Help Please with Math Question! I was asked this question (see description) in an interview and struggled to find an immediate answer, so I was hoping someone in this group could help me.
You want to tell your manager which site is more worth continuing to place your online advertisements. You advertised on two sites, Google vs. Facebook. You know the following. Google resulted in 700 clicks and you earned $1500, whereas Facebook resulted in 500 clicks and earned $1200.
I was hesitant to compare $/user ratios because the sample size is different for each site. I figured you’d have to weight each sample size properly in order to have a fair comparison. For example, let’s say I ended up with 700 clicks for Facebook and resulted in $1700. Then, it would be easy to conclude that Facebook is more worth investing in online ads.
What techniques/methods would you utilize to conclude which site is more cost efficient at producing the higher number of sales?
Any help is appreciated. Thank you!
Interesting question — the interviewer gave you one piece of information you didn’t need, and omitted one piece of information you did.
I believe the number of clicks is irrelevant… a “win a free iPod!!!!” banner ad might generate a lot of clicks, but when they arrive at the website of, say, an architectural design firm, probably not a lot of them are going to opt for a new addition to be built on their house.
So you should focus on the profit of Google = $1,500 vs. Facebook = $1,200.
The omitted piece of information is how much the advertisement cost — because money spent in one place is not money spent in another. Let’s say the Google ad cost $10,000 and the Facebook ad cost $4,000.
Then Google’s return is: (10,000 + 1,500) / 10,000 = 1.15. In other words, for every $1 invested in the Google ad, you will receive $1.15 in return.
Likewise, Facebook’s return is (4,000 + 1,200) / 4,000 = 1.30 (earning $1.30 for every dollar invested).
Of course if you have other goals in terms of needing a particular volume of sales, improving brand recognition, or gaining a presence in a particular new market you might use other metrics to gauge your success.
Hope this helps and good luck with the job search!
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