4 ms·

Well, Google's balance sheet tells me otherwise.

mlthoughts2018 7y ago
How so? The willingness to pay for digital ads actually has nothing to do with whether ads are effective (the statistical problem of attribution). For example, this was a pretty damning research paper on the topic, - https://poseidon01.ssrn.com/delivery.php?ID=018087083066114098080080104114097102052027021001058001027075086064094094086122078077099118053037011111023120101067023076079110122027038089015091126120124006029096006049011063124020084000126076075000101097007096097114092123019097028095103066019095003078&EXT=pdf https://poseidon01.ssrn.com/delivery.php?ID=0180870830661140...
- cocochanel 7y ago
  The paper is about predicting ROI, and that is a well known problem in advertising. Now, the same author of the paper you linked, Randall A. Lewis, has a paper about whether advertising actually works [1] and it does, "we find statistically and economically significant impacts of the advertising on sales. " [1] http://www.davidreiley.com/papers/DoesRetailAdvertisingWork.pdf http://www.davidreiley.com/papers/DoesRetailAdvertisingWork....
  - mlthoughts2018 7y ago
    You are wrong. The second paper is attempting to measure sales lift (with randomization, which many ad campaigns disallow because the marketer doesn’t want to pay for holdout inventory, so it’s not really the same situation that most companies are in when calculating lift), but sales lift does not mean there was positive ROI. You can increase sales all day, but if you’re spending more than you’re making to do so, it’s not effective and usually indicates some unsustainable effect that is more about short term attention than about a meaningful effect of information transfer about a product (and indeed in [1] the authors found a very similar effect - that there is usually positive lift on a customer activity like visits or site shopping cart checkouts, but that among users driven to the site by digital ads, their purchases were far less in total value, enough to more than offset the cost of advertising to drive them). [1]: https://marketing.wharton.upenn.edu/wp-content/uploads/2017/08/Johnson-Garrett-PAPER-VERSION-2.pdf https://marketing.wharton.upenn.edu/wp-content/uploads/2017/... I think you’re confused. I’m not disputing whether ads create positive lift in intermediate metrics like visits, clicks or sales. I’m saying the research pretty conclusively shows that despite that created positive lift in intermediate metrics, it does not translate to positive ROI, or a weaker version is that it may create positive ROI but on average marketing campaigns even from the country’s biggest marketers would need to be 10x-1000x larger than they are to even be able to distinguish such wildly incompatible outcomes as +100% ROI vs -50% ROI, to the point that for most companies buying digital ads, they literally have no idea if they are making money or losing money by doing so.
    - cocochanel 7y ago
      "the total effect on revenues is estimated to be more than seven times the retailer’s expenditure on advertising during the study." How is this not positive ROI?
      - mlthoughts2018 7y ago
        The first paper explains why such estimates are deeply unreliable, even in the second paper.

mlthoughts2018 7y ago

How so? The willingness to pay for digital ads actually has nothing to do with whether ads are effective (the statistical problem of attribution). For example, this was a pretty damning research paper on the topic, - https://poseidon01.ssrn.com/delivery.php?ID=018087083066114098080080104114097102052027021001058001027075086064094094086122078077099118053037011111023120101067023076079110122027038089015091126120124006029096006049011063124020084000126076075000101097007096097114092123019097028095103066019095003078&EXT=pdf https://poseidon01.ssrn.com/delivery.php?ID=0180870830661140...

cocochanel 7y ago
The paper is about predicting ROI, and that is a well known problem in advertising. Now, the same author of the paper you linked, Randall A. Lewis, has a paper about whether advertising actually works [1] and it does, "we find statistically and economically significant impacts of the advertising on sales. " [1] http://www.davidreiley.com/papers/DoesRetailAdvertisingWork.pdf http://www.davidreiley.com/papers/DoesRetailAdvertisingWork....
- mlthoughts2018 7y ago
  You are wrong. The second paper is attempting to measure sales lift (with randomization, which many ad campaigns disallow because the marketer doesn’t want to pay for holdout inventory, so it’s not really the same situation that most companies are in when calculating lift), but sales lift does not mean there was positive ROI. You can increase sales all day, but if you’re spending more than you’re making to do so, it’s not effective and usually indicates some unsustainable effect that is more about short term attention than about a meaningful effect of information transfer about a product (and indeed in [1] the authors found a very similar effect - that there is usually positive lift on a customer activity like visits or site shopping cart checkouts, but that among users driven to the site by digital ads, their purchases were far less in total value, enough to more than offset the cost of advertising to drive them). [1]: https://marketing.wharton.upenn.edu/wp-content/uploads/2017/08/Johnson-Garrett-PAPER-VERSION-2.pdf https://marketing.wharton.upenn.edu/wp-content/uploads/2017/... I think you’re confused. I’m not disputing whether ads create positive lift in intermediate metrics like visits, clicks or sales. I’m saying the research pretty conclusively shows that despite that created positive lift in intermediate metrics, it does not translate to positive ROI, or a weaker version is that it may create positive ROI but on average marketing campaigns even from the country’s biggest marketers would need to be 10x-1000x larger than they are to even be able to distinguish such wildly incompatible outcomes as +100% ROI vs -50% ROI, to the point that for most companies buying digital ads, they literally have no idea if they are making money or losing money by doing so.
  - cocochanel 7y ago
    "the total effect on revenues is estimated to be more than seven times the retailer’s expenditure on advertising during the study." How is this not positive ROI?
    - mlthoughts2018 7y ago
      The first paper explains why such estimates are deeply unreliable, even in the second paper.