We Have No Idea If Online Ads Work

> It isn’t easy, of course. In 2013, Randall Lewis of Google and Justin Rao of Microsoft released the paper “On the Near Impossibility of Measuring the Returns on Advertising.” In it, they analyzed the results of 25 different field experiments involving digital ad campaigns, most of which reached more than 1 million unique viewers. The gist: Consumer behavior is so erratic that even in a giant, careful trial, it’s devilishly difficult to arrive at a useful conclusion about whether advertisements work. > > For example, when the researchers calculated the return on investment for each ad campaign, the median standard error was a massive 51 percent. In other words, even if the analysis suggested an ad buy delivered a 50 percent return, it was possible that the company actually lost money. You couldn’t say for sure. “As an advertiser, the data are stacked against you,” the researchers concluded. That bodes poorly for your typical marketing schmo trying to glean meaning from a Google analytics page—all he can do is try to stack enough data to overcome his statistical problems. > > Still, in an email, Lewis told me that he believes “online ads absolutely work.” Or, at least, they can work. For instance, Lewis and his Google colleague David Reiley have written papers showing that display ads on Yahoo led to more customers making purchases in stores. The problem, Lewis argues, is that most analytics firms aren’t scientific enough about measuring profitability. Because they don’t run real experiments, he thinks most end up conflating correlation and causation.

(It's a very nice paper, I think, one of the most insightful applications of power analysis I've seen.)

Here's an article I wrote a while ago about how content marketing and native advertising are the same thing converging on a point where modern day advertising stops working... http://www.adotas.com/2014/05/surviving-the-adpocalypse-what...

Take most car advertising for example. A significant portion of the ads are from dealers advertising sales. Those are classic attempts to correct for imperfect information on the part of the consumer. But the other portion of the ads are all about how you should feel in a given car.

When you see an add for a luxury sedan combined with platitudes about performance, speed, and engineering or a truck and cliches about America, the goal isn't to sell you on the merits of the vehicle, but to sell you on a concept of a brand. The ideal targets for these ads aren't actually consumers currently in the market for a new car, but the people who just bought a new car. The people for whom the shine is starting to come off the rose. If you sell someone the idea that yes their purchase makes them special, then they are more likely to be happy with their decision, more likely to repeat that decision later, more likely to be a unwitting brand ambassador.

I'm not sure this is true: Samsung is not a (particularly) higher-end company, and their phones at least are lower cost than Apple.

In the case of Apple, their phones were appreciably better up until two years ago or so. Their laptops have been physically better in fit and finish for at least a decade (http://paulgraham.com/mac.html).