Tag: corpocracy

Contra the popular business assumptions, all that “online ad revenue” is more akin to money laundering among the cognoscenti and voluntary donations from the ignorati than anything resembling the stimulation of demand in the prospective market:

I’ve often recounted the curious tale of how in the 1980s I worked for a marketing research start-up that created perhaps the all time best real world lab for carrying out Randomized Controlled Trials.

In eight towns, we bought the new laser beam checkout scanners for all the supermarkets and drug stores in town in return for their cooperation. We recruited 3000 households in each town who agreed to identify themselves to the checkout clerk, so we could record all their consumer packaged goods shopping. And we controlled what TV commercials they saw on cable TV. So we could divide our sample into test and control groups that had exactly identical amounts of purchasing of the client’s product over the previous year and then show them more or different ads for a year and measure how much their purchasing increased.

Even today. this sounds like science fiction, but it was all up and running 40 years ago.

Brand managers at CPG firms were initially wildly enthusiastic: finally, they could scientifically prove to the beancounters at headquarters that their advertising is so effective that they should double their ad budgets!

But after a half decade of spectacular growth in our service, it turned out more or new advertising only rarely increased sales. And I don’t mean that doubling the ad budget only increased sales in the test group of thousands of families by, say, 7{cc08d85cfa54367952ab9c6bd910a003a6c2c0c101231e44cdffb103f39b73a6} over sales in the control group of families, and that didn’t quite payout in terms of profitability. No, I mean, the typical result was that the sales in the test cell that saw twice as many ads as the control cell bought 0.1{cc08d85cfa54367952ab9c6bd910a003a6c2c0c101231e44cdffb103f39b73a6} less.

They turned off all their keyword-search ads, then measured actual sales:

TADELIS: And the impact on average was pretty much zero.

What was eBay’s existing belief about paid-search advertising?

TADELIS: The company believed that roughly 5 percent of sales were driven by paid-search advertising, meaning that they believed that if we would pull the plug on advertising, sales would drop by 5 percent. What we found was that sales dropped by about half a percent. So, that’s an order of magnitude less. And it was not statistically different from zero.

But maybe it’s still worth it to gain even that half a percent? Now we have to know what the advertising costs, and measure the return on investment.

TADELIS: When you did the return on investment for every dollar that eBay spends — eBay believed that for every dollar they’re spending, they’re getting roughly a dollar-and-a-half back, meaning 50 cents of net profits. And what we showed is that on average, they’re losing more than 60 cents on every dollar.

So, how did these results go over?

TADELIS: Well, the president of eBay, who later became the C.E.O., he cut the paid-search marketing budget immediately by $100 million a year.

So, what happened next? You might think — what with capitalism being the hyper-competitive, market-optimizing, perfect-information ecosystem it’s supposed to be — you might think that other companies, once they learned about this eBay research, would cut their online ad spending. Or at least commission their own research to test the theories. So, did they?

TADELIS: Excellent question. There was a lot of chatter online after our experiments became public, suggesting that folks at eBay don’t know what they’re doing. And paid-search advertising works wonderfully if you know how to do it. But of course, that was backed with no data and no analysis.

In other words, the digital-ad community did not rush to replicate the results.

In the early 1990s, my father’s company was a leader in high-resolution graphics. They had always sold through a three-level distribution-dealer-end user structure, but saw their market position being eroded by inexpensive Taiwanese manufacturers going direct to the end user. So, they took out some very expensive, very prominent ads in PC Week, hired a number of people to take all the anticipated calls, and eagerly awaited the phone to start ringing.

I was one of the people assigned to the late 5-8 PM shift that covered the West Coast. I took one call on the third day. By the end of the first week, it became clear that the ads wouldn’t even begin to pay for themselves, much less the additional staff.

Not all paid advertising is useless, but I would estimate that 99 percent of it is. Which, of course, is why every owner of a popular Internet site soon learns that no one is willing to pay anything for access to even large and dedicated communities.

 Sometimes, the corporations and government offices will even back down:

9 young female employees of a NY court office all oppose C19V (They want kids)They organized & told their supervisor they will ALL walk out on the job if the C19V is mandated. The office cannot run without them. Result: the office is not mandating the shot. 

No job, no career, no travel, is worth submitting to the Vaccine Nazi regime. And this is not the first example of an office backing down from an announced vaccine mandate of which I have heard.

Remember, many corporations are struggling because they can’t find decent employees, so they’re not eager to see their existing ones walk over nonsense like this.