Ex-lawyer turned relationship coach

The Religious Experience Of Ads

Whether it’s Google Maps, YouTube, Gmail, or Google Search—we use Google services every day and don’t pay a dime. Google earns its money, roughly  $140 billion a year, through selling ads.

The ex-CEO of Google, Eric Schmidt, once said, “If you spend X dollars on ads, you’ll get Y dollars in revenue.”

Before the internet, marketers bought time slots on TV, put their hands together and prayed that some viewers would turn into customers.

So how could Eric be so sure of Google’s ad success?

Through measuring clicks and conversions.

And the marketers bought it.

In 2018, marketing departments across the globe spent close to $280 billion on digital ads. The two biggest sellers being Google and Facebook.

But does digital advertising work?

Professor of economics and former data consultant, Steve Tadelis, spills the beans.

Steve was once hired to hold eBay’s marketing team accountable. So the consultants held a presentation for Steve on how the company was making a fortune through ingenious ad placement.

The biggest money-maker was the ad that showed up at the top every time someone searched for “eBay.” Every click led to an average of 12 bucks in profit.

Steve wasn’t convinced. 

He reasoned that the same people who clicked the ad, would click on any Google link that led to eBay. So as an experiment, he asked if the consultants could cancel the ad for a couple weeks.

Steve was right. The same number of people that came onto eBay.com through the ad, now entered the site through the free Google search result.

That one discovery would save eBay $20 million a year in ad expenses.

And eBay isn’t the only organisation with careless marketers.

Countless marketing departments burn money to advertise to people who are already looking for the company’s webshop. So although the ads lead to sales, the clicks don’t actually lead to extra sales.

Which raises the question: Can you measure if an ad actually moves a complete stranger to buy your product?

The short answer?

No.

Is it possible to know if you should buy ads for your services?

Not with any kind of certainty. Although paid search may be worth it if you’re a company in a crowded market with little recognition.

While the effects of online ads can be measured much better than those of TV and print, search marketing is ultimately the same as its older relatives.

Once you buy your ads, all you can do is put your faith into a higher power and hope someone new becomes your fan.

By Jeroen Elsing
Ex-lawyer turned relationship coach