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Comment by everythingswan | Hacker News Reader

You noted a few interesting things that I wanted to call out as a marketer, like budget.

No one has a $3m Google Ads budget for something that doesn't work already. I've run campaigns for brands that lead the market and for new businesses that have no brand recognition at all--the difference is night and day. Should founders run to Gmail ads because of this? Probably not.

Assuming the campaigns are still profitable, doubling the budget is great. I hope they really did well. But what does this really tell us? What can a startup or small business founder learn from this? Not much.

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There is some evidence that big companies (e.g. Ebay) were not wisely spending millions of dollars on Google search ads.

Blake, Nosko & Tadelis, 2015. "Consumer Heterogeneity and Paid Search Effectiveness: A Large‐Scale Field Experiment," Econometrica.

https://econpapers.repec.org/paper/nbrnberwo/20171.htm

I'm sure the landscape has changed since then in terms of there being more accountability (better tools to measure things like ROAI and mgmt demanding stronger evidence of marketing efficacy).

I can assure you there's companies that spend a millions on ads with no idea what they are doing. In-fact there are products within business units, within large enterprises that spend >$1M per quarter, where the segment itself may spend $5M+/Quarter, easily.

The agency that runs the programs the the only people that win - after they pocket their 5+% commission.

Source: past roles where I saw a lot of people who do not know wtf they are doing with ads (yet they themselves are making 6 figures)

I originally had more nuance in my comment but wanted to keep it simple. In my experience, companies like the ones you describe have a really strong brand (so large volume of branded search) and/or really strong other channels, like SEO. At that point, paid search is a piece of the overall ROI (serving market share or other strategic objectives) and not channel-specific.

Adding even more nuance, that really only describes successful companies. Failing companies _think_ they are profitable, until they quickly aren't. Your experience is very similar to my own. You're 100% right.

Author here and I think you're spot on! We had a tight focus on ROAS and overall profitability for those campaigns, and optimized based on that. Sure, there are companies that can waste millions of dollars on ad spend, but the company I worked with was heavily invested in making paid ads work and had the right feedback loops in place to ensure we were making the right decisions.

How did you approach incrementality? I have some experience in this area, and get frustrated when marketers talk in terms of ROAS/ROI, without discussing the return compared to other options.

The ultimate goal of the marketer is to use the most effective, scalable channels. The optimization isn't against a fixed goal (CPA), but against the entire universe of ways to spend each marketing dollar.

If you're running $6MM in ads, you're spending $500k+ on brand lift and similar studies that give you answers.

Not all the time. A previous employer was spending around $350k/mo (for 2+ years) and did no verification outside of ROAS and what Marin told them.

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