> [picture of that search term and williams sonoma ads with shopping links]
The main problem here is that if Williams Sonoma was not advertising on that search term, Lodge and Food52 etc etc would, and then those companies would be above the Williams Sonoma organic placements.
The spend is necessary in a defensive way because Google creates a bidding war even for the hyper relevant.
edit: I just checked and if you search "williams sonoma skillet", if WS was not paying for [green] then the very first "result" (ad) would be Food52 [red] https://imgur.com/a/9Nnxs6h
I just tried "airbnb paris" and the first result is, somewhat predictably, an ad that is not airbnb. But the second one is also an ad, this time from airbnb. So they clearly didn't keep their spend dialed down to zero, and are aware of the need to advertise on their own keyword.
This is what is known as "on brand" Search ads. I like to call these effectively the "Google Tax" because publishers/retailers are forced to pay Google for the traffic they would have already received had the ad not been there.
I've seen way too many companies look at their analytics and say "see we get 20x ROAS on on brand! why would we turn it off?!?". Because silly, people are already going to go to your site without you paying for the traffic. I wouldn't be surprised if 25% of Google's ad search revenues come from this.
Isn't this just the usual problem with advertising? You have to do it because the other players are doing it. If nobody did it, it would still be the same cake to be shared.
This case is more on the nose, but only because of some fairness assumption that "Williams Sonoma Cast Iron Skillet" _ought_ to be traffic for Williams Sonoma.
But this line of reasoning begs the question. If this system wasn't in place, then Google search would not exist as it does and the search traffic would not necessarily exist in the same way, no?
But if you are implying that brands should not invest in on-brand search campaigns, then this is a really bad advice. It's a known fact that targeting your competitors' branded terms is ROI positive, which definitionally means that the affected brand is unable to capture all the customers who were initially searching for it.
Any other medium would theoretically have the same problem: if Ovaltine doesn’t sponsor kids’ radio shows in the 1950s and someone thinks they can deploy capital to grow a competitor, that someone will buy that slot. People couldn’t do this because there were human processes and relationships slowing this marketplace down. The thing that Google did was make it possible to test this at small scale.
So I click on the Toyota ad cause it’s on top, and buy a Toyota? Which is taking business from Ford ?
What is the answer, no ads hmm that’s not happening on a free search engine.
Mark the ad as an ad hmm done
Don’t show other results for any brand related keyword search, when all keywords are blocked probably nothing left to show
What should the ideal free search engine show when I search for “intel vs AMD”, should intel complain the first result is for a tech site.
I do genuinely wonder if the conclusion that the brand company lost money is valid, I do wonder if those searches are like ppl putting cnn in a search bar or generic searches
imagine you are driving to a specific restaurant see a billboard ad for another restaurant so change directions and go there, would you dislike the bus/building with the sign
I want a WS skillet, and the first X results are for lodge... I don't need a lodge, I don't want a lodge, i want a WS, and google is not showing me what I want.
It's the fundamental contradiction in Google's search ads model. If Google delivers users the thing they want, ads by definition have to be things users don't want.
Where I worked before, Google could get $4 for ever $1 we made. And we actually delivered the service, and people googled our name. Pretty crazy...
Bidding on a competitor's brand name keyword should be banned. But Google can't resist double-dipping.
Branded search terms are almost always less incremental than non-branded (ie: "lodge logic" vs. "cast iron skillet"), but the actual incrementality of the terms is something every advertiser should be testing continuously.
Opening google in incognito mode:
If I search for "Toyota RAV4", the first (ad) result is "Hyundai Tuscon". If I search for "AWS Cert", my first (ad) result is "Microsoft Learn". Et cetera et cetera :|
This is the real price of a constant threat to Net Neutrality, and allowing one monopolistic company to dominate mobile devices, web browsers, search results, and the largest video service on the entire Internet.
Their plan to corner and manipulate what everyone's freedom of choice and to secure their funnel of permanent revenue is considered cute to investors, but no one realizes how bad this will get in 5 more years.
Of course the numbers are fudged when you consider how they've turned analytics on their once very useful platform into a confusing mess, and when they announced that they were going to retire the system after it has killed off competition, because they can simply gather any analytical report they want privately from their web browser.
Public front-end statics are no longer trust worthy because they can be manipulated to drive platform revenue and engagement. The best and most accurate stats are provided only internally, to executive leadership that owns platforms.
Because we now use them for email, video views, browsing, phones, etc, they have key insight that can even be used for corporate espionage, your ideas can literally be beaten to market because your virtual assistant caught you mentioning keywords then reported you applying for your patent and corporate loan.
Most people have no idea about how bad this all can get. We'll find out soon enough though.
When ad revenue drops on platforms, the platforms simply reduce organic visibility which drives the need for regular ad spending for companies in order to remain visible on social platforms... AirBNB is riding a wave of prior popularity and name recognition, I guarantee they will go back to a certain point of obscurity at some point because they reduced their ad spend, and then be forced to promote heavily as they did once before.
It's all creates a new cycle of financial deception and manipulation on platforms. For very profitable companies, advertising is usually manageable, but for startups, for small business, and for independent creators, this practice is devastating financially, and fruitless on top of the financial loss of paying for promotion. These platforms also made promises to woo users based on free organic growth, which somehow conveniently disappeared due to covert and convenient EULA updates over time.
One could argue that no advertising is hard for the challengers, but in today's situation they are outspent anyway, so what do they have to lose?
The conclusion is that both incumbents and challengers would be better off in a world where no advertising exists.
When you put it that way this sounds like racketeering.
Personally I resist the idea that a brand owns my attention because I used a keyword, but that's one of my many personal quirks.
- review sites like Yelp (interestingly one of Google's loudest antitrust critics)
- domain names (arguably the entire ICANN generic top level domains sell-off)^1; US trademark grantees who fail to take action against confusingly similar domain names risk losing trademark protection
1. The gTLD application alone as $185,000 (https://en.wikipedia.org/wiki/Gtld)
In the case of Google and Yelp, the tech company can manipulate the alleged "algorithm" (read: no humans involve so you cant sue us, haha) behind the scenes and determine the "visibility" of the ad/review.
Ads are the perfect "business model" for tech companies because there is so little scrutiny of the ad services delivered. It is like philanthropy. When we make a donation, we generally do not track what happens to the money afterwards. We get a warm fuzzy feeling from making the donation as it is "doing the right thing". Then we leave the recipient to do as they please. How many companies buy ads on Google because they feel it is "the right thing to do". How many feel their donation was unwarranted after the ads fail to produce results.
Defensive ad purchases, defensive domain name registrations and even defensive gTLD purchases are one side of the coin. Another is the "winner take all" line-of-thinking (80/20, network effects, etc.) that tech companies worship that they in turn project onto customers. Competing for visibility on a fully searchable web of enormous capacity presupposes (artifically) that visible space is scarce. Ad auctions for the purpose of placing an ad on page one of hundreds of thousands of pages of results. The truth is that many people used to read newspapers from beginning to end. The whole paper, not just page one.
In a physical newspaper, there are ads on many pages. Often there are in fact no ads on page one. How many Google customers are encouraged to purchase ads that will appear on SERP #2 (do they even have ads on SERP #2). Imagine if newspapers tried to create a bidding war for page one of the physical newspaper. With the online versions, it seems that is exactly what happens. Do not blame the newspapers, do not blame Williams-Sonoma, blame the "tech" companies. This only reflects the pathetic "tech" company psychology, not the thinking of the businesses who give them money for online ad services.
And wouldn't any users who end up buying a Lodge pan have been legitimately converted by effective lodge advertising? I don't think anyone who's only interested in Williams Sonoma will just go ahead and buy a Lodge pan. Unless you're suggesting that simply because the user entered "Williams Sonoma" in the search bar that page somehow "belongs" to them, which seems a bit absurd.
If I as a customer am using such specific search terms, then I would assume that my intention is to find and possibly buy this specific product. The results of other brands might be annoying, but why should I click on them? The relevant results are still displayed on the first page.
And beside that a lot of people routinely misclick or click on ads not understanding that they are ads even when they are marked as such.
If you've never heard of Product Y, you might be intrigued and click. Maybe you want something less smelly!
I've noticed the quality of google search decrease drastically over the last 15+ years or so. I don't think that's directly tied to ad buys though.
At this point, Google's first page is so bad that I can almost build an anti search engine. Search for a term, and then exclude all the sites on the first page from ever showing up permanently ever again.
runnaroo showed things could be done better. The problem is that doing better doesn't seem to convert to profit.
People will typically write their intent on the search engine even when they could simply directly to the website.
Case in point: The top 10 bing searches are for websites, including FB, Google, Youtube [1]. This traffic is highly competitive and should (as in all competitive markets) be bid among competitors.
And if they were not above organically they would simply buy the advertising space that William Sonoma purchased. It's one of the slimiest things Google does - allows competitors to purchase advertising space on a query specifically crafted to find a particular source. It's nothing more than a shakedown.
Except they won't click those competitor links, because they are already specifically looking for Williams Sonoma
But after reading this article, it finally dawned on me. He makes imperfect conclusions in everything he touches, it's just that in some fields those conclusions can be more easily proved to be wrong than in others. SEO is the perfect field where a polished presenter can get away with imperfect conclusions for years - trust me, I know, I made a living for years in this field, and I am very familiar with the nature of this work. Most of the time, you have no idea what the black box really does, and instead you're just trying to guess what might have happened. Most importantly, there are many ways to skin a cat in SEO, and just because your approach is net positive doesn't mean that you truly are delivering the global maximum (or that the net positive gain was ROI positive). In short, it's impossible to know who's right and who's wrong, and Rand's videos convinced me that he's right, but I am no longer sure. I just rewatched one of them, and can easily see how his conclusions are just... opinions.
While we may or may never find out if his SEO opinions were the global maximum, we can quantifiably demonstrate that his opinions on content marketing are not solid. This whole essay he wrote can be replaced with "hey performance marketers, don't trust the platform numbers and instead do your incrementality studies." Platforms like Facebook will give you those for free if you reach a certain spend level, and you can also get them from 3rd party providers like measured.com. In other words, if you're a performance marketer and you're not conducting incrementality studies, then you're very early in your career and are not following the best practices. Simple as that - no need to extrapolate from there and reach all sorts of additional conclusions (which is obviously a pattern in Rand's behavior) - calling into question a perfectly investable marketing channel, conflating the needs of a public company with everyone else's needs, using words like scam, etc.
I am really disappointed to have to write this, but you would have been better off not reading this article. If Rand is really advocating that the majority of entrepreneurs should follow his advice and focus on PR instead of performance marketing, then perhaps an honest thing to ask would be - how is that working out for his own company? AFAIK, SparkToro is nowhere close to replicating the growth of his previous company, which is honestly disappointing for someone with such a huge reach and name recognition.
- Calling performance marketing platforms a scam (repeatedly, both in the title and in the narrative) doesn't explain how those same performance marketing platforms are carrying the majority of traffic acquisition in most of the B2C companies that went public this year (and practically all of the DTC ones). Calling into question the accuracy of measurement is one thing. Calling it a scam is wrong and designed to rank on HN rather than to be reflective of the true value of those platforms.
- As I pointed out in my original post, all you have to do is use incrementality studies and 98% of the criticism instantly goes away. Rand implies that you have to do your own studies (by eg, following Avinash Kaushik's methodology) which is 100% wrong - Facebook will do them for you if you reach a certain spend limit, or 3rd parties will as well with no spend limits. Also, from experience, this really becomes an issue once you spend meaningful amounts on two platforms at the same time. His rant on this subject has an iota of truth and a whole lot of sensationalism mixed together, and overall leads to wrong conslusions.
- He conflates "paid search" with "all performance marketing platforms", including "paid social." It would have been helpful to point out that the challenges with branded terms are entirely isolated to paid search and have nothing to do with paid social.
- My favorite sensationalist tactic: frame a strong accusation as a question. This way you get the clicks, but you can still cover your ass by linking to resources that with enough research would allow the reader to answer the question with a "No." But in lieu of that research, the implication is that the answer is a "Yes." You'll see this tactic used by less reputative media sources, and I was disappointed to see Rand do the same.
I could go on but hopefully this will suffice.
Unsurprisingly, those people are wrong and marketing works.
I do think things are better in some sense today. But it is a hungry beast, marketing. Oh, and lies and statistics.
You would have these very complete theories of how search engine ranking worked - completely disconnected from reality and unburdened by any actual knowledge. If there was ever a cargo cult, SEO was it.
I still cringe when people say that they have "done SEO" on their site while I'm in the room. It is kind of like telling their mechanic they've sacrificed a goat so their car will get better mileage.
Content strategy, keyword research, Search Console integration, site speed improvements, local search business profiles -- all of these contribute to SEO. It's unwieldy to talk about them all, so sometimes people can use a shorthand.
Interesting article
1. "industry" is moving away from last touch attribution (pretty much what Rand complains about)
2. "Incrementality strives to identify the causal event of a conversion,"
The way to identify the causal action seems to be :
errr ... that's difficult
#1 - Eliminated all paid search other than some limited branded search terms and shifted all the money to affiliates who were way better at making profits on the keywords we were competing on
#2 - Eliminated all display advertising after running numerous experiments showing it provided almost not incremental conversions, even though the platforms happily took credit for them.
Those two things drove our blended CAC down substantially and by building better affiliate relationships, sales actually increased.
The lesson here is that you need to try a lot of things out and you should be continuously questioning what you're doing and running specific experiments to gut check effectiveness of any ad platform that is slapping cookies on wide groups of users and claiming conversions.
My suspicion is that this is near impossible at any large organization, even one as new as Airbnb. I can just imagine someone walking into a team of 20+ performance marketers and suggesting they need to experiment to determine if any of it is remotely effective. COVID forced them into this but it's something that they should have already been doing.
I also suspect that the top line focus/obsession of most VC-backed companies make this type of exercise seem almost counterintuitive. Don't mess with or question the momentum.
This is all just my opinion and I'm sure there are better marketers than me that make this work, but this is what I've seen happen in too many VC-funded/backed companies. And it gets even harder when we're at the super levels of funding that we're now seeing. So if I'm a relatively small company (funded to $50m) that is spending $5m a year on marketing, and I'm competing against a company with $500m in funding and, say $100m on marketing, then it's even worse.
But, as you said, the incentives point towards terrible outcomes, so this keeps happening.
So, it's great for your business that this worked, but I personally don't see any strategy that leans on affiliates to be worth celebrating.
That said, I’ve worked at brands where paid search and paid social are incredibly valuable channels.
We're already seeing that. The quality of Google products continue to decay. Facebook and LinkedIn are increasingly both becoming shallower advertising hustles (LinkedIn just this week turned off post notification for events to force people to buy LinkedIn ads). As other apps and websites get snapped up by these FAANGs, we'll start to pine for the Internet that was 2008. The decay is already well under way.
What is truly sad is that some of the smartest computing minds of our day are spending their efforts at these FAANGs not advancing society but rather helping keep people more addicted to social networks, optimize for clicks on video and web streams, pushing products in all your channels, and optimizing for the wrong things. How have we gone so astray?
I think this sounds deeper than it actually is.
What you're describing is just capitalism. A consequence of capitalism is that sometimes people figure out how to make addicting products and then capitalize on it (cigarettes, drugs, social media). Eventually we figure out the harm and work hard to stop the damage as much as we can. Cigarette usage is down to historic lows in the US, for example. Sometimes it takes a while and takes a lot of fighting.
Another consequence is massive incentives to advance society. You can't deny that the vast majority of technology advances over the last 20 (or 40 or 60 or 80) years have been incredibly beneficial to society. And the advances wouldn't have happened if we didn't also risk the occasional bad actor coming up.
We're still figuring it all out as a society. We've weathered worse and will come out of it stronger.
When something is killing you and all life on the planet, it doesn't matter if it's killing you softly.
Meanwhile, it's a marketing cliche that "half the budget is wasted, but we don't know which." It's also true that google or FB provided analytics, using default settings often grossly overestimate ad effectiveness. All true. A journalist somewhere is writing a version of this article at any given time.
But... From the merchant's perspective, the existence-proofs for advertising's effectiveness are undeniable. Launch a site. No visitors. Advertise. Now there are visitors. People subscribed to something or bought something. The ROI may or may not work, but the principle isn't in question.
For a blank slate, newly launched business performance marketing is easy to measure precisely and you can have a reliable ROI. For BMW, GoPro or geico insurance... the world is more complex, ROIs are more theoretical and "half the budget is wasted, give or take 50%" applies.
The same was true for TV. A mattress store run ads with a crazy guy screaming "Sale!" and the next day a lot of mattresses get sold. The fact that ads made people come buy mattresses is trivially true, from the merchant's POV.
It didn’t make sense to me that it could be so attractive to brands to promote coupons there. People have already decided they want to buy the product; why would you want them to go hunting for a big discount after they’re already sold?
He told me that the people who like it are the advertising staff and consultants, so they can generate evidence for their bosses/clients that their campaigns are working.
I get that it can be partially effective. Sometimes I’ll think “I’ll buy this product if I can find a coupon that gets the price under X”.
It’s just a funny old world when an advertising professional is motivated to spend money with a third party to give their customer a big discount on a product they’ve already decided they want, in order for the advertising professional to justify their existence.
For me it just made me think, well I'm doing something right because Facebook mostly offers me shitty white label stuff that's being sold using fraud (I've made complaints to Advertising Standards [UK] a few times about Facebook ads) and that I would never buy.
One additional thing people don't call out is that a lot of the budgets spent on these platforms are "learning" budgets. Agencies play this card really well. They'll tell you, "oh, you need to increase your budget, and test all these different combinations of ads/targeting/landing pages/etc so that you can learn what works (or the AI behind the platform can learn what works)". And obviously, in "learning" mode, you're ignoring the ROI.
I've seen people spend substantial amounts of money in "learning mode", and the platforms are kind of incentivized to make the learning less efficient so it takes longer and more spend for you to get to ROI positive (or to learn that you will never get there).
Any successful platform is not, because by definition they have enough ads, and so want to focus on driving conversions for advertisers so that demand, and hence revenue, increases.
Agencies are often super shady though, on that we agree.
My ads were working reasonabilly well considering the low investment I was making, with a fair amount of prospects filling my contact form on a low but steady rate. I was satisfied with the return I was getting.
However, the pandemic caused a significant drop on my product's demand. I thought I was going to get little to no contacts from the moment the lockdown was announced on, but:
1) I kept getting clicks at basically the same rate -- therefore my budget kept being depleted as it used to be;
2) Bounce rates increased A LOT;
3) The few actual people who got in touch were not actually looking for the product I announced, but similar ones (which I didn't announce nor sell);
So, according to my experience, I can't say adwords totally doesn't work.. but I'd say their algorithms are optimized to spend your money regardless of the results you're going to obtain.
1. Geo-Targeting - no matter what geographic setting you create they will run your ads all over the world unless you know how to change settings they have intentionally hidden.
2. Keyword Selection - No matter how much effort you put into selecting the best keywords they pretty much run your ads on whatever keywords they want. They make it extremely difficult these days to control what keywords trigger your ads to show up.
3. Campaign Caps - A cap is a limit you can set on how much a campaign will spend each day. Except google will spend up to 2x your cap. So you would think you should just set the cap at half of what you really want but they have complicated algorithms in place to screw up your campaign if you do that.
This is a real problem with Adwords and it needs regulation. Google increasingly push people to give us your money and trust us, but as you say their optimisation recommendations both automated and account 'experts' suit their agenda more than yours.
Adwords is probably still the most effective channel for a typical business but make sure when being run it's by someone that knows what they are doing.
I once even had a marketing department shut down with analytical proof. I got tired of the marketing department with probably 50x the IT department budget constantly jumping down our throats about how "IF ONLY IT HAD DELIVERED X BY X we could have had 100,000,000,000x /s sales this month"
I made a dynamic report dashboard in my first react project to analyze market spending and prove that even if you wanted to move around metrics to be comically generous the marketing was doing basically nothing to drive sales. MGMT got rid of them and literally nothing changed except everyone had better budgets.
No one clapped the 4 people in marketing were not happy to lose their jobs. Marketing got moved to an accounting process where the handful of advertising things that seemed to work were kept on a monthly set budget.
This was a smallish family owned rather dysfunctional company as I grew to learn. I was able to have a meeting about this directly with the owners, by a meeting I mean drinks a bar/pub till 2am. Yeah 50x was probably an exaggeration as I don't know to the penny but several times is still a lot for a useless department.(also doesn't include salaries which IT had much more of) This was pretty much the only positive thing that happened there after that it was all downhill and the owners got bored with nerds that could no longer produce outsize ROI on their usefulness and we got laid off as well.
Its actually kind of sad that someone called it "obviously false" not all of us are basement dwelling introverts afraid to challenge the status quo.
Also to the other sarcastic jerk, SaleForce calls their report page "Einstein" Insights or something close.
> Reliably someone comes along every few months to question [performance marketing]. I always come back to analyses of incrementality as the real proof.
> Take an audience of X people. Divide them in two. Show ads to your test group, don't show to control. Watch your business grow and gauge the lift between the two audiences. The companies that know how to advertise at scale do this constantly and can gauge the real effect of their ad dollars. Facebook, Google and others make these tests possible in their platforms, while other software suites such as Impact Altitude and VisualIQ allow you to do this kind of analysis and testing as well.
> In the end, most of it proves out to be incremental. There are notable exceptions of course, but when are there not?
Any specific tips/links on how to do this with Google/Youtube retargeting?
This is really the sweet spot for digital advertising. The cost is low, both because you don't need that many new users to make a huge difference, and because the volume is so low that the targeting works really, really well, and conversion rates are really high. For a more established business, sure, you're getting people that would have bought anyway. But in this case, you're getting people that would have bought if they knew you existed, which they don't.
"Rental stays in XYZ city" will bring up an airbnb result all day, probably in the top five results. Therefore, paying $3 a click to be placed above your own search result is probably silly.
I happen to have a small side project and advertise it with a very low budget on facebook, google, and bing. It works. I don't rank very high because my SEO skills are poor, but google ads absolutely drive real and interested people to my site.
(If you have a near-monopoly on planners, of course, such an ad would indeed have been a waste. The author would have come to you by default once he decided to get a planner. )
Hard not to see this as a clumsy sales pitch for his company, especially when it starts with such a disingenuous example/quote (of course AirBnb didn't have to spend on performance marketing during a global pandemic where everybody was suddenly looking for a getaway...)
I mean I guess he would know from personal experience? He hadn't been the CEO for a year or two at the time, but he was still very much the public face of Moz when they "asked 28% of Mozzers to leave"[1], who worked on products complementing SEO. They used various euphemisms, but ultimately it's because they made no money[2].
[1] https://moz.com/blog/moz-is-doubling-down-on-search [2] https://twitter.com/randfish/status/765973082611781633
So if you’re buying or even just evaluating performance ads without considering the bigger picture you might come to erroneous conclusions.
Take the Lego Movie example from the article. The $65 million movie is no doubt an awareness play. Could you make the case that you should also increase your performance budget to help capture more of the demand you just generated with the movie? Or should you just hope that people go from the movie theater to buy Lego unprompted? Is it worth it for Lego to advertise to people who walk out of the theater and search for “Lego Batman set” or whatever? I think so, even though evaluating such branded search campaigns individually might make them seem inefficient.
It seems very easy to dismiss the performance advertising as a scam when you evaluate it in a vacuum. As noted in the article it’s important (and very difficult) to understand the incremental outcome of any channel or campaign. That incrementality includes awareness campaigns.
After more than a decade in advertising and marketing I am now more than ever unwilling to accept simple or definitive answers to highly complicated questions. At best I hope that we can unwind some of the overall complexity so we can have a chance to trust some of those definitive answers.
So it's only natural that after some time organic traffic exceeds paid traffic.
However, every advertising platform will take your money if you give it to them, so buyer beware.
True incrementally is a challenging measurement issue and therefore even more challenging to predict for delivery via ML. It's real, though, just hard.
Buyer beware. When buying ads, think the stock market. If you hear stories about 20x ROI from random people, do what you when you hear 20x ROI on stock picks: nothing.
Yes, you do have a challanging problem of attribution. But the spend and revenue figures are what matters at the end of the day. And neither of them has any area for scamming (let's ignore edge cases).
Disclosure: only skimmed through the article and my arguments above are just directed towards the headline. However credible and opinion leader the author - Rand Fishkin - is, the article itself at the first glance did not inspired me personally as a worthy my attentive reading time.
C'mon, this ain't reddit. Don't comment without reading.
I think this is overall a waste of resources and I'd like to see a more virtuous system, but I fail to imagine one.
I’ve been in growth for years and while I dislike PPC and find it boring and obfuscatory (FB and Google will both happily claim credit for the same purchase), there’s no denying that in many cases it works. I’ve been at early stage ecomm co’s where we’d pause the spend to see what happened and — what do ya know? — sales would plummet. Brands relying on it for discovery often benefit substantially.
I’d argue that most of the benefits of PPC accrue to smaller businesses (and the platforms, obv). The error in our collective framing is to hate on advertising because we think of it as coming from big brands. But these days it enables vastly more entrepreneurship and competition than I think many on here realize.
And to everyone cheering on Apple’s recent changes that make FB ad tracking impossible — who do you think suffers as a result? Big brands like LEGO can just redirect funds to a Hollywood film or some other high-visibility activation, because they already have their customers’ attention. It’s the small brands paying the price.
The whole point of _performance_ advertising is that it's effect is _measurable_. If AirBnB spent $500m+ on performance advertising, they should be able to trace that back to an exact amount of revenue. If you are a brand in this scenario, you can conduct split tests by sampling the conversion rate of users from advertising vs non-advertising. Again, it should be simple to see if the conversion rate for users targeted via advertising has increased or is unchanged.
In the branded search examples, again, as an advertiser, you can see what searches are associated with your leads. While you do have to compete for attention on your own branded search (to compete against competitors taking the slot), you should also be able to recognize unbranded terms which drive conversions for you. Again, assuming this is actually _performance_ marketing, you would be able to look at the cost of these placements and the ROI, and the impact would be measurable.
The rest of the article is largely composed of straw-man arguments that imply the results are not measurable, when in fact they are (if done right).
disclaimer: I'm the CTO of a performance marketing platform. The vast majority of conversions on our platform happen same-session. There's a very easy way to measure this effect -> pause your campaigns and immediately see conversions fall.
As you mentioned: The most important test (that you should be doing every now and then) is to actually pause the ad and see if revenue falls. Anything else is just an approximation and should be treated as such.
On the other hand, while I do indeed believe that the "ROI" from Performance Advertising is something between just false and deliberately misleading, the bigger picture that I'm interested in is marketshare. Because when looking at market share, it's not a question of incrementality anymore, but whether you're growing slower/faster than your competitors, and your cost of doing that, and at what point you're OK to 'buy' marketshare, in the sense of losing money in the pursuit of growth, and how much. And then, OK, let's talk about ROI on that basis - most of the time, achieving this will indeed require tools from the Performance Adversiting toolbox, which allow you to conveniently track the amount of marketshare (i.e. sales) you bought.
Any article that says "Don't buy X buy Y" loses a lot of credibility when it's written buy a guy who sells Y.
When you start using these tools, they almost seem to replace what would have been an organic acquisition with a paid acquisition.
As the article notes, why isn't this obvious for most large advertisers on these platforms?
Likely due to:
- Their spend is so large that it hides the fact that they would have gotten a large % of it for free anyway
- Large advertisers rarely stop all advertising for a period of time to notice the % of truely organic traffic (that isn't just opportunistically attributed to the platforms)
- They have been doing it for so long that big spends on these platforms are considered mandatory and not even questioned
So the idea it is a scam is stupid.
Some years ago, I treated myself to some nice Sophia Webster shoes.
I'm a tall man, my feet don't fit in any of her shoes, but a colleague had pointed out that er, they're for looking at, and if they're on my feet it's actually harder for me to look at them, so, why not buy them and put them on a display shelf like I would a nice sculpture. That made good sense. I bought an arbitrary size that was available - it's way easier to get the shoes you want if they don't need to fit.
Now of course as a tall man, even though it's not unknown for me to buy heels (in a size I can actually wear) it's rare, and I don't buy skirts, have no use for a bra and so on. But still, advertising isn't very smart, so it's not a huge surprise that after buying those shoes I got considerably more adverts for stereotypically female clothing and accessories even on platforms that explicitly know my gender and previous purchasing habits.
What did surprise me is how many adverts I got for the exact pair of shoes I had just bought. Not similar shoes from other designers. Not other shoes Sophia Webster has designed - the exact identical pair of shoes, often from the exact vendor who just sold them to me.
And my theory as to why is pretty simple. Advertising doesn't understand time's arrow. If you only ask whether these adverts are associated with my buying the shoes that's true. They showed adverts to me, I bought the shoes. The only problem is that causality is reversed, I bought the shoes and then they showed me the adverts.
This was confirmed to me by adverts the grocery delivery company I sometimes use ran at that time. The adverts specified the exact goods I buy from them, perishable goods which I had already booked a delivery of, saying hey, why not buy these from us. Well, I already did, duh? But so long as nobody remembers to analyse whether my actual purchase decision (not the delivery) was before or after the advert these adverts probably look like they have amazingly high conversion rates and you couldn't have targeted a traditional advert so narrowly, it must be worth it...
https://lockwood.dev/advertising/2019/06/07/adtech-sucks.htm...
https://lockwood.dev/advertising/2019/06/14/adtech-sucks-thi...
[1] or black hat SEO for that matter.
I'm constantly bombarded by ads for stuff I've already decided to buy (or more usually that I already bought last week). This stuff has zero value. The point of advertising has always (until now) been about taking your product to people who didn't know it was there. Targeted advertising would be a funny joke if so many people didn't take it seriously.
The results are filled with those scummy compare sites comparing e.g. a DBaaS to e.g. mailchimp. They are not even the same type of product!
The most common source of inflation in Google/FB self reported performance numbers is multiple ad channels taking credit for the same order. If a customer clicks a Google ad then clicks a Facebook Ad then makes a purchase, each ad channel will claim credit for that purchase. In reality each ad platform only has claim to ~50% of the purchase (depending on what attribution algorithm you want to use).
In terms of knowing that real value is produced from these ad channels, I see it every day in many of our customers data. Clients will increase or decrease ad spend and there will be a correlated increase/decrease in sales.
tldr; Google/Facebook ads over report their numbers but do ultimately drive sales according to the data I have first hand access to.
Performance marketing = Distribution. Without performance marketing your competitors take the sale instead.
It sounds “deep state” but it’s actually plainly documented in government files and written about by reliable sources.
Remember we’re still emerging from an era of whispering the same old story of morality and obligation to each other.
I am not at all interested in helping someone build a fertilizer empire or pillow brand. Politically my hands are tied to doing so if I want a life.
Poor people effectively live a life of quota and state sanctioned limits on their access to material support by cutting social programs with public support.
Advertising America as anything but a sanctimonious police state is a scam.