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by Joel Aufrecht
06:33 PM, 09 Jan 2005
Along with long tail and the broader thing called disintermediation, one of the biggest qualitative differences between physical retailing and internet retail is the ability to directly measure the effectiveness of advertising. With Google ads for my own commercial site, I can tell exactly how much advertising money each sale has cost me. Jeff Bezos describes the same thing on a bigger scale:
About three years ago [Amazon.com] stopped doing television advertising. We did a 15-month-long test of TV advertising in two markets - Portland, Oregon, and Minneapolis - to see how much it drove our sales. And it worked, but not as much as the kind of price elasticity we knew we could get from taking those ad dollars and giving them back to consumers. So we put all that money into lower product prices and free shipping. That has significantly accelerated the growth of our business.The one thing that may eventually kill that revolting thing called the television commercial is hard evidence that it is not cost-effective. We can only hope that time comes before our civilization is gone.
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