Comment by andreyf | Hacker News Reader

Comment by andreyf | Hacker News Reader

Had they randomly spent $240 on media elsewhere, would they have gotten a better return? For a pizza shop that's open two nights a week, I wouldn't expect so. Based on this data alone, the authors' conclusion is a bit grandiose and FUD inducing:

...social advertising is so new that nobody knows for sure [if it improves sales]. It's still unproven, untested and largely unstudied.

This simply does not follow from the anecdote of one tiny campaign, so it's coming from somewhere else.

I don't want to ascribe malicious intent to the authors, so let's rebute their conclusion directly: "social advertising" isn't wholly unlike other forms of advertising, with the principal difference being that you now have access to a lot more data when deciding who sees your ads, such as people's declared preferences and their social network.

It's up to businesses to figure out a media strategy making use of those data. Sure, this might take time/experimentation, but also seems quite obviously a better deal than placing ads in the Yellow Pages or broadcasting them (nearly) indiscriminately on TV or radio.

flyers distributed in the zip code where the Pizza Shop is located is a fraction of the price, and targets the residents. For some niche, local businesses, flyers still work

Really? They only spent $240. Would flyers for the neighborhood cost less than that?

They spent $240 and got no new customers. The $240 itself is irrelevant, the return on investment is what matters.

Perhaps they will next spend $250 on photocopied flyers and get 500 new customers. Perhaps they will then spend $1000 on a quarter page color ad in a local paper and get 10 new customers. None of these raw amounts have any bearing on whether Facebook costs $240 for getting no customers. What matters is whether there is a return in the investment for the ad campaign.

The implication that it is better to spend $240 on an ineffective campaign than spending more than $240 on a better campaign is not a reasonable comparison.

Of course the campaign was not completely ineffective. It cost them $240 to find out that Facebook campaigns did not provide a good return in their specific case. This may or may not be applicable to other businesses. Apparently GM has reached the same conclusion with $10 million in ad money. The Pizza place is smart, they were able to come to GM's conclusions for their own case, but it cost them a lot less to learn this information than it costed GM.

The $240 itself is irrelevant, the return on investment is what matters.

I disagree ($240 might represent the entirety of their marketing budget for now, so the ROI on flyers could be moot), but regardless, parent did not mention ROI at all.

"new customers" is not a valid metric for a restaurant or a pizza place. You want new customers, sure - if you are a small place just starting up. What's important though is repeat customers. Perhaps if they marketed to people who 'like' them on facebook, those customer would more frequently visit that restaurant, thus increasing revenue. Just because they got no new customers doesn't necessarily make the campaign a flop.

Where I live, you can buy about 1000 flyers for this amount of money. But you still have to get these to the people which will drive the costs up to twice as much (either pay students or postal fees). The waste is also bigger with flyers because they are less targeted, more like a shotgun approach - scatter everywhere and hope it hits someone.

You'd be surprised but Yellow Pages can sometimes be more effective that a social media strategy. Targeted ads are targeted at people who aren't exactly looking for a service. People that check out Yellow Pages are looking for something to purchase.

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