We Have No Idea If Online Ads Work

Online ads is a broad category. It includes social media, display ads, re-targeting ads, and paid search ads. Social media adverts are hard to measure in terms of ROI. At my workplace we have found a way to measure profitability for paid per click ads. We can optimize to drive more conversions at a cost effective price. Success depends on what one is measuring and what the end goal is. In the sea of data it is easy to get carried away on optimizing and improving front end metrics.

Or they are trying to do the thing BMW and Apple do where they are trying to make you feel good about a decision you already made.

The premise of the article is naive at best

You can use web analytics to measure a conversion rate from ads. Hence user clicks ad -> sales happens (in the best cases). That's Internet Ads 101

In fact, with online ads the "if it works" part is much more measurable than for other medias

"Last year, a group of economists working with eBay’s internal research lab issued a massive experimental study with a simple, startling conclusion: For a large, well-known brand, search ads are probably worthless."

Once again: "For a large, well-known brand"

Well, so do you mean that pumping ads for something everybody already knows (and already gets massive advertisement everywhere else) doesn't work? Color me shocked.

Just because something cannot be quantified DOES not mean it does not work....Marketing is often UNQUANTIFYABLE...but almost always effective.

I remember reading the tobacco industry was actually secretly grateful when the EU banned them from advertising.

As I remember it, they were in a stale-mate. The market was pretty much divided up. Most people were loyal to their brand and that was that. Despite that, they were spending a massive amount of money on advertising even though their market shares remained unchanged.

The reason was that if one of them stopped funnelling massive amounts of cash into advertising, they would lose a big chunk of their market share to the others. So they were all paying mostly to maintain the status quo.

With the ban on advertising, the amount of money saved greatly outweighed the revenue lost as others couldn't advertise either so it really only affected new smokers rather than convince current smokers to switch brands.

I see a similar thing happening in my line of work. In our niche of e-commerce every player of importance works with the same online marketing networks and paying rather a lot per sale or click.

There's a whole lot of sites out there which basically exist to infest organic search results, send traffic to us and our competitors and collect their referral fee from the advertising network. They add no value[1]. Without them, the customer would have been similarly divided amongst the competition as well without having to pay for it. Yet, if we stop paying them, we'll lose a lot of business as our competitors will continue to do so.

Disclaimer: this is all as I understand it and in no way my employers opinion or persepctive ;)

1) Some do, by providing extra information or ranking the shops by what's best for the consumer (price, reviews) rather than the most cash-per-click.