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Question - You are the CMO of Zappos, and you have been concerned about the ROI of your ads. You are reviewing the results of your recent online display ad campaign on Facebook. In the campaign, you targeted your Facebook fans. Fortunately, Facebook agreed to partner with you and run a ghost ad experiment. Your sales representative at Facebook presents you the following data table from the experiment.
a. How much do ads increase sales on average (compute the treatment on the treated estimate)?
b. Suppose that Zappos' gross margin on sales is 50% and that the campaign spent $2 per person on ads. What is the ROI of the campaign?
c. The Facebook sales rep also notes that average sales were $12 among the unexposed friends of exposed fans (fans who saw a Zappos ad, but their friends did not). Explain how and why this evidence affects your assessment of the campaign's ROI.
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