The new dot com bubble is online advertising (2019)
I remember reading this article back in 2019 when it was originally written. Unclear why it is being dusted off now when it is still just as wrong as it was then.Yes, it is probably hard for a large, well-known brand like eBay or Procter & Gamble or Coca-Cola to measure their return from online advertising. If Coca-Cola stopped all advertising for 1 week, would anything really change? Probably not. And it’s not as if anyone is clicking Google search ads for Coca-Cola and ordering a 6-pack right there. This is the same problem that these companies have with TV advertising.But anyone who has ever run a small, consumer-focused startup with low brand recognition can very easily measure their return on ad spend, and will spend a lot of time doing this. You can easily tell which specific ad referred someone to your website, and how much money they spent once they got there.If they’re not convinced by this data, at some point most startups will find the opportunity to simply turn off all advertising for a week for one reason or another. And can usually see the drop in revenue immediately.I was involved in a consumer hardware startup where our COO shared granular ROAS numbers in our all-hands every week for Google, Facebook, TV advertising across multiple networks, etc. They regularly A/B tested different advertisements and messages across different media and directly optimized for revenue. It was clear beyond a doubt that this advertising worked. The company would not have been viable without it.The fact that this proof is easily and readily available from small, lesser-known companies is part of why large companies continue to spend money on advertising despite the benefits being much harder to measure.