Friday, September 04, 2015

digital advertising. where did it all go wrong?

By 1971 Manchester United’s Irish star George Best's hectic off-field celebrity life style had began to take its toll on his effectiveness on the pitch.

Arguably the most talented footballer of his (or just about any) generation George had lost interest in the game, developing a reputation for general unreliability and missing both training sessions and matches.

This erratic behaviour was connected to Best's developing problem with alcoholism. He eventually parted company with United (and football) during the 1973/4 season, at the end of which Manchester United were relegated.

George Best was only 27 when he quit - an age when most players are usually regarded as being at or near their peak – and the ‘wasted genius who threw it all away’ narrative was never far from the tabloid headlines.

Without the distraction of football, George was free to pursue his other interests – namely drinking, gambling and glamorous women.

One night in 1974 George spent the evening in a casino with a former Miss World.

They won a silly amount of money, went back to their hotel room and ordered the hotel’s best champagne which was shortly delivered by an Irish room service waiter.

The waiter looked at George, Miss World, the piles of money scattered all over the bed, the vintage champagne and said to Best:

“So tell me now George…
 Where did it all go wrong?”

On the surface, George didn’t look like he was having too many problems.

Similarly, looking at the numbers, online advertising seems to be in rude health.

PwC forecasts that global total internet advertising revenue is set to grow from (US) $135.42bn in 2014 to $239.87bn in 2019, a Compound Annual Growth Rate over the period of 12.1%.

They go on to predict that as the segment captures an ever-larger portion of advertising budgets, it will exceed TV to become the largest single advertising category by 2019.

Here in Australia the digital advertising market also continues to grow with the latest IAB/PwC Online Advertising Expenditure Report (OAER) noting that it generated $1.15 billion during the March quarter, another 5% increase year on year.

That’s a lot of money scattered over internet advertising’s bed.

It’s had a few good nights at the casino but the real problems are only now starting to unravel.

A basic problem is the widespread acceptance and assumption in the industry that ‘advertising online’ almost exclusively means ‘highly targeted direct response advertising’.

Where did it all go wrong?

There is also widespread acceptance and assumption among web users that ‘advertising online’ must mean tracking.

It’s easiest to point the finger at adtech (or programmatic) the spoiled problem child of direct response marketing, given far too many toys to play with.

Adtech’s parents (Direct marketing) knew their role. They were there to make the phone ring after brand advertising had done it’s job.

But that wasn’t good enough for for the adtech brats. They wanted the whole game, and the internet – led by their big brothers and sisters Google, Facebook et al,  allowed them to play it.

But if - as adtech asserts - people are demanding and responding to more personalised and relevant ‘advertising’ , why isn’t ad-blocking adoption going down instead of up?

It turns out that people don't like the idea of being tracked and profiled.

They don't like being followed around the web by ads for stuff they have already bought (this has a knock-on effect in that it harms those brands that are doing the following. It looks desperate, it’s creepy and does nothing for ‘signal’)

And people don’t like their mobile data allowance being spunked by ads.

So naturally they start installing adblocking software.

And everyone loses.

While adblocking solves one consumer problem – they don’t see intrusive ads – it doesn’t solve any privacy problem.

Even if a human user doesn’t see the small portion of ads served that are actually viewable (most of the page views and clicks reported are fraudulent anyway) they are still being tracked, for the most part, and the adblocker may have done a deal with ‘white-list’ adservers anyway to allow preferred ads through.

From an advertisers point of view, and also for agencies and publishers; the failure with ad tech (aside from fraud, data-leakage, invasion of privacy) is that it is simply not able to deliver the necessary brand advertising part of the equation.

The internet’s inability to deliver on brand advertising means it is (today) no place to be if you want to build a brand over the next 10 years, and no amount of adtech is going to fix that because we have set up the web to only deliver direct response marketing in advertising clothing in the form of impressions and clicks - coincidentally the easiest things to fake and to track - and an ecosystem that rewards crap.

Brand advertising creates demand, direct response fulfils it.

A model in which the high quality sites, with high quality audience do their own deals with high quality brand advertisers, extracting (at least) the highest quality parts of their available inventory from the programmatic space might be a start.

Publishers could restrict their premium inventory, creating scarcity and an opportunity for ‘signal’.
A bit of brand-building conspicuous waste.

(I pitched for work a couple of years ago and this was their exact model. There was no way they were going to sully their web presence with anything other than premium ads or premium native – same strategy as the print mag).

And us in agencies need to stop pushing adtech and data-driven as the answer to every digital advertising problem for fear of looking not-up-to-date.

A final thought...if account planners still cared about being representing the minds of consumers rather than the latest gizmo then we would never have got into this mess in the first place. 

Stanley Pollitt is turning in his grave.

George Best famously noted:

"I spent most of my money on booze, birds and fast cars. The rest I just squandered."

We've squandered a lot of advertising money on dubious adtech and direct response advertising that's created no value for publishers, advertisers or consumers.

Time to spend some on booze, birds and fast cars.