Advertising: The new dotcom bubble?


A thought provoking article on whether digital advertising is actually effective.

One of the key benefits of digital channels is that it is all measurable. But is it really:

Picture this. Luigi’s Pizzeria hires three teenagers to hand out coupons to passersby. After a few weeks of flyering, one of the three turns out to be a marketing genius. Customers keep showing up with coupons distributed by this particular kid. The other two can’t make any sense of it: how does he do it? When they ask him, he explains: “I stand in the waiting area of the pizzeria.”

And ‘findings’ such as this:

Tadelis got right down to business. Together with his team, he carefully analysed the effects of the ad stop. Three months later, the results were clear: all the traffic that had previously come from paid links was now coming in through ordinary links. Tadelis had been right all along. Annually, eBay was burning a good $20m on ads targeting the keyword ‘eBay’.

The article itself is worth reading, but be very careful with accepting all the conclusions as-is. Much of the testing is from years ago – the finding above was from 2012 – and search engines and channels have changed significantly since then.

It’s pretty much pay to play now on Google and Facebook – much more so that just a few years ago.

That said, the call to conduct your own testing is important. Make sure you test carefully, with long enough tests to notice the difference between weekly cycles versus real trends.

Also, with any testing, try to push the results to equate with actual revenue. Testing engagement can be meaningless. Testing traffic through to conversion to revenue is meaningful.

Test and measure.

As usual of course, YMMV.

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