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You are correct, but if you look at total instead of marginal the picture's not much better. While 80% of brands have negative marginal ROI, 67% (2/3) have nega
by evancox100 5y ago
You are correct, but if you look at total instead of marginal the picture's not much better. While 80% of brands have negative marginal ROI, 67% (2/3) have negative net ROI, and so would presumably be better off with zero advertising.
- singhrac 5y agoNot necessarily. The thing to measure is the marginal ROI at zero advertising spend. Derivatives are not bounded by their average value across a range.
- mlyle 5y agoThe claim was: "67% (2/3) have negative net ROI, and so would presumably be better off with zero advertising." If they truly have negative net ROI, they would be better off with zero spending than their actual spending. The claim holds. > The thing to measure is the marginal ROI at zero advertising spend. Derivatives are not bounded by their average value across a range. OK, so if we're going to get super pedantic... the derivative could be negative at the current value, and at zero, and there could be a positive ROI for some value of spending (between 0 and the amount spent, or even for some value more than what was spent). But it's not really likely, nor relevant to the point the person above made.
- evancox100 5y agoFurthering the pedantry, even assuming monotonically decreasing ROI as ad spending increases, as long as ROI of the first dollar was positive, there would be some optimum between zero and current levels. But my original statement still holds, zero would be preferable to current levels of spending for those brands.
- rhizome 5y agoI'm not an MBA nor even a math person really, what is the "I" in this equation when the ad spend is zero?
- zeusk 5y agoYou just take the interval (0, inf). So you analyze it as limit spend -> 0+ in that region. My personal opinion however is that ad industry is a big scam.