Earlier quoted context omitted.
The teams spending the kind of money these ad networks care about are doing a lot of upper funnel brand marketing where exposure is more important than clicks and where conversions are expected to be much lower for this segment of spend.
The largest brands (Walmart, McDonald's, Coca-Cola, etc.) put a lot of analytics into their ad spend. I worked on an ad platform with a large audience that these kinds of brands wanted to get their name in front of, but the audience was exceedingly unlikely to click on big-brand ads on our platform. The brands figured this out quickly and pushed hard for cost-per-click rather than cost-per-impression because cost-per…
Maybe 15 years ago multi-touch attribution was the big push but even that only adds minimal insights into how ad spend affects the behavior you're trying to measure. It helps with high-level channel attribution but it's still at best directional.
So once you reach a point when increasing spend at Meta/Google results in superlinear increases in CAC vs. spend, you eventually end up having to move those ad dollars elsewhere and over time (and a lot of money) you get an intuitive understanding of how these other mediums trickle down to the metrics that matter.
You're totally right about agencies and their perverse incentives and how that leads to sub-optimal spend allocation.