What kind of rational system would ever incentivize spending rather than results (aka sales?). Sounds like the marketing equivalent of being paid by the line of code.
> "What kind of rational system would ever incentivize spending rather than results (aka sales?). Sounds like the marketing equivalent of being paid by the line of code."
OP works for an advertising company. They get paid by clients to run advertising campaigns. Employees of the advertising company get bonuses for closing high-profile deals with clients. The employees are incentivized to continue bringing in more revenue streams and continue closing more high-profile deals.
The deals couldn't have been made in the first place without some form of trust between the parties. As long as the clients are seeing results (aka return-on-investment, ROI), the trust is maintained, and the deals are renewed. Different clients have different budgets, and have different ways of measuring their ROI (sales are one parameter, but there can be more). No one would be buying those advertising services if they wouldn't be seeing ROI.
It is generally acknowledged that "advertising works". In reality though, there are lots of factors at play.
Marketing ROI is very tricky to measure. On the other end, you would see that the more you spend the more customers you have. The question is: are those new customers due to your increased spend or not? There's all sorts of attribution magic that goes in the background to trace back adcampaigns to converting users (especially across devices). That's why the article mentions that most of the "big fraud" that was uncovered by simply turning off paid campaigns without conversions dropping. That's a pretty big giveaway that something is amiss.
There's an old saying in advertising that we know half of our budget is wasted, we just don't know which half. Ad fraud and bot traffic live in that area, kind of as expected waste.
Then there's the other issue - branding campaigns also cost an arm and a leg, and the most you get is vanity metrics like reach and likes and impressions and whatnot, which have dubious correlations with reality but they look nice on dashboards.
I used to own a digital agency. I had a client who was the 80 year old CEO of a 120 year old military contractor. He sat through a meeting where his 27 year old marketing manager and I walked through advertising metrics for digital ads. At the end he said,
“This is all very interesting, and will be helpful for Kelly (the marketing manager). I’m going to decide if we renew next year with this: increase in sales divided by ad spend. I’m looking for a number greater than 3.”
This is the dichotomy. The company’s purchasing the ads want to spend based on conversions - the ad companies want to charge based on impression or clicks (if forced).
They did. We got them 5.2, but it was very hard, and it was also very good for our team to have to deal with a hard metric target. We got a lot better at ad buys.
In adtech you have to spend all the budget a client gives you. They get very pissy if you don't and it's not unheard of for clients to penalise you several multiples of the unspent budget.
