Jun 25, 2022
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A key tenet of Hwang's argument is the notion that today's programmatic ads are akin to the subprime mortgages of the 2000s, which played a central role in the Great Recession Banner Design of 2008-2009. . Although there is plenty of evidence to suggest that digital advertising is not as effective as platforms like Google, Facebook, Twitter, Microsoft and Amazon claim and that attribution (the process of assigning "credit for positive results to contributing channels) is still murky at best, it just doesn't follow that these ads are "worthless". But maybe it's due to a fundamental misunderstanding Banner Design about the value of an ad, to begin with. Hwang claims that the value of an ad is the “putative attention” of a user (which he says is as worthless as a 2007 toxic security) – I would say the definition is incomplete. When you buy a digital ad, you buy the likelihood that the ad contributes to a positive outcome that has some value (X) for your organization. In short: you buy the expected economic value (“EEV”). Since every organization is unique, the Banner Design desired positive outcomes are unique, as are their economic values, risk tolerances, and associated probability density functions. Are all ads the same? Before we go any further, let's do a brief digression to explain a Banner Design critical point: not all digital ads are programmatic display ads. Total spending on programmatic ads was around $106 billion in 2019, according to Statista. But that's less than a third of eMarketer's total digital ad spend of $333.25 billion. What else is there? There is also: Look for advertisements. Social Ads. Video ads. Private market offers. Shopping ads (Amazon, Walmart, Kroger, etc.). Advertising Continue reading below Each has its own challenges, targeting and bidding process, set of control levers, Banner Design and level of transparency/accountability. If that's too technical, the simplified version is this: Ads (digital, traditional, etc.) are worth different amounts to different organizations at different times. So what is the value of an ad? And therein lies a critical difference between ad units and Banner Design subprime mortgages – the value of the underlying asset in each case is fundamentally different. On the one hand, a subprime mortgage is a loan, with a fixed value (the principal), an expected return (interest rate) and a third-party risk assessment (a rating). Wired, in its articles, notes this – and suggests that a more appropriate comparison would be to compare MBS to Google and Facebook stocks. Unfortunately, this comparison also falls short - if for no reason other than stock prices rarely (if ever) reflects company Banner Design fundamentals in the way MBS prices reflect the value of their underlying assets (mortgages that make up the MBS). Advertising Continue reading below Where Hwang is correct is that the entire digital advertising ecosystem is backed by a vast, opaque technological infrastructure, which enables thousands of real-time auctions to determine which ads are shown to which users. on which pages, all in near real time.