
Ask HN: Does your company get positive ROI from its ad spend? - rahimnathwani
Occasionally, I come across blog posts where people complain about one or more of:<p>1) High and rising CPC rates for major platforms;<p>2) Difficulty matching activity with ad clicks;<p>3) Platforms intentionally user over-generous attribution models, causing uncritical clients to overestimate their ad ROI, and to continuously spend money on unprofitable campaigns;<p>Some companies also have a different problem:<p>4) The people who deploy ad spend are paid on the performance (ROI) of that ad spend, but are also in charge of how that performance is measured. So they&#x27;re incentivised to be as generous as possible in attributing activity (e.g. purchases) to ad campaigns.<p>Given all of the above, I&#x27;m curious to know whether you think your company suffers from these problems, and whether overall your ad spend is managed well and&#x2F;or has positive ROI.
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nikisweeting
We definitely did, there was an immediate, directly correlated increase in
user signups while we ran ads, and an immediate corresponding drop when we
stopped them. Looking over ~12 months of analytics and usage data in
hindsight, Google Search ads were the primary drive in signups.

The users we got through ads were generally surprisingly high quality too,
they stuck around and continued to play games for many months, even years
after signing up, in an industry with relatively high churn (free online
games).

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buboard
But was the ROI positive ?

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nikisweeting
I mean it got us investment money, but we ended up pivoting away from the
original business model before becoming profitable, so it's hard to say.

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digicoffee1
Hey my agency creates profitable leads using Google and Facebook Ads.

We focus on high ticket industries like wealth management, real estate and
legal services. We also sell a ton of info products.

Here to answer questions :) google analytics is your friend

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chwolfe
I worked in ecommerce for 10 years and got to know the quantitative marketing
folks well. All marketing campaigns were tracked and analyzed weekly based on
the concept of "marketing income". Marketing income at the order level was
defined as: Marketing Income$ = Order Total$ - Cost of Goods$ - Shipping$ -
Marketing Expense$.

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shishy
This might be a dumb question, but how did they know that marketing expenses
drove more orders (rather than just eating into their margins)?

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nikisweeting
Good data-driven marketing teams work hard to establish control groups and
known baselines before starting high-spend campaigns, and the ROI of those can
be quantified by referrer info if they're highly specific and keyword-related.

As for more general campaigns, in my experience, it's a crapshoot, if the
numbers go up everyone is happy whether or not marketing was responsible for
the majority of it. I'm sure other companies have better approaches than that
though.

