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Don’t most companies have budgets? Wouldn’t raising prices just cause companies to buy less? I feel like folks don’t just increase spend when prices go up, when

by r0m4n0 3y ago

Don’t most companies have budgets? Wouldn’t raising prices just cause companies to buy less? I feel like folks don’t just increase spend when prices go up, when it comes to ads. Now if everyone is increasing budgets, prices of goods, ad spend, that story would make more sense. But that would correlate to whole market movements which honestly makes sense for something of this scale

riku_iki 3y ago
I think the real negative impact would be that clients see lower ROI, and move somewhere with better ROI.
- fieldcny 3y ago
  For most companies ROI on ad spend is incredibly difficult if not impossible to calculate. Setting aside all the challenges south multiple devices lagged purchasing etc there are a lot of sales processes that take a digital lead and convert it to real human contact so attribution is very difficult
  - riku_iki 3y ago
    I disagree with the "most" statement, most online commerce ads tracking is streamlined, user clicks on ads, goes to ebay, buys item, ads platform connects click and purchase through some cookies or fingerprinting and you got reliable tracking. Google obviously tracks lots of people through multiple devises, because they are in eccosystem.
seadan83 3y ago
Drawing on my experience from working with an Ad-Tech: > Don’t most companies have budgets? Yes > Wouldn’t raising prices just cause companies to buy less? Not necessarily, the "ad-spend" typically remains a fixed budget until a given ad-campaign is complete. The kicker is basically the cost per ad is increased, which means the budget for an ad-campaign is consumed more quickly. Thus, for example, rather than an ad-campaign lasting 4 weeks and generating X number of impressions, it lasts 80% of that time with 80% the impressions. Thus, even though the revenue is fixed per ad-campaign, Google would be able to cycle through more ad-campaigns > I feel like folks don’t just increase spend when prices go up, when it comes to ads. Depends on the company. In all probability the ad-spend would remain fixed and the companies just get less return on that spend (as an aside, the ROI for ads is highly debated to begin with)
- drawkward 3y ago
  >The kicker is basically the cost per ad is increased, which means the budget for an ad-campaign is consumed more quickly. Thus, for example, rather than an ad-campaign lasting 4 weeks and generating X number of impressions, it lasts 80% of that time with 80% the impressions. Thus, even though the revenue is fixed per ad-campaign, Google would be able to cycle through more ad-campaigns This is, in fact, companies buying less (advertising), which is what I took the parent comment to be asking. It certainly isn't spending less.
dubcanada 3y ago
Company X makes budget of $200k a quarter to buy ads. Agency Y setups up ads in Google, a budget and a keyword. They then tell Company X they got a certain amount of referrals/traffic/clicks/what ever. Google increases ads 5% or 10% Agency Y reports 5% or 10% decrease from last quarter. Company X goes well that's not great. Agency Y makes changes, Google changes back 5-10% change, next quarter it goes up. Company X goes great! Google just made 5-10% extra an entire quarter. Rinse and repeat. Basically 5-10% is nothing, nobody would really notice. General traffic would probably change 5-10% every quarter, same with spending habits and other factors.
- r0m4n0 3y ago
  That's the thing though, with the Agency Y making changes. They would have to go back and ask for more money than before... which I just don't think that's happening (at least that's not what I do). I'm speaking from a place where I purchase ads for my product and know someone else who does as well. We just budget a set amount on ads with an agency and then measure what we get out of that. If it's worth it, then it's worth it for us. The tuning of 5% up and down doesn't really effect how much I spend per se. I only have so much to spend on that type of marketing. I guess the more expensive it is the more it grinds into profit margins because those clicks go down. At one point though, it isn't profitable to market there anymore and I move onto something else, which wouldn't be what they want I would assume? That's where the ad "market" comes into play. The market decides the price supposedly? Is the argument that there is nothing else to move on to when they fudge the price?
  - cyanydeez 3y ago
    It doesn't factually matter what the customers budget is. They being sold less product for a high price and their tools to identify that are manipulated opaquely.

by r0m4n0 3y ago

riku_iki 3y ago

I think the real negative impact would be that clients see lower ROI, and move somewhere with better ROI.

fieldcny 3y ago
For most companies ROI on ad spend is incredibly difficult if not impossible to calculate. Setting aside all the challenges south multiple devices lagged purchasing etc there are a lot of sales processes that take a digital lead and convert it to real human contact so attribution is very difficult
- riku_iki 3y ago
  I disagree with the "most" statement, most online commerce ads tracking is streamlined, user clicks on ads, goes to ebay, buys item, ads platform connects click and purchase through some cookies or fingerprinting and you got reliable tracking. Google obviously tracks lots of people through multiple devises, because they are in eccosystem.

seadan83 3y ago

Drawing on my experience from working with an Ad-Tech: > Don’t most companies have budgets? Yes > Wouldn’t raising prices just cause companies to buy less? Not necessarily, the "ad-spend" typically remains a fixed budget until a given ad-campaign is complete. The kicker is basically the cost per ad is increased, which means the budget for an ad-campaign is consumed more quickly. Thus, for example, rather than an ad-campaign lasting 4 weeks and generating X number of impressions, it lasts 80% of that time with 80% the impressions. Thus, even though the revenue is fixed per ad-campaign, Google would be able to cycle through more ad-campaigns > I feel like folks don’t just increase spend when prices go up, when it comes to ads. Depends on the company. In all probability the ad-spend would remain fixed and the companies just get less return on that spend (as an aside, the ROI for ads is highly debated to begin with)

drawkward 3y ago
>The kicker is basically the cost per ad is increased, which means the budget for an ad-campaign is consumed more quickly. Thus, for example, rather than an ad-campaign lasting 4 weeks and generating X number of impressions, it lasts 80% of that time with 80% the impressions. Thus, even though the revenue is fixed per ad-campaign, Google would be able to cycle through more ad-campaigns This is, in fact, companies buying less (advertising), which is what I took the parent comment to be asking. It certainly isn't spending less.

dubcanada 3y ago

Company X makes budget of $200k a quarter to buy ads. Agency Y setups up ads in Google, a budget and a keyword. They then tell Company X they got a certain amount of referrals/traffic/clicks/what ever. Google increases ads 5% or 10% Agency Y reports 5% or 10% decrease from last quarter. Company X goes well that's not great. Agency Y makes changes, Google changes back 5-10% change, next quarter it goes up. Company X goes great! Google just made 5-10% extra an entire quarter. Rinse and repeat. Basically 5-10% is nothing, nobody would really notice. General traffic would probably change 5-10% every quarter, same with spending habits and other factors.

r0m4n0 3y ago
That's the thing though, with the Agency Y making changes. They would have to go back and ask for more money than before... which I just don't think that's happening (at least that's not what I do). I'm speaking from a place where I purchase ads for my product and know someone else who does as well. We just budget a set amount on ads with an agency and then measure what we get out of that. If it's worth it, then it's worth it for us. The tuning of 5% up and down doesn't really effect how much I spend per se. I only have so much to spend on that type of marketing. I guess the more expensive it is the more it grinds into profit margins because those clicks go down. At one point though, it isn't profitable to market there anymore and I move onto something else, which wouldn't be what they want I would assume? That's where the ad "market" comes into play. The market decides the price supposedly? Is the argument that there is nothing else to move on to when they fudge the price?
- cyanydeez 3y ago
  It doesn't factually matter what the customers budget is. They being sold less product for a high price and their tools to identify that are manipulated opaquely.