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What if performance advertising isn't just an analytics scam?

mackgrenfell.com

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Re: What if performance advertising isn't just an analytics scam?

#21

Post by firecall »

PragmaticPulp wrote: post #6

> As impressive as these examples might seem, we have to consider the fact that no company would ever publicise their results had they observed the opposite. No CMO is going to go on Medium and write an article called We dropped our spend by X%, and saw our volume drop by X%. Even if they did write such a case study, it's unimaginable that it should become part of modern marketing folklore in the way that Airbnb and…

I've been responsible for large 7 figure budgets in Australia.

And I have anecdotal data that showed that we reduced spend, and business kept on keeping on!

Some key points though:

* It can be hard to understand the reason for your growth Unless it's an explosively popular new product line!

* Sometimes you grow the business because you are riding on the back of a popularity wave, external incentives, or you are have organic viral growth power!

A tourism destination that is suddenly cool, government incentives to renovate your home, or you are Tesla!

* If we hadn't of cut spending, would we have grown more? FOMO is strong in advertising! Could you have accelerated capture of market share during overall market growth?

* Budgets are power in corporations! The bigger your budget, the more power you have! There are not many marketing managers that will want to admit to needing less budget!

The more budget you have, the more important you are!

Re: What if performance advertising isn't just an analytics scam?

#22

Post by PragmaticPulp »

giaour wrote: post #10
PragmaticPulp wrote: post #6

> As impressive as these examples might seem, we have to consider the fact that no company would ever publicise their results had they observed the opposite. No CMO is going to go on Medium and write an article called We dropped our spend by X%, and saw our volume drop by X%. Even if they did write such a case study, it's unimaginable that it should become part of modern marketing folklore in the way that Airbnb and…

I don’t understand the survivorship bias argument. If any company tried to follow in AirBnB’s footsteps and saw their revenue decline as ad spend went down, wouldn’t they widely publicize this fact? “Hey! AirBnB is wrong, and following their advice nearly destroyed my small business” would be a compelling read and get a lot of traction. I find it hard to believe that such a demonstration of the value of marketing wou…

> If any company tried to follow in AirBnB’s footsteps and saw their revenue decline as ad spend went down, wouldn’t they widely publicize this fact?

In the real world, a CMO who stopped advertising and suffered the predictable outcome would likely be removed from their job ASAP. Not boasting about shooting their company in the foot in a blog.

> I find it hard to believe that such a demonstration of the value of marketing wouldn’t be immediately shouted from the rooftops by CMOs everywhere and find its way into marketing textbooks.

I don't understand why you think these examples don't exist. It's marketing 101. Professional marketers (the real ones at big companies) are doing extensive measurements around their advertising value and customer acquisition costs.

Small businesses do it, too. It's really trivial stuff to do basic analytics on where your customers are coming from when they arrive at a website and it's not hard to see which ones are arriving because they clicked on ads and which of those translate into purchases.

I think this idea that all advertising people have no idea what they're doing and are unable to quantify their results is a weird HN bubble thing.

Re: What if performance advertising isn't just an analytics scam?

#23

Post by unclebucknasty »

naravara wrote: post #18
PragmaticPulp wrote: post #6

> As impressive as these examples might seem, we have to consider the fact that no company would ever publicise their results had they observed the opposite. No CMO is going to go on Medium and write an article called We dropped our spend by X%, and saw our volume drop by X%. Even if they did write such a case study, it's unimaginable that it should become part of modern marketing folklore in the way that Airbnb and…

> Obviously no company is going to brag publicly about shooting themselves in the foot by reducing advertising spend, so the only possible anecdotes that can exist publicly are positive ones. Coca-cola did just that, testing the impact of reduced ad spend in various media markets. They noticed reduced market share as a result and publicized it. Information is valuable. If you’re doing a test presumably it’s worth wha…

And there may be a number of other incentives for publishing the data, including being a publicly traded company that needs to explain blips on a quarterly report. Not to mention there's always a way to spin it: "experimentation with our channel priorities resulted in a temporary decline that validated our channel focus, blah, blah, blah".

Likewise, several years ago a few large companies (IIRC, GM was one), announced that they were suspending millions of dollars of ad spend on FB because they weren't certain it was effective. I don't know what the net outcome of that was, but it seems not very different to admit, "we were spending millions, possibly with no results" than it is to admit a reduction in ad spend resulted in revenue losses.

Point being, companies talk about this stuff all the time.

Re: What if performance advertising isn't just an analytics scam?

#24

Post by mkmk »

doctor_eval wrote: post #15
giaour wrote: post #10

Earlier quoted context omitted.

I don’t understand the survivorship bias argument. If any company tried to follow in AirBnB’s footsteps and saw their revenue decline as ad spend went down, wouldn’t they widely publicize this fact? “Hey! AirBnB is wrong, and following their advice nearly destroyed my small business” would be a compelling read and get a lot of traction. I find it hard to believe that such a demonstration of the value of marketing wou…

If advertising drives sales then you will see a decline really quickly if you cut spending. You’ll likely see this decline within hours. In order to restore sales the first thing you’ll do is restore spending. You’re not going to wait to collect a bunch of data in order to be able to roll it up into meaningful research for a blog post because those lost sales are real money that you’re losing. The thing is, it’s in A…

>If advertising drives sales then you will see a decline really quickly if you cut spending. You’ll likely see this decline within hours. In order to restore sales the first thing you’ll do is restore spending.

True for digital, but not for TV, podcast, and OOH. On those channels, it’s common to see a multi-week long tail of performance even after spend stops. Very annoying for testing.

Re: What if performance advertising isn't just an analytics scam?

#25

Post by soared »

dontich wrote: post #8
jpdaigle wrote: post #5

Earlier quoted context omitted.

Isn't that basically a "no true Scotsman" fallacy, though? I can completely believe both sides of this: the original Fishkin article, and this rebuttal which claims that "actually, marketers are competent and knowledgeable". One way to look at this, mindful of [Sturgeon's Law]( https://en.wikipedia.org/wiki/Sturgeon%27s_law ) stating that ninety percent of everything is crap, is that good marketing agencies will rise…

Personally I have never found a good agency for these type of things, and I have worked with a bunch. Some in the gaming space were decent enough.

From my experience agencies around 200 employees that specialize seem to be the best. “Full service” means shitty at everything. Too small of an agency and you don’t get experts (or the experts leave), too big and you’re stuck in bureaucracy, huge margins, occasion very under skilled employees who go unnoticed, etc.

I’m also starting to see more often the game brands play if switching vendors constantly so that each vendor operates at a loss to try and win the clients business. But the client always leaves by design.

Re: What if performance advertising isn't just an analytics scam?

#26

Post by eatonphil »

giaour wrote: post #10
PragmaticPulp wrote: post #6

> As impressive as these examples might seem, we have to consider the fact that no company would ever publicise their results had they observed the opposite. No CMO is going to go on Medium and write an article called We dropped our spend by X%, and saw our volume drop by X%. Even if they did write such a case study, it's unimaginable that it should become part of modern marketing folklore in the way that Airbnb and…

I don’t understand the survivorship bias argument. If any company tried to follow in AirBnB’s footsteps and saw their revenue decline as ad spend went down, wouldn’t they widely publicize this fact? “Hey! AirBnB is wrong, and following their advice nearly destroyed my small business” would be a compelling read and get a lot of traction. I find it hard to believe that such a demonstration of the value of marketing wou…

I agree. People publish post-mortems all the time. I don't think it's obvious good companies/organizations would be incentivized to keep a negative learning experience hidden.

Re: What if performance advertising isn't just an analytics scam?

#27

Post by human »

giaour wrote: post #10
PragmaticPulp wrote: post #6

> As impressive as these examples might seem, we have to consider the fact that no company would ever publicise their results had they observed the opposite. No CMO is going to go on Medium and write an article called We dropped our spend by X%, and saw our volume drop by X%. Even if they did write such a case study, it's unimaginable that it should become part of modern marketing folklore in the way that Airbnb and…

I don’t understand the survivorship bias argument. If any company tried to follow in AirBnB’s footsteps and saw their revenue decline as ad spend went down, wouldn’t they widely publicize this fact? “Hey! AirBnB is wrong, and following their advice nearly destroyed my small business” would be a compelling read and get a lot of traction. I find it hard to believe that such a demonstration of the value of marketing wou…

Let me go try with my business. If we crash and burn at least people on HN will read my blog post (maybe).

Re: What if performance advertising isn't just an analytics scam?

#28

Post by human »

mkmk wrote: post #24
doctor_eval wrote: post #15

Earlier quoted context omitted.

If advertising drives sales then you will see a decline really quickly if you cut spending. You’ll likely see this decline within hours. In order to restore sales the first thing you’ll do is restore spending. You’re not going to wait to collect a bunch of data in order to be able to roll it up into meaningful research for a blog post because those lost sales are real money that you’re losing. The thing is, it’s in A…

>If advertising drives sales then you will see a decline really quickly if you cut spending. You’ll likely see this decline within hours. In order to restore sales the first thing you’ll do is restore spending. True for digital, but not for TV, podcast, and OOH. On those channels, it’s common to see a multi-week long tail of performance even after spend stops. Very annoying for testing.

I’ve always pictured branding like a flywheel. Advertising adds momentum. If you cut spending it will take a while before you see it slow down. And by the time you notice a real slow down it takes months to build it back up.

Re: What if performance advertising isn't just an analytics scam?

#29

Post by notreallyhere00 »

franczesko wrote: post #17
notreallyhere00 wrote: post #9

Wow. This article is excellent. It’s not just the content; he’s even made nice graphics… And the aesthetic of the post on mobile is 10/10. The issues at hand in this post are real. 1. Problem 1 - Awareness Many marketers outside of mega super super high paying startups are BARELY aware of these factors. I’m an amateur at this stuff but people look at me like I’m a wizard when I get my - VERY SIMPLE - Spreadsheets out…

In a smaller scale this probably would be very effective, however I can't see this being possible with bigger client volumes. Also, I noticed in my career some sort of elitism and looking at the marketing from above, which is driven by ignorance in most of the cases.

It’s not possible to do this with all clients; that’s not my argument. But in a big company it should be done with as a matter of practise with at least a cohort.

But yes there is a ton of ignorance in this world. I constantly have to remind folks that the world outside of Spreadheets is insanely messy.

Re: What if performance advertising isn't just an analytics scam?

#30

Post by doctor_eval »

mkmk wrote: post #24
doctor_eval wrote: post #15

Earlier quoted context omitted.

If advertising drives sales then you will see a decline really quickly if you cut spending. You’ll likely see this decline within hours. In order to restore sales the first thing you’ll do is restore spending. You’re not going to wait to collect a bunch of data in order to be able to roll it up into meaningful research for a blog post because those lost sales are real money that you’re losing. The thing is, it’s in A…

>If advertising drives sales then you will see a decline really quickly if you cut spending. You’ll likely see this decline within hours. In order to restore sales the first thing you’ll do is restore spending. True for digital, but not for TV, podcast, and OOH. On those channels, it’s common to see a multi-week long tail of performance even after spend stops. Very annoying for testing.

But this article is specifically addressing performance advertising where the advert is intended to directly influence sales through conversions.

Awareness advertising, like TV and billboards, is presumably coated separately.

(I admit I wasn’t clear about that in my post but it was my intent)

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