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A firm recently spent $100 on Google Adwords and generated 100 extra visits to the firm's...

A firm recently spent $100 on Google Adwords and generated 100 extra visits to the firm's website, 5 of which resulted in a purchase. To pay for the charge, they dropped the banner advertising on ESPN.com, saving $1000, but which also reduced the number of visits to their wev site by 500, and 20 fewer sales. Sales form visitors from ESPN.com were, on average, 25% higher than sales from visitors from Google Adwords. Evaluate the decision to shift advertising money from ESPN.com to Google Adwords.

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Answer #1

Here google adwords, we can find the marginal effectiveness of advertisment is 1 sale for $20. That is,

On the same way, the marginal benefit for advertising on ESPN is 1 sale for $50. That is,

On this regard a sale from ESPN is more valuable than a sale on goole adwards. That is 20 sale from ESPN is equal to 25 sale on good Adwords. So the marginal effectiveness of ESPN advertising is 1 sale for $40. That is,

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