Reading 2021-10-13


  • Ref:: SparkToro
  • Title:: What If Performance Advertising Is Just an Analytics Scam?
  • Author:: Rand Fishkin
  • Year of publication:: 2021
  • Category:: Blog
  • Topic::

Notes from reading

ref: Hacker News

Key take-away from OP:

advertise to those already primed to buy and you’ll see a phenomenal return on advertising investment without any sales lift.

Some are convinced that’s exactly how a majority of so-called “performance advertising” channels work. They don’t boost sales (at least not much), but they unfairly take credit for a huge percentage of sales that would have happened anyway.

Google, Facebook, Amazon, and the ad networks that power the web are vast nests of behavioral and predictive data. The first half of their pitch is that incomprehensibly large quantities of historical data about what people visit and engage-with online plus artificial-intelligence technology (really just machine-learning, but “AI” sounds sexier) allow them to show the right ads to the right people at the right time to deliver sales.

Here we come to the second-half of the performance advertising pitch: those perfectly-timed, perfectly-targeted ads will influence more people to buy your product that would have without them.

On this part, I don’t believe the ad networks.

Herein lies the scam. I’m not saying “no one buys because of a retargeting/display/branded search ad.” I’m saying, “somewhere between 60-99%* of the people exposed to those ads would have purchased anyway.“

The ad platforms know this. Many of the ad buyers even know this. But because the platforms have no incentive to make incrementality (i.e. the additional lift in sales that a given ad campaign creates) clear, ad buyers look at their analytics and think, “I should spend more on performance marketing!“

Interesting discussion

ref: Hacker News

What if this article is missing the forest for the trees a bit? In my experience performance advertising is almost always paired with awareness advertising. The latter makes you aware of the brand/product/whatever then the former nudges you to act/buy/whatever. 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.