So What Club

Customers and growth: the economics of marketing

A furniture retailer in the UAE: which ads really pay?

The prompt

A fictional online furniture retailer in the UAE has a 40 percent gross margin. Its last-click report says ads on searches for its own brand name returned AED 1.2 million of sales on AED 100,000 of spend. Social media ads returned AED 400,000 on AED 200,000. The marketing team wants to cut social. A holdout test then shows only 10 percent of the brand search sales were extra. Social ads caused AED 600,000 of extra sales. Many buyers saw a social ad, then later searched and clicked a brand ad. What should the retailer do?

Before you reveal anything, plan your own structure and first move on paper. Then reveal one part at a time and compare.

Clarifying questions, with the interviewer's answers

Next case

Read the next worked case the same way: plan your own answer first, then reveal one part at a time.

Next case: What is a detergent brand worth in Spain?The lesson: Marketing return: CAC, payback, incrementality, and why last-click credit misleads
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