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Why do you say that there's no meaningful ROI? I know a lot of marketers and advertisers who have built great businesses off of Facebook Ads. Agree that we nee

Why do you say that there's no meaningful ROI? I know a lot of marketers and advertisers who have built great businesses off of Facebook Ads. Agree that we need to improve the quality of ads across the board.

nihonde 9y ago
I will answer your question with another: what metric are you using to measure ROI? Edit: When you say you know lots of "marketers and advertisers" that are making money from ads, are you referring to resellers and providers of ad inventory and/or analytics, or are you referring to people who actually sell goods and services other than marketing and advertising inventory?
- matsur 9y ago
  People entering and converting through a purchase funnel?
  - nihonde 9y ago
    OK, so how is the success of that funnel measured vis-a-vis other promotional channels? And are you able to demonstrate definitively that a visitor from FB concluded a sale? If so, how?
    - traek 9y ago
      > OK, so how is the success of that funnel measured vis-a-vis other promotional channels? What difference does it make? If it’s profitable, it’s profitable. > And are you able to demonstrate definitively that a visitor from FB concluded a sale? If so, how? Through the variety of existing measurement solutions, or a custom solution. Twitter: https://business.twitter.com/en/help/campaign-measurement-and-analytics/conversion-tracking-for-websites.html https://business.twitter.com/en/help/campaign-measurement-an... Facebook: https://developers.facebook.com/docs/facebook-pixel/pixel-with-ads/conversion-tracking/ https://developers.facebook.com/docs/facebook-pixel/pixel-wi... Google: https://support.google.com/adwords/answer/1722054?hl=en https://support.google.com/adwords/answer/1722054?hl=en I don’t understand why you seem to think that companies are throwing tens of billions of dollars a year at Facebook (and Google, and Twitter) with not only no returns but also no ability to measure that lack of returns. It’s just such a ridiculous viewpoint to hold.
      - nihonde 9y ago
        I think so because the entire history of advertising is based on hiding the ball in terms of ROI. How many sales does a Super Bowl ad generate? How many does a billboard generate? For some extremely simplistic e-commerce conversions, such as for referrals to SaaS, it is easy to measure. For entire swathes of consumer products, the game is brand recognition and other soft metrics that drive huge ad spends. You can pretend it’s a science, but the incentives are all upside down for a true end-to-end ROI determination.
        sdenton4 9y ago
        A large number of companies are advertising /only/ online, and therefore have a pretty pure measurement of ROI via click tracking from the ad to purchase. It's one of the promises of internet advertising: there's sufficient <strike>surveillance </strike> logging to be able to see what's happening with much greater clarity than TV or billboards. The other half of the promise is that you can target exactly the 'right' people. And this seems sketchier to me, as the article kinda gets at: as targeting complexity increases, it's harder to tell whether problems are arising due to market fit or issues in the targeting algorithms. In the old world, you bought ads on content, and now you buy ads on eyeballs: my guess is that there's an unexplored happy medium between the two.
    - jaggederest 9y ago
      Yes. Facebook gives you a unique visitor id when they see the ad that persists and is included in the sale form. It's completely linear, and is tracked from beginning to end. Every click is tracked, and users are tracked even if they leave the website and return later. There's hard, direct evidence involved in every step of the way.
    - nl 9y ago
      OK, so how is the success of that funnel measured vis-a-vis other promotional channels? It's trivial easy to add a tracking id to this (in-fact I think it is on by default) And are you able to demonstrate definitively that a visitor from FB concluded a sale? If so, how? I think people are a little confused about if you are trolling or you genuinely don't know. Anyway, https://developers.facebook.com/docs/facebook-pixel/pixel-with-ads/conversion-tracking/ https://developers.facebook.com/docs/facebook-pixel/pixel-wi... (and plenty of other methods) It's really, really easy. And that is why Facebook and Google are printing money - vendors know it works and can measure exactly how well, so they throw money at them.
      - nihonde 9y ago
        FWIW, I am not trolling. FB domains are deliberately blocked via my hosts file, and my business has nothing to do with consumer ads. I am just a skeptic of intertuption advertising effectiveness in general, and curious to see how rigorous the defense of FB advertising will be. I am still not convinced that click tracking is effective, but I’m willing to be wrong.
        jaggederest 9y ago
        It's effective enough to drive the entire marketing campaigns of multimillion-dollar businesses :)
- akanet 9y ago
  Yeah, this is a very strange statement. Many businesses are printing money advertising through Facebook.
  - nihonde 9y ago
    Then you should be able to answer my question: what is the metric for ROI?
    - csallen 9y ago
      Metric for ROI is profit from a customer vs cost to acquire that customer via Facebook ads.
    - jaggederest 9y ago
      Return on investment for advertising is very simple: net present average customer lifetime value acquired per unit of advertising cost If it's over unity, you're making money with advertising, if it's not, you're wasting money on advertising or need to increase your CLTV or decrease your discount rate.
      - nihonde 9y ago
        How do you measure this? Please be specific.
        deleted 9y ago
        [deleted]
        nl 9y ago
        Not the OP, but... You put a cookie on their machine when they hit your website, tracking where they came from, and exactly how much you paid for that visit (because FB will give you which cohort they came from). Then you track that to a sale, and you can determine how much you made from them. If it is a single sale, then that's basically it (obviously you track return visitors and amortize the cost of them against that too). If it is a SAAS, then customer value calculation is a little more complicated (you record how long people stay with you etc). Most ecommerce platforms or marketing platforms have this setup with a click of a button. Here's a link to KissMetric's page on this: https://blog.kissmetrics.com/customer-acquisition-cost/ https://blog.kissmetrics.com/customer-acquisition-cost/ A16Z included this on their metrics post: https://a16z.com/2015/08/21/16-metrics/ https://a16z.com/2015/08/21/16-metrics/

nihonde 9y ago

I will answer your question with another: what metric are you using to measure ROI? Edit: When you say you know lots of "marketers and advertisers" that are making money from ads, are you referring to resellers and providers of ad inventory and/or analytics, or are you referring to people who actually sell goods and services other than marketing and advertising inventory?

matsur 9y ago
People entering and converting through a purchase funnel?
- nihonde 9y ago
  OK, so how is the success of that funnel measured vis-a-vis other promotional channels? And are you able to demonstrate definitively that a visitor from FB concluded a sale? If so, how?
  - traek 9y ago
    > OK, so how is the success of that funnel measured vis-a-vis other promotional channels? What difference does it make? If it’s profitable, it’s profitable. > And are you able to demonstrate definitively that a visitor from FB concluded a sale? If so, how? Through the variety of existing measurement solutions, or a custom solution. Twitter: https://business.twitter.com/en/help/campaign-measurement-and-analytics/conversion-tracking-for-websites.html https://business.twitter.com/en/help/campaign-measurement-an... Facebook: https://developers.facebook.com/docs/facebook-pixel/pixel-with-ads/conversion-tracking/ https://developers.facebook.com/docs/facebook-pixel/pixel-wi... Google: https://support.google.com/adwords/answer/1722054?hl=en https://support.google.com/adwords/answer/1722054?hl=en I don’t understand why you seem to think that companies are throwing tens of billions of dollars a year at Facebook (and Google, and Twitter) with not only no returns but also no ability to measure that lack of returns. It’s just such a ridiculous viewpoint to hold.
    - nihonde 9y ago
      I think so because the entire history of advertising is based on hiding the ball in terms of ROI. How many sales does a Super Bowl ad generate? How many does a billboard generate? For some extremely simplistic e-commerce conversions, such as for referrals to SaaS, it is easy to measure. For entire swathes of consumer products, the game is brand recognition and other soft metrics that drive huge ad spends. You can pretend it’s a science, but the incentives are all upside down for a true end-to-end ROI determination.
      - sdenton4 9y ago
        A large number of companies are advertising /only/ online, and therefore have a pretty pure measurement of ROI via click tracking from the ad to purchase. It's one of the promises of internet advertising: there's sufficient <strike>surveillance </strike> logging to be able to see what's happening with much greater clarity than TV or billboards. The other half of the promise is that you can target exactly the 'right' people. And this seems sketchier to me, as the article kinda gets at: as targeting complexity increases, it's harder to tell whether problems are arising due to market fit or issues in the targeting algorithms. In the old world, you bought ads on content, and now you buy ads on eyeballs: my guess is that there's an unexplored happy medium between the two.
  - jaggederest 9y ago
    Yes. Facebook gives you a unique visitor id when they see the ad that persists and is included in the sale form. It's completely linear, and is tracked from beginning to end. Every click is tracked, and users are tracked even if they leave the website and return later. There's hard, direct evidence involved in every step of the way.
  - nl 9y ago
    OK, so how is the success of that funnel measured vis-a-vis other promotional channels? It's trivial easy to add a tracking id to this (in-fact I think it is on by default) And are you able to demonstrate definitively that a visitor from FB concluded a sale? If so, how? I think people are a little confused about if you are trolling or you genuinely don't know. Anyway, https://developers.facebook.com/docs/facebook-pixel/pixel-with-ads/conversion-tracking/ https://developers.facebook.com/docs/facebook-pixel/pixel-wi... (and plenty of other methods) It's really, really easy. And that is why Facebook and Google are printing money - vendors know it works and can measure exactly how well, so they throw money at them.
    - nihonde 9y ago
      FWIW, I am not trolling. FB domains are deliberately blocked via my hosts file, and my business has nothing to do with consumer ads. I am just a skeptic of intertuption advertising effectiveness in general, and curious to see how rigorous the defense of FB advertising will be. I am still not convinced that click tracking is effective, but I’m willing to be wrong.
      - jaggederest 9y ago
        It's effective enough to drive the entire marketing campaigns of multimillion-dollar businesses :)
akanet 9y ago
Yeah, this is a very strange statement. Many businesses are printing money advertising through Facebook.
- nihonde 9y ago
  Then you should be able to answer my question: what is the metric for ROI?
  - csallen 9y ago
    Metric for ROI is profit from a customer vs cost to acquire that customer via Facebook ads.
  - jaggederest 9y ago
    Return on investment for advertising is very simple: net present average customer lifetime value acquired per unit of advertising cost If it's over unity, you're making money with advertising, if it's not, you're wasting money on advertising or need to increase your CLTV or decrease your discount rate.
    - nihonde 9y ago
      How do you measure this? Please be specific.
      - deleted 9y ago
        [deleted]
      - nl 9y ago
        Not the OP, but... You put a cookie on their machine when they hit your website, tracking where they came from, and exactly how much you paid for that visit (because FB will give you which cohort they came from). Then you track that to a sale, and you can determine how much you made from them. If it is a single sale, then that's basically it (obviously you track return visitors and amortize the cost of them against that too). If it is a SAAS, then customer value calculation is a little more complicated (you record how long people stay with you etc). Most ecommerce platforms or marketing platforms have this setup with a click of a button. Here's a link to KissMetric's page on this: https://blog.kissmetrics.com/customer-acquisition-cost/ https://blog.kissmetrics.com/customer-acquisition-cost/ A16Z included this on their metrics post: https://a16z.com/2015/08/21/16-metrics/ https://a16z.com/2015/08/21/16-metrics/