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Comment by roenxi | Hacker News Reader

Prefacing this with an acceptance both that HN culturally has US management principles and that I've got no idea how to run a business...

Why is it an initial assumption that customer acquisition and ad spend are linked short or even medium term? That doesn't seem right.

When I see an ad for washing machines it doesn't make me run out and buy a washing machine. It gets me familiar with Samsung the brand so in 6-12 months when I buy a washing machine I am familiar with Samsung and buy their brand. Or it means that if my washing machine starts to sputter I'm more confident knowing where to go to buy a new one.

It doesn't seem enough to stop advertising for 6 months and claim no damage is being done. It seems well understood that repeated exposure to a brand has a powerful effect on humans.

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In online marketing/merchandising online advertising is very alluring for two reasons: immediate feedback and the few key players are well known. Essentially online advertising makes a marketing team’s life much easier even though it could be a net negative for the business revenue.

When I was doing some work in this space for Travelocity many years ago the biggest problem was cannibalism of data and traffic. Yes, the traffic coming in from ads was shitty and generally costs more than it returned, but even still cannibalism was the bigger problem. We would have been better off taking all the ads off the site and spending money in other offline venues. It was so apparent that ad spend was a drug addiction. I still don’t understand how this was a mystery to anybody in management considering the strength of the brand and the success of their television ads.

Eventually the business imploded and the partner/affiliate segment became more valuable than the core business partially because it was absent online ad spend.

You're correct on that. Large scale ad spend is divided into "branding" (creating awareness about the company and products) and "performance" (leading directly to a sale). The performance category has many factors including the path to the actual conversion/sale and how many steps are in the way and how long it takes. It can be instant (clicking a buy button in the ad itself) or many months.

Optimization is part of the process to ensure wasteful spending is reduced as analytics and sales data is generated but unfortunately the biggest issue is the people who actually run these campaigns. Lots of politics, perverse incentives, lack of skills, and general apathy.

Don't know how much of that is true as I am not a practitioner but when I was studying marketing we were taught this (continuous brand awareness reinforcement) only works for FMCG.

So this is arguing against GP's point since a washing machine should last for several years and is not fast-moving, right?

Yes, that's correct

Uber is about as fast-moving a consumer good as it gets. Up to the local speed limit.

That's fine - that's awareness marketing and if you want to do it with online ads that's up to you. But then you should consider it compared to your other awareness marketing channel.

But the promise of performance marketing is exactly this immediate connection between ad spend and performance (i.e. sales).

Well then it becomes a question of attribution. How do you with a finite amount of dollars to spend on advertising know if you are getting your money's worth when you cannot connect a dollar spent on ad with incoming revenue?

Sure in broad strokes you are probably right that brand awareness has ROI positive in the long term. But then why would you buy targeted advertising vs a giant billboard on the main road?

This quote is over 100 years old, “Half the money I spend on advertising is wasted; the trouble is I don't know which half.”

To more specifically answer your question; I imagine they have some sort of strategy with advertising. A billboard campaign might work. I always see Barracuda ads in airports, but nowhere else. Soap operas are named because soap and consumer products advertised to homemakers during the day. Even when using a broad brush you look for the best use of your money and target your audience.

> Well then it becomes a question of attribution. How do you with a finite amount of dollars to spend on advertising know if you are getting your money's worth when you cannot connect a dollar spent on ad with incoming revenue?

The problem with attribution is that it's entirely flawed. Just compare what Google Analytics reports for a campaign vs what Facebook is reporting for the same thing. They'll give you different results and in most cases you probably shouldn't trust either.

BUT, what they do is provide an easily accessible number that you can show your boss to show you had results. This is massively flawed but most marketers don't understand the mechanics of advertising or tracking well enough to understand why they're reporting garbage data.

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