| "Online advertising returns much less than $1 in profit for every $1 spent" Are you saying (A) no single advertiser increases their profits by more than the amount spent on advertising, (B) that, in aggregate, the amount spent on advertising is less than the additional profit earned by all advertisers, or (C) something else? It's unlikely that (A) is true. It's possible that (B) is true but that any individual advertiser would be net harmed if they were to stop advertising (because they can't stop their competitors from advertising). "The fact that advertisers are pulling back during this economic contraction only proves this - if $1 in ad spending bought you >$1, they'd keep up their spending." It doesn't prove that. Perhaps they are pulling their spending because: - they're not selling any more due to social distancing (theatre tickets? massages? dating services?) - they're not selling any more due to supply constraints or inability to operate their business's physical locations - the stuff they're selling is stuff people cut in a downturn Just because a piece of advertising isn't worthwhile when no one can go out and many people have just lost their jobs, that doesn't mean it wasn't worthwhile before. |
Targeted ads for largely online companies: If your customer sees an advertisement on Facebook and YouTube, and sees a few sponsored search results on Bing, then opens an ad in an Amazon mobile app six months later and converts, which ad was effective? Which was priced right? Lets assume you can 100% correlate all of this activity. Can you justify spending $X on platform Y will return >$X?
Brand awareness ads for largely offline companies: Your products are largely sold at retail, and you are a large multinational company like Coca Cola or Nestle. Which of your ad campaigns this quarter drove sales? Can you justify spending $X on platform Y will return >$X?