[bigtechdataeng]

How do you define “worked”, though? Was each advertising dollar the most effective way for that company to spend that dollar? Or was it just ROI positive?

Most people consider the latter, because it’s hard to accept that the spend needs to compete with every other way of spending that money, not with other ad media.

[jlbnjmn]

Analysis paralysis is real.

For the majority of businesses, the opportunity cost of properly testing all available options is higher than any potential gains.

It's like asking a developer if their code really "worked", even though they didn't write it and run tests in every popular and obscure programming language.

Should more thought be given to alternative ad options? Probably.

Does that mean that the ads didn't work? No.

Outside of the VC backed world, people play with real money and the market decided what works and what doesn't.

Unfortunately, VC money distorts the market for everyone.

[libertine]

"Worked" depends on the goal. Effectiveness of each dollar depends on the goal.

The questions you pose, though completely valid - and should be asked - are done in different levels.

If you set a marketing budget, it's because there was a decision to achieve some goal that is bound to marketing. The same goes for R&D, Acquisitions, Human Resources, etc.

That's why, in a classical corporate sense, at the beginning of the fiscal year, each department fights for a cut of the big budget to be invested.

Within a marketing budget you then have to split it again, and again, and by this time you should be at the advertising level. Within this level you have Advertising (the creative part, copy and art) & Media Buying. Etc.

But getting back to your question: being ROI positive can be quite deceiving, because you can have negative ROI yet get positive long term results. Example:

You, as a manager, decided that Amazon is a viable channel for sales and distribution. You evaluate the competition and you realize that for you to have some relevance on organic results, you need to improve your ranking through Amazon PPC and external traffic. You factor in Price Promotion, to present a competitive offer and to help your product being established.

You run that campaign at loss (negative ROI), for 2 months, but you manage to get yourself to the Top 10 listings for organic results.

Question - assuming it's a healthy market: is this a bad campaign?

(The obvious answer is: it depends. But assuming the short term, ROI negative, campaign can set you up to generate more sales in the future, it's a good campaign. Then arguably you could present other solutions, at lower cost, to produce the same outcomes.)

[jbay808]

Is the total amount being spent on online advertising more than the total amount that was being spent on advertising in general, in say the 90s?

If so, what does it mean for all of those dollars to be more effective?

Does that mean that today's average net user is now subscribing to three different car insurance plans, because of how effectively they've been advertised to?

[cortesoft]

Opportunity cost strikes again

[jlbnjmn]

The opportunity cost of calculating opportunity cost is often higher than the underlying opportunity cost.

Analysis paralysis.