What if performance advertising isn't just an analytics scam?
mackgrenfell.com
mackgrenfell.com
In other words: Survivorship bias is the driver of these anecdotes. 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.
Also: Most companies aren't established, household brand names like AirBnB or Uber or eBay. Those companies have built enough of a reputation and have enough word of mouth momentum that advertising campaigns aren't going to move the needle much.
I agree with much of this article. The original claims that performance advertising is a "scam" is playing to general distrust of marketers or a dislike of advertising. Any small companies trying to ditch advertising because AirBnB did it (after they were established and had saturated the market) are making their decisions for the wrong reasons.
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.
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 AirBNBs interest to discredit advertising because they have a huge organic advantage over their competition. If I want to rent a holiday place somewhere, I’m going to search AirBNB first. Only if it doesn’t work out will I try a broader search, and be exposed to AirBNBs competitors.
Competitors won’t want to publicise the fact that ad spending is important because it gives them an advantage over those who believe AirBNBs argument.
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.
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)
I've never written about it. But now I am.
AirBnB is totally wrong because of my 10 year old anecdote
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.
No it is not.
If a customer came from brand bidding, you do not know if he would not have come to your website even without the campaign.
How do you calculate where a customer originated from, if he visited the site multiple times, sometimes through paid and sometimes through free channels?
You cannot blindly trust their claim that they are creating value - even advertisers from your own company are in on it.
I am speaking from my own experience working at analytics tools for a corporation, which has a monopoly. The product name is our brand. We are the only ones selling it. Every child knows it. Think public utility.
These people will still do brand bidding.
> These people will still do brand bidding.
Ooh this pisses me off so much. My IT consulting employee bids on their unique name. I guess the marketing department use it to fudge conversation rate of their ad spend. A scam.
Unless you are a dropshipper the value of Google traffic is way lower than appearant since people use Google as a address bar nowadays. And showing ads for people that already are considering to buy your product ... that is the worst kind of statistical causality poisoning.
I’ve worked in marketing for a decade and my experience is that most of my colleagues are making things up as they go. Very few have any formal education in marketing, let alone have any interest in reading marketing textbooks or studies and even fewer still have any maths background.
I suspect things are different at larger and more prestigious companies, but the state of marketing for SME’s is pretty dire.
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 whatever you’re wagering to get it.
The supposition that it’s “obvious” that nobody would publicize this assumes everyone’s pathologically fixated on saving face and not, like truth or information.
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.
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!
Also all the articles of "We increased our ad spending by 50% and sales went up 50%" are survivorship bias. This does not (dis)prove anything
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.
That’s one thing.
Problem 2 - The tools
these platforms and analytics tools are kind of shit at piecing the story together.
I’m the sole marketer at a (very rapidly growing, if I may) software startup.
Every so often, as an exercise, I go back and piece together the entire journey of our highest value opportunities and prepare a nice little report.
The idea is to show the team that the buying process is complex and that tracking in our neat little funnels is a rough proxy at best.
Problem 3 - untracked interaction
We sell a product that is used by teams. This means that a TON of our traffic is going to be from team members coming in to have a look after team member A discovers us. But what happens if it’s team member C that gets in touch? How do you attribute that?
Doing regular deep dives on individual customers is the best way to maintain sanity in an organisation and stop the inane conversations that non-marketing team members tend to start. The deep dives, in my experience, tend to be the thing that most generates trust in the marketing activity - because it goes from being just an abstract game of big numbers to ‘oh hey, that actually works, how clever.’
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.
I think this is worth specifically calling out. We’re all so blinded by numbers on a dashboard that we forget to take a look at the wider context.
People take numbers at face value, and for various reasons, those numbers are frequently wrong. In even more cases we don’t even know to what degree those numbers are wrong so we’re left making imperfect decisions based on a complete misunderstanding of what we’re seeing.
In the end of the day, they need to keep the lights on and it's not their money anyway.
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 above, but if I own a store selling scented candles and Google "online advertising" and hire one of the random agencies listed, maybe, just maybe, I'll get one of the 90% of bad ones that will try to hoodwink me into believing unsupported incremental conversion numbers.
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.