this post was submitted on 02 Dec 2023
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I think ad space sellers wildly overestimate the effectiveness of ads and google has made it far worse with targeted ads. People have gotten used to saying things like "ads work" and "brand recognition" but does anyone know the numbers? Or is this just repeating some phrases you've heard?
I don't know the numbers myself, but I'm quite skeptical.
Companies have tested this. A DIY chain ran an ad and people complained it was annoying, so they stopped running it. Their sales started to decline. Started running the ad again and sales went up.
Probably you're not the target audience and just collateral damage in the ad war, but for the population in general they work.
A DIY chain is the ad I’m most unlikely to see. The only ads I see are usually the same 5 auto makers advertising the same bland cars on a cliff or in a desert. The vast vast majority of ads don’t work and waste everyone’s time for a small bump in sales and recognition. Especially since the variety of the US market is dominated by so few billion dollar businesses. Like Walmart still advertises. Walmart. The company that owns like 40% of grocery sales in the US and can’t pay their workers a living wage. They’ll gladly stop you from watching your shows though because their marketing department needs a salary.
No it does not mean you will pick it. It means you are more likely to pick it. Given all else being equal you are vastly more likely to pick something familiar than something unfamiliar. And it all comes down to trends and statistics. The hope is that more people will go for your brand that leads to more sales then the cost of the marketing in the first place. You might not go for NordVPN for other reasons, but can you say that about every product you have been advertised to? If anything the more you know about a product the less advertising will affect you in the familiarity sense - these adverts are not so much meant for you as they are for people not familiar with VPNs at all.
But there are a lot of studies on the topic like this and this meta analysis that seem to conclude that advertising is effective. And there are a lot of studies on what various aspects of adverts make them more effective. I am yet to see any research that says adverts are ineffective overall, though I have not dug that deeply into it.
There used to be a business joke you’d hear in the ‘60s, often attributed to John Wanamaker, a pioneer in marketing:
“Half the money I spend on advertising is wasted; the trouble is, I don’t know which half!”
The joke highlights the dilemma many businesses face in evaluating the effectiveness of their advertising spend. It’s remained relevant in the advertising and marketing industries, reflecting the challenges in measuring the impact of advertising efforts.
You just became an ad for mullvad...
Good products are worth sharing to help shape future products. Grass roots only works if the product is worth using. Vote with your wallet to help shape future products. While the previously poster can be viewed as an "ad", the post is same as a next door neighbor bringing it up. Mullvad doesn't do affiliate marketing or pay influencers.
I used to use Mullvad but now I use a different service, but especially like to support open source products.
2 second google for some numbers: “In 2022, global internet advertising revenue stood at 484 billion U.S. dollars”
One of the metrics you measure when running ads is return on investment, and companies will soon go bust if you aren’t making money on your ad spend.
Except how is ROI estimated? I can imagine it being done both intelligently and stupidly and so I’m curious how well it is actually done.
Part of what I’m sceptical about is that it seems like a practice driven either by a lot of FOMO and vague thinking or a system where it only makes sense to run ads because everyone else is.
This is all measured and not really estimated. If you think that any substantial chunk of that 484Billion is being done 'stupidly' then you're just making presumptuous incorrect guesses without knowing much about the industry.
Revenue (sales) - Investment (total costs) = ROI There is ROAS which similiar: Revenue - Ad Spend = ROAS You can measure things in more detail like CPA (cost per acquisition) to work out how much ad spend you have per sale, again this is a measurement not an estimation.
Where previously there was mass advertisements to millions of people like TV or radio ads which were only affordable to large companies. Advertisers now can target the exact type of person they're trying to market to for their niche which is a lot cheaper and so more accessible to smaller businesses. To me that makes business sense to do if I can optimise to the right ROI, and nothing to do with FOMO or vague thinking.
How well are sales and ad spend correlated and how well are spurious correlations accounted for?
you're really determined to stick to your belief haha, don't worry about it man I don't think I'm going to sway your mind on this so peace !
Unfortunately I’m genuinely curious. Honestly is a little disheartening though that the first piece of technical pushback has you bailing out. “Correlation is not causation” being stats 101 and all.
If you do have any more to say though I’d happily read it! If not .., all the best.
The fact that companies pour millions into ads means it works for them. Don’t assume that just because you and I (and probably most users on here) aren’t susceptible, it doesn’t mean the majority of the population aren’t too.