Google ads are a con. Meta ads are a con. If someone tells you you’re just not doing it right yet, they’re probably trying to sell you something.
famous saying 'i'd cut my ad budget in 1/2 if i knew which 1/2 to cut'
'attribution' is the holy grail of hard thing in marketing.
so they know for sure the channel spend is iffy.
but it's hard to measure, esp. for brand and indirect campaigns.
so as a 'starting point' - it's a very 'noisy channel problem'.
the next wild idea is that ads come from a marketing budget which has $X to spend, and they have to spend it.
this is where the ROI stuff is wildy upside down.
large companies with 'market power' have a lot of surplus. they put that towards relatively lucreative marketing. the $ must be spent.
the cmo makes a budget, allocates, the managers follow the campaign, front line staffers spend. they try to get the best results they can.
there is often an unbelievable lack of true roi concern in all of that.
sometimes it's very aggressive, aka for some keywords, for sure.
but a remarkable amount of $ is spent in very unnacountable way, over what are 'grey' channels anyhow.
the marketing ops person is going home at 5pm and does not care one bit about bots. they were paid to spend it, they did. Facebook is paid to 'show a chart of view' ... they did that. 'everyone is happy'.
im not saying the whole system works that way, but much of it does.
the wild part is - there is so much 'dumb big money' in ads, it makes the whole thing very inneficient.
companies like P&G have 'distribution monopolies' on so many packaged goods, they have to keep up brand awareness.
It's why so many commercials are for commodity products like home stuff - the market is huge, the market channels are locked, they pay $$$ for ads for 'toothpaste' - the least novel and least productive kind of thing imaginable.
so 'Colgate' costs $5 at the store, it costs 50 cents to manufacture - that $4.50 gross margin is stuffed into a system of relative inneficiency up and down the economy. much of it in 'nearly useless ads'.
it's a deep market inefficiency people dont want to recognized because people assume private capital is inherently efficient and that a dollar spent = GDP = value and that's it.
our lives could materially be improved if we banned ads for a lot of things - feels like 'socialism' but really it'd just be about a kind of 'regulated market efficiency'.
and where it is more efficient its where there is better attribution models aka direct sales.
note: there are certain kinds of products that are 100% 'click driven sales'. they zero brand awareness, they want to sell you that 'fleece hoodie' on the spot. those guys have their funnel math down solid.
but startups and other companies ... not the same.
well funded startups burn $ thinking it's productive - and hugely: buying fake customers, or, spending $2 to get $1 in revenue to either pad the books, show investors, make themselves feel good or 'strategic'. FYI 'strategic' is often rational. those are big pools of money.
but usually campaigns are mixed and attribution is hard, even for smaller companies.
the tighter the budget, the more 'direct purchase', the more 'nominally efficient' it is.
also note - most ad $ is big companies who ironically spend a smaller share of their revenue on ads <- this is the power of scale.
It's more like 25% of their budget.
https://www.statista.com/topics/7725/cpg-industry-advertisin...
I'm highlighting that the gross on commodity consumer goods is huge - and that it just pays for mounds of white collar bureaucracy, including advertising, and yes 25 points is about right.
Consider that companies pay more for advertising than COGS.
That should tell us something about 'productivity'
FB/Goog revenues could be cut by 60% and the good may very well flow just the same, aka they are not just capturing surplus but facilitate aggressive inefficient competition.
A western nation will post the $5.00 to the GDP when much of it is inefficient make-work.
This is why 'Pricing Parity' has to be used even to begin to compare relative wealth etc.
Toothpaste manufacturers can probably get away without advertising on FB/Goog, but I'm not sure that would work for other products or brands. It's not make-work to tell people about your product or service, although in markets with limited players you could see how a marketing arms race would drive prices up.
Google and Facebook are in the business of 'economic rent' of people's attention.
25% of sales price going to Google might leave 5% for manufacturer and possibly even more for the Ad channel. Aka 'Google is where most of your profits are absorbed'.
You're not competing against product competitors - you're competing for attention of individuals, which is very narrow, through a very small number of pathways wherein there are quasi monopolists.
Your 'competitors' are actually 'value chain competitors' - Google and Meta - in this case, who require you to pay extraordinary amounts to access their captured audience.
Google is a massively 'high margin' business, which is an indication of their market power in the value chain, and they could be much more profitable if they wanted to be.
Whatever you make - you are bidding against McDonalds, Mondelez and Proctor & Gamble, not your just your competitor.
To realize this power, do a little 'thought experiment' and imagine of the 'ad layer' of the system would commoditized and extremely efficient, due to heavy competition and/or 'good' regulation (or socialization). Say for example, people were served ads with perfect efficiency, and accounting for some kind of community/regulatory guidance - which meant that 'local services and companies' were guaranteed a tranche of time, along with public services and community things - like School events, local street plays, art houses.
This could probably achieved for a fraction of the cost in the system now, and it would mean 1) the profits parked at G and Meta would be distributed to other layers of the value chain - aka the advertiser/maker, manufacturers, parts suppliers, and also to consumers. 2) likewise a system that defies the 'race to the bottom' competition of advertising (imagine very simple, relatively cheap and authentic ads) and 3) the hidden surplus of the benefit of community awareness, issue awareness, which is invisible on the GDP because 'money does not change hands'.
Another way to put it, is that the 25% spend on Ads is mostly spent on 'economic rent' not really on the cost and effort associated with that activity, in addition to that system being extremely optimized for certain outcomes (profits for private enterprise) and not others (aka 'financialization' of social and community aspects).
All of the extra money, time and effort people have to invest in fighting with each other over very limited attention, through captured attention, is inefficient 'make work'. It's the 'private economy' version of the government paying people to dig holes and fill them.
In almost all areas where there is heavy economic rent, there are inefficiencies; Advertising and Real Estate are huge ones there, there are a few others.
Obviously, Google and Meta do 'real things' - they're not fake businesses, but the massive profits are an indication of the oligarchic power and it's definitely sub optimal.
Sure there is innovation but nobody new ever enters the market.
aside, re: 'socialism', Moscow has no ads, and I have to admit it certainly helps with aesthetics.
I've reported a few to Advertising Standards in the UK, but they're not really interested in combatting Facebook/Amazon fraud.
What's hilarious is having reported an ad to Facebook, they show you that ad more because you didn't longer looking at it. Mad.
Flashlights that can do this exist. I don't know if they're being advertised on Meta platforms.
More modern, and also capable of improvised cooking are handheld searchlights from Acebeam and Imalent with many large LEDs, cooling fans, and even bigger Li-ion batteries. There are third-party videos of these and the older halogen type cooking eggs and setting fire to paper on Youtube.
What you're describing from the ads obviously violates the laws of physics. An alkaline AA would have a hard time cooking an egg on a dead short.
Which emotions does this bring up? For me its hate. fostering hate is what these places mastered. The data is clear - it skyrockets engagement and time-spent. The question is if we want this as a society? I mean, they dont even tax any of the "earnings" aka "mental-health-money"
Until last year I used Instagram and most of the ads I got were actually relevant. Zero scams, mostly local businesses. If I'd been visiting pages about home decoration I'd get local furniture shops and so forth. Google ads were - and are - the opposite for me, totally irrelevant and frequently scammy.
SMBs can find an audience that would otherwise be impossible to reach. The thing that is advertised is so diverse it's hard to generalize, however the main thing I've noticed is SMBs live and die by the quality of their ad creatives.
For big businesses which make up the other 50% of Meta ads revenue: They are very effective in circumstances where your main offering is operational and the long term value of a customer is very large. For example it would be a very good place to advertise health insurance and TV subscriptions (which is a significant amount of the big business spend). Here I am more certain. If you didn't invent your product, and it is a beneficiary of the zeitgeist promoted by social media itself (beauty-focused, soft core brain rot), and your thing is basically fungible, you will thrive.
It's bullshit all the way down. The most valuable bullshit is the numbers that you can sell to someone else who is looking for bullshit. They're not lying; they are merely reporting what they are being told, and you can't fault them for trusting their ad networks / investees / LPs / LPs / pension plans.
I went through the CPI basket[1] and vaguely looked for categories "life's necessities" and came up with "Food and beverages", "Shelter", "Fuels and utilities", "Transportation", "Medical care", "Education and communication". Those categories alone make up 85.3% of the basket, and I didn't even bother going into detailed categories to look for other essentials. "Televisions" on the other hand makes up 0.1%. I'm sure there's more non-essentials on there, but 85% of the CPI basket being non-essentials seems... pretty reasonable? If anything, it's weighted more towards essentials than typical consumer spending patterns.
Ad business is the best business: you pay for something no one can reliably verify or measure. But you still pay because there is something somewhere with some correlational relationship with an uplift in some of your metrics and you’re afraid to turn it off. So you just keep paying.
If you login to the admin side of any ad business (Reddit Ads, X Ads, LinkedIn Ads etc) you are faced with a severely broken product: broken buttons, obviously wrong metrics, and other glaring bugs.
But somehow you still trust that people who cannot pull the CRUD side of the product off, are going to serve your ad accurately to the targeted audience and give you reports.
So who is this shit working on? These companies must have detailed profiles on “people who do what we tell them” as a whole class of people. Scary.
I don't think it even registers for them that they're ads (even though I have informed them multiple times).
Same for sponsored items in Amazon search results. As an adblock user it's really jarring to see their experience of the web compared to my own.
There are definitely industries and situations where ads are difficult to make perform, things like a single business working against aggregator heavy environment or markets where growth is more important than profit, but overall there's reason for hundreds billions spent on online ads, this when most business can track ROI results.
One of the bigger issues I see is even 'experts' hand over control to the ad platforms to optimise their spend. For better results often you need to manipulate the systems to work in your favour, which platforms try to limit but you do what you can.
One change I feel we need is for regulation around controls and data on ad platforms to stop this ever increasing 'give us your money and trust us' type behaviour.
I get my app is probably bad but you'd expect at least one comment out of 100 "clicks" to say something.
https://www.forbes.com/sites/jaymcgregor/2017/02/20/reddit-i...
Here on YC News, even a minor comment a few lines long might get at least one or two upvotes (or downvotes). I'll get a reply about 50% of the time.
On Reddit there are posts with apparent huge volumes of "user interaction": thousands of comments, thousands of upvotes per top comment, etc... but if I comment on one of those posts... nothing. Zero up or down votes, zero replies, just... silence.
I'm learning to recognise these posts now, and they're the majority of the "front page" volume. The only posts where I'll get any interaction now is the really niche ones like the hobbyist ones or "owners of specific gadgets" and the like.
You don't get any up votes because nobody ever saw those comments to begin with.
I have heard that shadow banning is more commonly used on Reddit than here, which just makes the problem worse: banning humans but allowing bots through.
PS: someone showed that around the time GPT 4 was released the use of em-dash on Reddit increased from 5% to 20% of comments: https://www.reddit.com/r/dataisbeautiful/comments/1kfg9b8/oc...
Unless you somehow insult their favourite entertainment franchise / political party / deity / etc., or praise one of the same that they don't like. That will get you piles of responses, though not in a way useful to your app!
What doesn’t work is the nonsense people try to teach about how to optimize it.
It’s what got me into programming in first place, since most strategies can be automated, but there are still companies paying money to people to manage their ad spend.
It is not to protect the children.
I think the only sane way tu run a Google Ads campaign is to:
- only enable Google Search ads (i.e. disable all third-party publishers -- this may be a bit extreme but it's good if you're advertisting a niche product that people are actually searching for)
- only use "exact match" keywords ("broad match" is so broad that Google will show your ads in completely unrelevant SERPs)
- disable AI Max
- disable all automations
- reject any of their "optimization" tips
- set a max CPC even if they say it's bad for you
In other words, reject everything they suggest you to do. Maybe I'm wrong, or maybe this only works for my use case, but that's how I've been using Google Ads succesfully without wasting money.
Except then they just don't run your ads unless you're willing to pay silly amounts like $3 per click for bot traffic.
I always ignore all numbers on the dashboard. All I care about is how much I paid, and how much revenue went up in following weeks.
I never could quite get that number positive.