January 05, 2012

The Way-Too-Simple Online Ad Strategy

It seems that every company in the world is trying to cut through the hype and baloney about online advertising and produce an online ad strategy that makes sense. Here at The Ad Contrarian, we always put our loyal readers first and so today we are going to speculate on how you might spend digi-dollars sensibly and prudently.

Let's start with all our cards on the table. As you know, when it comes to online advertising, I am a Luddite dinosaur.

One of the insufferable things about us Luddite dinosaurs is that we require facts before we believe something, and we insist on strategies before we allow money to be spent. I know, we're totally out of it.

Nonetheless, just for the sake of argument, let's pretend that there are some imaginary marketing people in the world who want to implement an online ad program that is based on facts and has a strategy behind it (c'mon, it's only a game.)

Let's start where intelligent marketers always start. Not with demographics or ethnographics or psychographics or any of the other jive-o-graphics of marketing, but with actual consumer behavior.

It turns out that people do a lot of things on line. Here's a list of the top 10 activities people engage in on line and, according to Nielsen, the order in which they do them:
  1. Social Networks 
  2. Online Games 
  3. E-mail 
  4. Portals 
  5. Instant Messaging 
  6. Videos/Movies
  7. Search 
  8. Software Manufacturers 
  9. Multi-category Entertainment 
  10. Classifieds/Auctions
The first thing to notice from this list is that the vast majority of time spent online is not spent buying or searching. In other words, not in "shopping mode." From the numbers that Nielsen has published, I deduce that the amount of time spent online in "shopping mode" is about 5%. I stipulate that this is an imprecise number and for all I know it could be twice this. However, according to Nielsen's data, 5% seems like a reasonable estimate.

My key hypothesis in deriving my strategy is this: When people are in shopping mode the web is a very effective advertising medium. However, when people are not in shopping mode the web is a dismally ineffective medium. This is an important concept.

As an advertising medium, the web resembles the yellow pages more than it does television. People use the web much as they used to use yellow pages -- as a way to gather information and make comparisons once they've decided they might like to buy.

In other words, if one were a marketing professor, one might say that online advertising has thus far proven itself to be very good at fulfilling demand i.e., helping people who are already inclined to buy make a final decision.

On the other hand, online advertising has not proven itself to be effective at creating demand. Unlike television, we cannot think of a single mainstream non-web-native consumer-facing brand that has been built primarily by web advertising. Can you?

The clearest evidence of this fulfilling demand/creating demand dichotomy is the dominance of search. Search constitutes 4% of online time but receives 45% of online ad dollars. This is telling us something.

Knowing all this, what is a sensible online ad strategy? It's so simple, even a marketing professional can understand it.

Instead of slathering the web with 360 degree silliness, go where the shoppers are.

Spend your money where people go to fulfill demand -- in the locations where people are spending the 5% of their online time in "shopping mode" and are willing to pay attention to your message. A lot of this is search, but remember, search is just a middle man. Search takes you somewhere and there are other web venues where people go to do research and compare.

Unless you're a direct marketer, don't spend money trying to create demand in the locations where people spend 95% of their online time. It's just not cost effective.

I realize this way of thinking is way too simple for today's techno-hypnotized marketing professional. Nonetheless, if someday you happen to find yourself on a planet where facts matter and strategy rules, it might prove helpful.


Afferbeck Lauder said...

How do you place political advertising in this context? Do people begin by searching for candidates to support?

Simple Marketer said...

I would be willing to bet you that the end result of many of the activities listed in #6 and #7-#10 end up with some type of transaction and that consumers are in the "shopping mode" in those categories as well.