Eli5 How does a huge sum of a company’s money used for marketing really help in the long run?

Question

Eli5 How does a huge sum of a company’s money used for marketing really help in the long run?

In: 16

Answer 1

If you found a vending machine that spat out $4 every time you put a dollar in it, you’d “spend” a lot of money at that vending machine. Same goes for marketing. Companies have a “return on ad spend” (ROAS) metric for each channel.

So a company like Home Depot might have a running ROAS of 4x via Google Ads. Meaning every dollar they spend on Google Ads returns about $4 in customers buying stuff. If your goal is to make money, you could see the logic in spending every dollar possible on buying those ads.