> I work in adtech, and almost all companies run experiments in order to optimize their ad spend ... It's incredibly naïve to think that companies are flushing half a trillion dollars a year down the toilet on advertising without any attempt to validate their investments.
We have a very large and conspicuous example here that suggests that Uber hasn't been doing this.
Running experiments like you suggest is difficult and to do them right requires some fairly specialized knowledge to do correctly. I'd doubt more than a small percentage of companies have the expertise to effectively run any kind of advertising experiment that returns useful data. Most businesses lack that knowledge and rely on metrics provided by the people selling the advertising—who are likely to provide self-serving numbers.
While I'm sure some of the bigger F500 companies do a good job validating their ad spend, I most companies don't even know how. Certainly the majority of small businesses have no idea how effective their advertising spend is aside from very crude word-of-mouth feedback. I suspect this creeps way up into the Fortune 500 as well.
> We have a very large and conspicuous example here that suggests that Uber hasn't been doing this.
I'm not sure this article is the smoking gun that the author makes it out to be. By 2017 Uber had reached saturation in what could reasonably be considered their addressable market. From my perspective, turning off app install campaigns and not seeing any dip in acquisition validates this position.
Meanwhile, their other major app, UberEats, is a business that exists in a highly competitive market, and they continue to invest in app marketing in order to grow that division. If the takeaway from this article was that Uber discovered app marketing was useless, I doubt you'd see them make that same mistake again.
> While I'm sure some of the bigger F500 companies do a good job validating their ad spend, most companies don't even know how.
If anything, I think bigger companies are more prone to overspending/spending inefficiently. While they do experiment to try and optimize strategy, there is some business inertia that gives them the flexibly to move a little slower, since one poor marketing decision will not sink the business overnight. Conversely, small businesses don't have the resources to investment as much in marketing. This leads to poorly run ad campaigns, but rather than continuing to invest in a bad strategy, they typically just kill the effort altogether.
Most small businesses don't need complex experiments to understand how marketing effects their bottom line - poor ROI is a lot more apparent when you're low on funds. That's also why it's in an ad tech platform's best interest to make efficient advertising as accessible as possible.
We have a very large and conspicuous example here that suggests that Uber hasn't been doing this.
Running experiments like you suggest is difficult and to do them right requires some fairly specialized knowledge to do correctly. I'd doubt more than a small percentage of companies have the expertise to effectively run any kind of advertising experiment that returns useful data. Most businesses lack that knowledge and rely on metrics provided by the people selling the advertising—who are likely to provide self-serving numbers.
While I'm sure some of the bigger F500 companies do a good job validating their ad spend, I most companies don't even know how. Certainly the majority of small businesses have no idea how effective their advertising spend is aside from very crude word-of-mouth feedback. I suspect this creeps way up into the Fortune 500 as well.