Analysing the Effects of Pausing Online Advertisement on Sales Revenue -- What is the real effect of online advertising? - Google and Facebook adverts are important for driving sales revenue, especially if your business is mainly online. - But how important (is it worth it)? - We stopped the Facebook and Google adverts of a Finnish company (75% of their sales come from online and >50% are attributed to Google Ads and Facebook Ads) for 5 weeks. - Measured the loss of sales revenue using ARIMA modeling. - Compared the actual loss of revenue to predicted loss by the models. -- Practical problem - Google and Facebook: “keep increasing budgets” - Commercial bias: can we trust that their recommendations are good for the advertiser? -- Preliminary findings - Pausing ads didn’t significantly impact the company’s sales negatively in the short term - The loss in sales is not very dramatic when pausing the online ads (“the sky didn’t fall”) don’t overestimate the impact of online ads on total revenue - By stopping adverts, there might be an effect that traffic moves towards organic, and thus mitigates the loss of sales. - However, the company characteristics matter: strong search engine standing, customer loyalty… less need for advertising? - Google conversion values are more strongly correlated with total revenue than Facebook. This implies that customers find the company’s products more often from Google Ads than the Facebook ones.

1. Analysing the Effects of Pausing Online
Advertisement on Sales Revenue
Joni Salminen, Tommi Salenius,
Michael Hall, Vignesh Yoganathan,
Victoria-Sophie Osburg, and Bernard J. Jansen.

2. • Google and Facebook adverts are important for driving sales
revenue, especially if your business is mainly online.
• But how important (is it worth it)?
• We stopped the Facebook and Google adverts of a Finnish company
(75% of their sales come from online and >50% are attributed to
Google Ads and Facebook Ads) for 5 weeks.
• Measured the loss of sales revenue using ARIMA modeling.
• Compared the actual loss of revenue to predicted loss by the models.
What is the real effect of online advertising?

3. Sales from online channels – an example
(https://www.elamyslahjat.fi/)

4. Practical problem
• Google and Facebook: “keep increasing budgets”
• Commercial bias: can we trust that their recommendations
are good for the advertiser?

5. • We conducted an experiment for a Finnish e-commerce company that specializes in
selling experience gifts (i.e., gift cards that allow customers to redeem an experience,
such as tandem jump, rally driving, etc.).
• The company paused Facebook and Google advertisement between June 15th and July
19th 2018, and then reinstated ads on July 20th 2018.
• To improve comparability, we continued the ads after the testing period with the exact
same bids, targeting, and other settings.
Research design

6. • Following the experiment, we collected the data from the company’s analytics
databases, including:
a) Content Management System (CMS) that contains each sales transaction
b) Google Analytics account that contains organic traffic data
c) Facebook Ads account that contains ad spend data
d) Google AdWords account that contains ad spend data
• The data was retrieved from the period between 1st of January 2017 and the 30th
of September 2018. Over this period, there were ca. 48,000 transactions through
online and offline channels. Of these transactions, 72% occurred through the
online store.
• We computed the predicted impact of pausing adverts on sales using Auto -
Regressive Integrated Moving Average (ARIMA) combined with GLS.
Data collection and analysis

7. Experiment period
There was no statistically significant impact on revenue
growth compared to last year’s performance when the
advertisement was paused.

8. Google and Facebook ad platforms calculate conversion values using an attribution
model, such that if a person who bought from the store had at some point clicked
(or even seen) the ad, 100% (by default) of the value of his or her purchase is
attributed to that ad.

9. (Red) Total Online Revenue
(Green) Facebook Conversion Values from Jan 2017 to Sep 2018
(Purple) Google Conversion Values from Jan 2017 to Sep 2018
(Grey) shaded area: period when advertisement was paused.

10. Weekly Organic Traffic Share (grey shaded area: advertisement paused).
Suspending the advertisement caused a statistically significant change in
the organic traffic share (ARIMA).

11. • Pausing ads didn’t significantly impact the company’s sales negatively in the
short term
• The loss in sales is not very dramatic when pausing the online ads (“the sky didn’t fall”)
 don’t overestimate the impact of online ads on total revenue
• By stopping adverts, there might be an effect that traffic moves towards
organic, and thus mitigates the loss of sales.
• However, the company characteristics matter: strong search engine standing, customer
loyalty…  less need for advertising?
• Google conversion values are more strongly correlated with total revenue
than Facebook. This implies that customers find the company’s products
more often from Google Ads than the Facebook ones.
Preliminary findings

12. Thank you!