The new dot com bubble is here: it’s called online advertising

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The new dot com bubble is here: it’s called online advertising

Is Google hacking your brain?
‘The best minds of our generation’
A not-so-brilliant advertising campaign
Run an experiment!
#FitGirl analytics
Is online advertising working? We simply don’t know

When does advertising really work? Ask economist Garrett Johnson, who
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And Google worked as a middleman, connecting websites with ad space to advertisers eager to get their banners seen.
A former Facebook engineer once said (and he’s been quoted a thousand times over): “The best minds of my generation are thinking about how to make people click on ads.” I spoke to some of those best minds: economists employed and formerly employed by the most powerful companies in Silicon Valley: Yahoo!, Google, Microsoft, eBay, Facebook, Netflix, Pandora and Amazon.
Economists refer to this as a “selection effect.” It is crucial for advertisers to distinguish such a selection effect (people see your ad, but were already going to click, buy, register, or download) from the advertising effect (people see your ad, and that’s why they start clicking, buying, registering, downloading).

“I’m selling $25bn of advertising a year,” Karmazin said. “Why would I want anyone to know what works and what doesn’t?”
Leaning on the table, hands folded, he gazed at his hosts and told them: “You’re fucking with the magic.” ….

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The story that emerged from these conversations is about much more than just online advertising. It’s about a market of a quarter of a trillion dollars governed by irrationality. It’s about knowables, about how even the biggest data sets don’t always provide insight. It’s about organisations and why they are so hard to change. And it’s about us, and how easy we are to manipulate

Tadelis suggested an experiment: stop advertising for a while, and let’s see whether brand keyword advertising really works.
For every dollar eBay spent on search advertising, they lost roughly 63 cents, according to Tadelis’s calculations.
The experiment ended up showing that, for years, eBay had been spending millions of dollars on fruitless online advertising excess, and that the joke had been entirely on the company.
The benchmarks that advertising companies use – intended to measure the number of clicks, sales and downloads that occur after an ad is viewed – are fundamentally misleading.
Can advertisers ever know exactly what their ad brings in?
“People thought that after a one-million-person experiment, we could walk away, and know exactly how advertising works,” Johnson recalled.
Ebay lost 63 cents on every dollar they put into Google search advertising, but that’s actually an imprecise estimate.
Then how do advertisers know what they ought to pay for ads?
Rao was able to use ad stops like these, just as Tadelis had at eBay, to assess the effects on search traff

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