personal computer company; now it sells not only computers, but it sells smartphones, tablets, headphones, smartwatches, and other consumer electronics, as well as provides services for a fee. Google has a lot of activities, and Facebook has been branching out into VR through its Oculus acquisition.

Having a research lab could be helpful with exploring other areas that the company could branch out into.

You're sadly downvoted, but you're making a good point. The digital ad companies are at this point operating mature stable businesses in monopoly markets. Do such companies really need to invest in R&D?

How do you think those companies got to be mature monopolies? Someone had to do the research to find out which “hot singles near you” banner ad has the highest conversion rates.

I say that tongue-in-cheek, but only partly. There actually is a ton of research that goes into following things like cultural trends and human psychology to ensure maximum ad consumption. Advertising in the middle of a mobile game or on Netflix requires an entirely different school of thought than advertising on traditional cable TV or news websites.

A notable “innovation” (though many may not respect it very much) is the new paradigm of advertising stuff via Instagram influencers and the functionality built into the app to facilitate it. Someone had to research and design that, just like such companies now are probably trying to find the best way to advertise in VR/AR platforms or in rideshares.

Digital ad tech may be mature but search is not. If it was then the experience of using any search engine would be very much the same but in my experience that is not close to being true yet.

But isn't the experience pretty much the identical? Google, Bing and DDG look essentially the same; the two main differences are the colour of the lipstick, and the search index. The main experience - type in words, get suggestions while typing, confirm and have it show relevant webpages + various info/image/videoboxes - it's universal now.

Right but the visual experience isn't as much a differentiator as the "does this answer my question" experience, which relies on fairly sota methods in NLP, clustering, etc.

They are not monopolies. They own a segment of users but NOT a segment of advertiser budget. They compete with each other for their true customers: advertisers and their money. If one platform gives a higher ROI than another then more advertiser budget will shift to it. Sure, most large advertisers will diversify but even a 1% shift means billions in this case so worth having people try to optimize.

Every large ad company has a bunch (or a lot) of PhDs that publish papers and generally try to out innovate their competitors. There's research on human behavior, economics (auction theory, etc.), optimization theory, machine learning, etc. For example, modern ad systems are the largest auction houses in human history by orders of magnitude.

Despite this mostly being an attempt at snark:

To research new infrastructure technology to reduce expenses or simplify operations (making outages less likely, feature development easier, etc.)

To get better at targeting ads by investing in data science/machine learning/AI

To create new products through which to serve ads, reduce CAC, or build goodwill or diversify

To generate publicity and press for recruiting purposes, public perception, etc.

To acquire patents or to genuinely just try something new and figure out how to use it later

There are so many reasons, but the main reason is despite making their money from ads, they are not only ad companies, they have many products.

Even disregarding the product reasons, research often makes these companies look good to both a technical audience and sometimes to politicians who value "innovation".

Because they want smart people, but they’re ad companies.

Because the companies that HN likes to sarcastically call "ad companies" actually ship many sophisticated products to their customers (both users and advertisers)? Products with features and infrastructure enabled by research done in their research labs?

They could stop working on their products but they wouldn't last long. The consumer tech world changes rapidly and is fiercely competitive.

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