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The problem is that the outcome of some campaigns doesn't reflect in dollars, and still you have a winning campaign.

In fact, probably the most expensive campaigns are used to consolidate market shares, brand positioning and notoriety.

People just seem to forget that advertising existed before the internet, and it worked without the bloat of metrics.

> The problem is that the outcome of some campaigns doesn't reflect in dollars, and still you have a winning campaign.

All winning campaigns reflect in dollars. The question is when. That's why it's imperative to separate markets entirely.

Radio ads for a "branding/awareness" strategy. Search ads for a direct response strategy. The majority of people viewing/hearing one should never hear/view the other.

If it takes 6 months to properly test a branding campaign, decide ahead of time whether your organization has the patience to wait. If not, just stick with direct response.

Also, Scientific Advertising was written in 1923.

What I mean is that on today's standards for some SMEs, you either have a lead/sales generation campaign, or nothing.

There's no space for brand positioning campaigns, or brand awareness, or anything that it's not tracked into a direct sale/lead.

Like you said, branding takes time, with huge investments - and usually it's almost a leap of faith because of the sheer amount of budget and pressure it requires, namely in terms of GRPs.

That's why testing used to be done in focus groups, and other forms of market research, to support a brand strategy.

Maybe branding is a "luxury" SMEs can't afford, but the thing they don't get is: it's a long term investment.

Ah, I see what you're saying. Yes, you're exactly right.

Brand advertising has a much higher ROAS when done well. The challenge is doing it well, and knowing if you did. My experience has been that SMEs rarely have the appreciation for art necessary to do branding well, and without strong branding, brand campaigns are a waste of money.

And it's not just a lack money. They'd rather spend the money on ads than on people. In some industries, that's a better strategy, but for most they would benefit greatly from recognizing that all customers, both B2B and B2C, are in fact humans.

Founders have an advantage here, because they can operate on a longer time scale.

(Side note, GM spent $3140000000 on ads in 2018.)

Imagine having an ad budget of pi billion dollars...

I would launch a new $10,000,000 engineering bounty every Monday and a $30,000,000 race event every weekend.

The engineering bounties would be for open source hardware, software, and tooling challenges, with a heavy focus on optimizing robots and social computer vision problems.

The races each weekend would alternate between full size trucks in a strong man style competition, manned quadcopters doing search and rescue challenges, and autonomous cars in an urban race series.

I would spend the remaining $10,000,000 from the week's budget on vocational scholarships and micro-loans for low income single parents.

If anyone from GM is reading this, let's talk.

It might be pretty close to what Tesla is doing with its own marketing budget... beside, not open sourcing it or doing weekend races (although Nurburgring and other drag tests could count).

still a better policy than what the fed is doing

Before the internet, there wasn't an endless fleet of robots subscribing to the local newspaper.

Metrics did exist, though more rudimentary. X subscribers, X viewers, etc.

How do you define “worked”, though? Was each advertising dollar the most effective way for that company to spend that dollar? Or was it just ROI positive?

Most people consider the latter, because it’s hard to accept that the spend needs to compete with every other way of spending that money, not with other ad media.

Opportunity cost strikes again

The opportunity cost of calculating opportunity cost is often higher than the underlying opportunity cost.

Analysis paralysis.

Is the total amount being spent on online advertising more than the total amount that was being spent on advertising in general, in say the 90s?

If so, what does it mean for all of those dollars to be more effective?

Does that mean that today's average net user is now subscribing to three different car insurance plans, because of how effectively they've been advertised to?

Analysis paralysis is real.

For the majority of businesses, the opportunity cost of properly testing all available options is higher than any potential gains.

It's like asking a developer if their code really "worked", even though they didn't write it and run tests in every popular and obscure programming language.

Should more thought be given to alternative ad options? Probably.

Does that mean that the ads didn't work? No.

Outside of the VC backed world, people play with real money and the market decided what works and what doesn't.

Unfortunately, VC money distorts the market for everyone.

"Worked" depends on the goal. Effectiveness of each dollar depends on the goal.

The questions you pose, though completely valid - and should be asked - are done in different levels.

If you set a marketing budget, it's because there was a decision to achieve some goal that is bound to marketing. The same goes for R&D, Acquisitions, Human Resources, etc.

That's why, in a classical corporate sense, at the beginning of the fiscal year, each department fights for a cut of the big budget to be invested.

Within a marketing budget you then have to split it again, and again, and by this time you should be at the advertising level. Within this level you have Advertising (the creative part, copy and art) & Media Buying. Etc.

But getting back to your question: being ROI positive can be quite deceiving, because you can have negative ROI yet get positive long term results. Example:

You, as a manager, decided that Amazon is a viable channel for sales and distribution. You evaluate the competition and you realize that for you to have some relevance on organic results, you need to improve your ranking through Amazon PPC and external traffic. You factor in Price Promotion, to present a competitive offer and to help your product being established.

You run that campaign at loss (negative ROI), for 2 months, but you manage to get yourself to the Top 10 listings for organic results.

Question - assuming it's a healthy market: is this a bad campaign?

(The obvious answer is: it depends. But assuming the short term, ROI negative, campaign can set you up to generate more sales in the future, it's a good campaign. Then arguably you could present other solutions, at lower cost, to produce the same outcomes.)

Rule 5: Keep the metrics simple.

As a career marketer, most people in marketing and pretty much every leader outside of it, want intense analytics. They don’t matter in the long run unless you have a big budget to make rapid iterative changes.

Total Revenue & Total Ad Spend ROI are the best metrics. Customer Acquisition Cost is second. Website visits and anecdotal brand measurements are third.

Yeah.

Analytics is the unit testing of the marketing world, but for some reason it's become the main event.

More copywriting audience building and creative, less analyzing.

Every penny spent on analytics is wasted if it doesn't improve the copy, targeting, or creative.

Sigh.

The biggest issue with analytics is that it doesn't tell you what is right or wrong.

Say you just made an instagram ad - how do you improve it? Well, you need to have 3 different images, 3 different sets of copy, 3 different targets.

That's 27(!!!) different scenarios to determine the most optimal option. For. An. Instagram. Post.

Then you repeat that EVERY SINGLE TIME because nothing ever has a fixed rate of return in advertising. Plus, you have to educate all the stakeholders as to why you're doing that and why you're knowingly spending money on 26 out of 27 things that are proven to not be the best way to spend money.

Unless you've got a stupid size budget, at some point you have to call it quits on analytics and just set a benchmark for both revenue and customer acquisition-costs you feel emotionally comfortable with and only use analytics to make gains from obviously underutilized resources.

Imagine how much a company could make if the guy at the top was a hard cutter that didn't put up with unscientific money wasting! They could clean out all of the people who anti-did their jobs (managers who pollute the information stream for personal interest reasons, consultants who give you advice that was worse than what you would do otherwise), and then they would clean out any market.

If it’s so easy, why isn’t everyone doing it?

Because cable advertising sales reps take you out to lunch, give you box seat tickets to NFL games, and create all of your reports for you. Which is even easier.

Also, some people measure their self worth on the size of their company's ad budget. And those same people tend to have stupid amounts of money compared to their childhood peer groups.

So buying ads is like adding a set of metal balls to a truck hitch. Revenue was never the point.

Also, a lot of entrepreneurs have short attention spans and constantly change things out of fear, taking it from easy to do well to impossible to know.

What would you say is the best advertising for a small business or application to do?

What product or service is being sold, and to who?

Look at all the biggest spenders in Advertising: most of them are all big brand advertisers where proving ROI is nearly impossible. In that type of environment, in the absence of a good ROI calculation, a lot of BS can prosper.

Peer pressure and lack of confidence. It doesn’t really matter how obvious, in hindsight, or how wonderful some decision is. Moving against the tide or investing in something original scares the shit out of most people.

I hate that question so much.

If someone doesn’t ask, how will we learn from those with something to teach? I ask because I’m curious!

Sorry, it's not you, it's a pet peeve of mine. I used to collect ideas and there are so many things out there that no one seems to know about.

Whenever I tried to talk about them there's always someone who asks that question. It's a BS question though, because it presupposes that humans somehow always instantly adopt the great new thing, but history shows that we just don't.

(E.g. Marconi was called before US Congress to testify because they thought radio might be a scam.)

We have all kinds of awesome stuff that gets ignored. Or even simple obvious things that no one notices (Why do refrigerators have doors instead of drawers?)

Sorry for picking on you. Nothing personal. :-)

No sorry necessary! I did not take it personally.

It's actually not easy, scientific thinking is easy to fake and hard to get right.

I spent three years "managing upwards" on that point. Was like a breath of fresh air when I got a manager who listened in that way - he needed some education, but soon came around and pushed our media agency to stop BS-ing us.

Oddly, up to that point I was senior enough to daily manage the budget, but not senior enough that my opinion on what to do was taken seriously. We're talking > 50% wastage, so I just didn't do my job in the end and stopped providing the creative for the wastage part, saved money, made no difference to the end result.

Never underestimate how so much of bad advertising is because of clueless people in the chain of command.

> Never underestimate how so much of bad advertising is because of clueless people in the chain of command.

Hello fellow person with in-house advertising experience.

> Oddly, up to that point I was senior enough to daily manage the budget, but not senior enough that my opinion on what to do was taken seriously.

Good freaking lord you hit the nail on the head here about most of marketing career!

Then you get in trouble because your boss's boss wants better ROI and blames YOU for an overextended budget because you manage the money, but you just have to sit there and take the blame because your immediate boss won't budge on the strategy.

Thankfully I've moved up, but I feel that pain so bad.

> There are essentially 4 rules for effective advertising

The original sin, as pmarca put it, is advertising.

All you need to know to realize that this is a bubble is to look at how Youtube keeps asking you to subscribe for their ads-free plan.

Google know it, but it’s too late for them...switching users from “products:through selling their data” to “subscribers:who pay for services” is going to be hard to sustain.

Hard because google is now competing with others for a reputation, which they already know they have a serious problem with.

Paul Graham tweet from last month “When I bought extra space for GMail, I got logged into a "google account" that I'm logged into even when I do searches. Searches are much slower logged in. And I'm not sure if I can log out without logging out of GMail

Solution: Use duckduckgo.com for search.” https://twitter.com/paulg/status/1248207051542745089?s=21

Jack tweet from last year “I love @DuckDuckGo. My default search engine for a while now. The app is even better!” https://twitter.com/jack/status/1199783221162053633?s=21

And this comment on hacker news that was doing astroturfing for Google two months ago https://news.ycombinator.com/item?id=22383746

Internet has gone mainstream, globally. No one can live without an email or a social network!

Customers are now ready to pay for all the services they used to enjoy for free.

I wish App.net was still alive.

There's no secret about declining ad revenue on youtube. There was an 'adpocalypse' and most small yotubers at some point or another discuss their revenue.

The best money doesnt come from google, but instead advertising products off the back of your own credibility inside the video and building exposure to other businesses you run.

Youtube's ad free plan has been bought by people who want to watch music videos on their phone without draining all the battery. The plan and app makes youtube videos keep playing when you close your smartphone display. Making money off content has always been about controlling the platform like cable companies and music companies have done for decades. Eventually youtube will be both, better premium content is starting to converge behind paywalls and the free stuff is advertising in itself for its own channel. I dont think youtube will have sustainability problems in the long run.

Do you want the free stuff? Apart from low overhead tech services, most of it was crap. Tv quality channels on every obscure topic I could want have sprung up because of the money making potential. Most creators listen to their audience and react or die off when customers dont get what they want. What more do you want for the youtube dollar?

> And this comment on hacker news that was doing astroturfing for Google

Except that the mod reply also links to other astroturfers doing the exact same thing. Astroturfing is everywhere it seems.

> Customers are now ready to pay for all the services they used to enjoy for free.

I find it very hard to believe this. Do you have any sources to back this?

Double-blind methodology would work great on that scenario.

Campaign manager to sales team: we did two experiments in cities A and B. We won't tell you what we did. Go look at the sales numbers, and tell us if you see improvements in sales in those cities. Then we can share what we actually did.

Really ought to be three cities, else any natural differences between the two may be incorrectly attributed to the experiment. With three you can ask the reviewer to find the odd one out.

Sales teams are likely to have at least a vague idea of the marketing going on in their city.

> 1) ignore all metrics from online platforms (especially the ones that sell ads)

This seems counter intuitive at first, but the more I think about it, it does seem quite insightful.

Of course, this is because we live in crazy-land, where the ad companies can never be held accountable for anything. So if they say you got 100 clicks, you're paying for them no matter what.

I like to think incentives matter, always have and always will.

TV had "viewers", but how many were changing the channel during commercials?

Newspapers had "circulation", but how many were sitting in hotel hallways or mulching on driveways?

Direct mail had "addresses", but how many of those were left on the side of the road or tossed straight into the trash?

Radio had "listeners", but nobody believed those numbers anyway.

Etc.

Speaking of, by far the most popular "videos" on YouTube are music videos. How many of their so-called watch time metrics are actually people listening to music while they work? For me that's several hours a day.

So yeah, the crazy thing to me is how poor of a job our society has done at teaching people how to think for themselves.

INCENTIVES MATTER!

I'm not in the advertising industry, so my knowledge is quite limited. But TV adds do work. Are you in the US? "Better Ingredients, Better Pizza, Papa Johns." I even know what Papa John looks like. Then there's the surveys they send out to consumers like "Which of these brands have you heard of?" and that kind of stuff. They can loosely extrapolate advertising penetration with that information.

There's always going to be some portion of advertising that is ineffective. Not everyone is going to see every commercial or read every piece of junk mail (junk mail being the bottom end of traditional effectiveness, I think, but they have these coupon envelopes that have local small businesses and I'm pretty sure those are quite effective).

As far as TV/Radio, they have lead in and lead out commercials. Those commercials closest to the content are most valuable.

> Speaking of, by far the most popular "videos" on YouTube are music videos.

Totally agree here. I've never tried to advertise on YouTube (or most media, for that matter, not my industry), but smaller niche channels seem to be good at picking up their own sponsors and advertisers. Similar to how some radio shows do live reads of advertising material. The "My Pillow Guy" buys a lot of these, same with Sherri's Berries.

All advertising viewed/heard by actual humans has potential to increase sales.

I was not meaning to say that any of those mediums are ineffective, simply that inflated numbers aren't a new problem.

YouTube ads are actually one of the best values right now, because 1) a lot of advertisers are scared of video ads and 2) you get access to search audiences.

That being said, I don't care how great Google tells me my YouTube campaigns were. I care about dollars spent and leads that became paying customers (with a recognition that direct attribution undercounts, so break even is positive).

>So you do the obvious thing: buy radio ads in city A and search ads in city B, then compare sales.

The issue isn't whether search ads are better than radio ads. The issue (as illustrated in the article) is how many of those customers would have been customers anyway.

You might be counting your dollars and missing out on the fact that those would have been your dollars without advertising.

I isolate for this by cutting spend to zero occasionally.

"Would have bought anyway" only applies to household brands, retail distribution, and earned traffic.

If your average search position for an important query is 36 and you're not running any other ads, it's pretty easy to track sales.

Where mistakes pile up is when companies want to try everything, all at once.

I've thought this way for a while, but after seeing a few things go live without and with campaigns I think there's an underestimation of how indifferent people are unless they've been primed. Ideas of things to purchase just don't generate in people's heads very much outside of advertising. You could say without advertising we'd all be a lot more satisfied and I'd believe you (see: quarentine), but if you're a business trying to sell more things to more people I no longer think advertising isn't a valid way to put your idea in front of people.

This is hyperbolic, and just bad advice.

The metrics from Google and FB are essential to understanding what's going on, the key, like everything, is to really understand them.

"run tests that make sense" - as opposed to one's that dont?

"Measuring in dollars" yes, but there's a lot of indirection in ads, there are other metrics that are useful.

Fair enough.

Don't make buying decisions based on metrics provided by vendors.

For even better results, optimize systemically and ignore their metrics.

Example: click comes in with tracking code in url. Lead submitted with tracking code. Purchase made.

How much did you spend on those ads? How much did they spend on your products? Was it worth it to you?

That's more analysis than many ad accounts currently do, because vendors provide wonderful sounding things like CTR and CPC and Impressions and Reach to keep you focused on optimizing within their platform instead of between platforms.