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There are two quick flaws with this argument. 1) It assumes you can't track ROI on 'traditional' marketing. You can. There are a myriad of ways: Using advertis

There are two quick flaws with this argument. 1) It assumes you can't track ROI on 'traditional' marketing. You can. There are a myriad of ways: Using advertising-specific numbers with call forwarding; Statistics modeling; asking the customer, &c. People generally don't spend millions unless they know it's going to matter, and traditional advertising has defended itself more than once. 2) It assumes the purpose of advertising is 'click-through'. Most advertisement is building name recognition: not everyone needs an ACME Widget right now, but I want to make sure they know to go ACME when they need it. 3) It forgets you're competing in a shared environment. If Pepsi shrinks its ad budget, Coke wins. "Many manufacturers secretly question whether advertising really sells their product, but are vaguely afraid that their competitors might steal a march on them if they stopped."

daniel-cussen 19y ago
I agree with most of what you're saying, but would like to point a few things out: 1) Yes, you can track ROIs of that nature, and many people do. But as Steven Levitt says, it seems to not be a part of corporate culture to do so. And according to him, they often do waste millions. It's not the marketer's money, after all. They'll often say things like, "It's my job to spend the budget" when Levitt points out their losses. 2) There's more to online ads than clickthrough, I agree. I didn't say there wasn't. My point was that the stats are easier to come by, and they'll be harder to weasel up. 3) That is a legitimate concern, I agree. However, being in a marketing arms race should already have been factored into the ROI, IRR, or whatever all-inclusive metric or set of metrics you are basing the budget decisions on. I don't mean Pepsi should give up, or that its marketing budget is bloated, but that even in an arms-race you can go too far.

daniel-cussen 19y ago

I agree with most of what you're saying, but would like to point a few things out: 1) Yes, you can track ROIs of that nature, and many people do. But as Steven Levitt says, it seems to not be a part of corporate culture to do so. And according to him, they often do waste millions. It's not the marketer's money, after all. They'll often say things like, "It's my job to spend the budget" when Levitt points out their losses. 2) There's more to online ads than clickthrough, I agree. I didn't say there wasn't. My point was that the stats are easier to come by, and they'll be harder to weasel up. 3) That is a legitimate concern, I agree. However, being in a marketing arms race should already have been factored into the ROI, IRR, or whatever all-inclusive metric or set of metrics you are basing the budget decisions on. I don't mean Pepsi should give up, or that its marketing budget is bloated, but that even in an arms-race you can go too far.