If Coke switched off their advertising they would eventually lose market share, but it would take more than one Christmas of not seeing the polar bears. For companies in their position, advertising is about maintaining dominance. Spending on a Superbowl ad is a way for them to say "we're the best, we know it, and you know it, and when you want a drink, you're going to buy Coke, not RC Cola". It takes a long, long time for that indoctrination to wear off, so there's no way to experiment on it - there's no untouched part of the market that's never seen a Coke ad against which you can do an A/B test.
Sophisticated advertisers like Coca-Cola are aware of the concept about incremental ROAS. They can't do the exact A/B test scenario of isolated consumers you're talking about but decades ago, they did do A/B tests in different tv markets where one city had more ads than another and the city with more ads had higher sales. (What the industry jargon calls "lift" from advertising exposure.)
So even brands that are already very well-known by most of the public still constantly do A/B tests to measure incremental conversions in all media including digital, magazines, sports sponsorships, etc. Back in the late 1990s, many advertisers noticed that running banner ads on Yahoo didn't work which contributed to their stock price crashing. Recently, a lot of advertisers (e.g. Proctor & Gamble) quit spending ad dollars on 2nd and 3rd-tier ad exchanges because their A/B measurements showed they were a waste of money. (The "1st-tier" ad exchange examples would be Google & Facebook.)
Can you share a link? I work in digital marketing and would be super interested in more info on this.
The benefits of brainwashing can pay dividend over a lifetime.
The product is successful not because of advertising, because it is actually good. I find it weird that, most people spend huge on advertising, but sometimes neglect the product.
It reminds of car ads. Apparently (correct me if I’m wrong), but OEM ads aren’t about converting new customers, but they’re about trying to convert recent buyers into lifetime buyers. It’s to build in the consumer the attitude of “we’re a Ford household”, not to convince a Chevy driver to buy Ford for the first time.
It’s not just that Volvo wants me to think I drive a safe wagon that is a sensible choice for middle-class, educated people who watch public television.
I want my neighbours to think these things about me even though they drive Ford and GM. That advertising assures me I’ll get both a car and a cachet.
If Volvo had a way of only selling to people who want Volvo cars for the utility, but few others would have heard of the brand, it would have less value.
It is the only path I've seen that can account for all the noise in the measurement ecosystem. And even then it is far from easy to do "right."
The future? No, statistical analysis was always at the core of advertising, from the moment statistics was invented.
It's only recently in the last few years that people forgot this, and only because techies and programmers without statistics knowledge successfully "disrupted" the advertising industry.
But internet advertising sucks balls compared to classical advertising forms, especially from the point of view of ROI to the client.
So we will eventually "undisrupt" this mess and make internet advertising more like the classical forms.
t. working in ad tech for the last 17 years.
Disagree on traditional vs digital though. It is totally circumstantial which performs better.
I’ve tried lots of colas. I’m never buying a Pepsi if there is Coke. I will always buy soft drinks in this order: Cherry Coke, Cherry Dr Pepper, Dr Pepper, Coke, maybe I’ll just have water. At this point no amount of advertising will change my mind.
“I have such strongly held opinions about my favorite soda! No amount of advertising will change my mind. I am immune to advertising!”
And then they go to the grocery store, and remember their girlfriend told them to pick up some fabric softener, which they know nothing about. So they look on the shelf and they think “Ok, Downy, I’ve heard of that one. It’s probably fine.” And away they go.
And the next time they need fabric softener, they reach for it again, because it worked fine last time, and what’s the point in spending any more time thinking about fabric softener?
This is what brand awareness advertising is meant for. It’s meant to change your weakly held preferences, not your strongly held ones.
Imagine further that this isn't a product category that you feel quite so strongly about (most people don't have a 4-deep ordered list of brand preferences for common product categories). If you were making a quick choice between Sprite and 7-up (again, for a party), are you sure that advertising couldn't possibly influence which of the brands is most accessible to your brain?
If Coke switched off their advertising they would have gained this market share in recent years?
https://www.statista.com/statistics/225464/market-share-of-l...
I don't want to be offending but this is honestly a very basic point, of course one would only measure the Return On Ad Spend from the user's acquired by said ad and not any others... Advertisers are familiar with all such basic statistics and Google/FB ads give you very easy tools to track any person who clicks on an ad throughout their entire journey.
Edit: I was mistaken as described in the comments below
Imagine a product, let's call it Oxygen, that every single person buys $10 worth of every month. It has 100% market penetration.
One day, Oxygen Corp decides to take out a $1M ad buy. They reach 1 million people, all of whom then go on to buy $10 of Oxygen, as measured by cross-site conversion tracking. $1M ad buy to move $10M of product - that's a whopping 10.0 ROAS. Must be the most effective ad campaign ever run, right?
From a gut feeling I can say that the customer came from some result of previous advertising (as we're talking about products like sodas not life-essentials like oxygen), but I guess there's no way to know since those previous ads being tv/print ads were not tracked.
If we suddenly stopped all other forms of advertising and only used online ads, in 10-20 years each customer can be tracked exactly to what ad created the first impression about the brand and thus be more accurate (still excepting marketing like word of mouth though)
You can't measure it across multiple advertising platforms very effectively though.
As you said yourself, b) breaks down for multiple platforms. It also breaks down if users have disabled tracking.
They are essentially what one needs to measure incremental ROAS of one's advertising.
Now, there are obvious caveats (online, tracking etc) but they're much much better than what's available for other platforms.
Almost all users who disable tracking also block ads, so you are still correctly measuring the effect of your ad spend.
PS: Of course that works if the difference is indeed small enough in your case so that it CAN be ignored.
I run an eBay store that has pretty decent revenues but no brand recognition, and we make pretty heavy use of their Promoted Listings function.
We've generally found for competitive items that sacrificing 5% to ad spend allows us to increase the price of the item by 20% without experiencing any reduction in sales. There is no way to fake that.
For my other business, though, (Low-cost USB Oscilloscopes) I found Google, Facebook and Amazon ads to be completely useless. Even then, though, it didn't cost a lot of money or take a whole lot of time to get a definitive answer and cancel the campaign.
Maybe in 2009, when the market was playing ball, was it okay not to buy your own brand (eBay) as a keyword, as this is an audience that already want to go to your site. Now all your competitors are buying your brand and you'll end up in fourth or fifth position with your own audience if you don't buy it.
And while most will still scroll it through, you will end up losing a small but consistent share of clicks to competitors time to time. And if they manage to make their service slightly more sticky than yours, you'll end up losing small market shares over time.
My general advice, which I borrwed from somewhere...
Advertising is like an Aircraft. You power up, use a lot fuel(budget) and you get airborn!
Then you cut the engines (reduce budget) and you start gliding and you think, well OK, everthing seems fine! I dont need to keep burning fuel!
And then all of sudden you either smash into the ground or you have to use that rapid fuel burn all over again to get back on top!
YMMV!
On the flip side, I've cut Google Ad spend for a large tourism brand and traffic to the website continued to grow even 24 months later.
Traffic is one metric of course....
Marketing and Advertising are complicated and hard! It requires nerves of steal and it really helps when it's someone else's budget! :-)
So, as an advertiser, you end up coming up with some meta-strategy: when to perform those experiments and when to forgo them and rely on your educated guess.
Google, Facebook and alike developed support for performing such experiments throughout the last decade. But this meta-strategy kind of judgment is firmly in the department of advertisers.
Certainly not a new dot com bubble as the title suggests, and the article even mentions Randall Lewis, so I guess it's just the style of journalism these days...
This is how Google and other advertising companies leak data.
If I target an ad about Y to a group X, then I know that someone who clicked it is in X. For any Y.
Supermarkets already have a loyalty card program where you receive a small discount and in return you agree to receive targeted advertising based on your purchases.
Why don't these loyalty programs add a clause saying that they may also share your personal information with Google? That would mean Coca-Cola or Proctor and Gamble could see how much they spent on advertising to a particular person, and how much that person spent in buying the company's products.
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.