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Comment by croes | Hacker News Reader

>Also, as another member pointed out, Airbnb's performance marketing budget is still well over $200M/year, which no responsible/public company would spend if it wasn't returning a great ROAS

That's not really an argument. You wish that a responsible/public company wouldn't do that but we have seen much dumber behavior.

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Now I am curious - what are the examples of unprofitable performance marketing campaigns at that scale conducted by public companies?

> When P&G turned off $200 million of their digital ad spending, they saw NO CHANGE in business outcomes. When Chase reduced their programmatic reach from 400,000 sites showing its ads to 5,000 sites (a 99% decrease), they saw NO CHANGE in business outcomes. When Uber turned off $120 million of their digital ad spending meant to drive more app installs, they saw NO CHANGE in the rate of app installs.

https://www.forbes.com/sites/augustinefou/2021/01/02/when-bi...

Like, this is probably true for advertisers who have a well known brand. One would expect incrementality to be lower, because everyone's already heard of the brand.

However, if you are a new entrant/small business this is not the case, because nobody has ever heard of you.

As an example, look at TikTok. They spent insane amounts of money on FB ads to get as many installs as possible, but I'd suspect that they don't do this anymore because they've got enough brand equity that it doesn't make as much financial sense.

That was an incredibly misleading article. If you check the links, you find the following:

1. P&G didn't turn off that spend, it shifted it to other marketing platforms.

2. Chase didn't change its marketing spend, it just concentrated it from 400k sites to 5k sites.

3. Uber found out that their agency was committing fraud and AFAIK the case is still being litigated.

I hate being that guy, but check the links. Those reporters really must have an agenda or something (or are just struggling to get the clicks, so they need to make a story out of nothing).

To 1. "P&G’s $200 million digital cut were reinvested into areas with “media reach” including television, audio and ecommerce" So they awitched to other platforms with mostly no back channel and no user tracking. So the whole tracking seems to be pointless

My point is not exclusively advertising but that it is wishful thinking that companies always make sensible decisions. Often enough, useless or even harmful things continue to be pushed through, simply so that one doesn't have to admit to oneself that one has made a mistake. They would rather try to achieve a positive result with larger investments after all, which usually fails and leads to even larger losses, than to exit early and get away with smaller losses. Therefore, the statement that a reasonable company would not act this way is not covered by reality. Companies should not act this way, but they do.

https://en.m.wikipedia.org/wiki/Escalation_of_commitment

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