Ask HN: Does your company get positive ROI from its ad spend? | Hacker News Reader

Ask HN: Does your company get positive ROI from its ad spend?

Occasionally, I come across blog posts where people complain about one or more of:

1) High and rising CPC rates for major platforms;

2) Difficulty matching activity with ad clicks;

3) Platforms intentionally user over-generous attribution models, causing uncritical clients to overestimate their ad ROI, and to continuously spend money on unprofitable campaigns;

Some companies also have a different problem:

4) The people who deploy ad spend are paid on the performance (ROI) of that ad spend, but are also in charge of how that performance is measured. So they're incentivised to be as generous as possible in attributing activity (e.g. purchases) to ad campaigns.

Given all of the above, I'm curious to know whether you think your company suffers from these problems, and whether overall your ad spend is managed well and/or has positive ROI.

View on HN

We definitely did, there was an immediate, directly correlated increase in user signups while we ran ads, and an immediate corresponding drop when we stopped them. Looking over ~12 months of analytics and usage data in hindsight, Google Search ads were the primary drive in signups.

The users we got through ads were generally surprisingly high quality too, they stuck around and continued to play games for many months, even years after signing up, in an industry with relatively high churn (free online games).

But was the ROI positive ?

I mean it got us investment money, but we ended up pivoting away from the original business model before becoming profitable, so it's hard to say.

Hey my agency creates profitable leads using Google and Facebook Ads.

We focus on high ticket industries like wealth management, real estate and legal services. We also sell a ton of info products.

Here to answer questions :) google analytics is your friend

I worked in ecommerce for 10 years and got to know the quantitative marketing folks well. All marketing campaigns were tracked and analyzed weekly based on the concept of "marketing income". Marketing income at the order level was defined as: Marketing Income$ = Order Total$ - Cost of Goods$ - Shipping$ - Marketing Expense$.

This might be a dumb question, but how did they know that marketing expenses drove more orders (rather than just eating into their margins)?

Good question! Combination of holdout groups (split testing) based on historical keyword traffic/conversion and tagging paid and natural search entries to compare cannibalization across campaigns.

Good data-driven marketing teams work hard to establish control groups and known baselines before starting high-spend campaigns, and the ROI of those can be quantified by referrer info if they're highly specific and keyword-related.

As for more general campaigns, in my experience, it's a crapshoot, if the numbers go up everyone is happy whether or not marketing was responsible for the majority of it. I'm sure other companies have better approaches than that though.

Reply on news.ycombinator.com