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>Wouldn't they spend a bigger part of their revenue on ads ?
_For context, we've worked with thousands of advertisers worldwide_
They do, up to a certain extent. ROI isn't the only element to look at here, what also matters is at what max scale you can keep this ROI. Let's take e-commerce as an example scenario: A digital channel can deliver a solid ROI (>200%) at $10K-$50K / month. Advertiser is excited, wants to scale to $500K / month. ROI drops to 110%. Woops, not as good. So what does advertiser do? Advertiser finds the max scale they can run at to maintain an acceptable level of ROI (for ex, 140%) and that is $100K / month of spend on that channel. The interesting shift we're seeing is that historically, advertisers just went on and multiplied the number of channels, spending $10K / mo on channel 1, $50K / mo on channel 2, $500K / mo on channel 3. However, the cost of maintaining each channel and optimizing is greater than the added value. So current trend we're seeing is consolidation of this spend, and understanding that they won't be able to spend as much on ads since they still to need that 140% ROI, but only on a few channels. As to measurement, incrementality measurement (usually two methods, ITT (intention to treat, divide your entire audience in 2 parts and show ads to only 1 of the group) or ghost ads (described below) delivers a very clean metric as to whether ad spend if bringing any sort of value and how much value it actually brings. Assuming a healthy p-value is present (aka, assuming advertiser is running enough marketing spend $ that results are significant), that's your answer to how much more you should invest on the current marketing campaigns (or it will show that you need to change your campaigns because current ones are not performing) |