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Run experiments to measure the effects of advertising (and make money)

Summary:
Readers of this blog know that we are big fans of randomized control trials (RCT's).  Here is a story from a new book, The Power of Experiments, taken from a review by Strategy & Business. eBay used to pay Google about million annually for ads by search terms that included the company name, such as eBay or eBay shoes. To determine whether this was worth the money, they ran an experiment, turning Google ads on and off, and tracking the traffic coming to eBay from Google ads (paid) vs. traffic coming from organic search (unpaid). They discovered that paid advertising was cannibalizing traffic from organic search: ...the experiments found that in markets where the company didn’t advertise, it got a spike in traffic from unpaid organic links. “Evidently, users who Googled ‘eBay’ (or

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Readers of this blog know that we are big fans of randomized control trials (RCT's).  Here is a story from a new book, The Power of Experiments, taken from a review by Strategy & Business.

 eBay used to pay Google about $50 million annually for ads by search terms that included the company name, such as eBay or eBay shoes. To determine whether this was worth the money, they ran an experiment, turning Google ads on and off, and tracking the traffic coming to eBay from Google ads (paid) vs. traffic coming from organic search (unpaid). They discovered that paid advertising was cannibalizing traffic from organic search:

...the experiments found that in markets where the company didn’t advertise, it got a spike in traffic from unpaid organic links. “Evidently, users who Googled ‘eBay’ (or another eBay-related search term), who had been clicking on the ad because they saw no reason to scroll down to the organic link just below it, were now instead clicking on the first organic search result.

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