May 19, 2014

Ad Industry Is The Web's Lapdog

One of the important responsibilities of the advertising industry is to be an "honest broker" between our clients and the media.

We have failed miserably.

While we have been aggressive about detailing the woes of traditional media -- the decline of the newspaper business; the problems of radio; the movement away from network television -- we have glossed over or completely ignored the shortcomings of the web as an advertising medium.

We have failed to educate our clients on the serious deficiencies related to web advertising:
It is clear why the ad industry has been complicit with online media in covering up these issues -- the web has become a gold mine for agencies.

WPP, the world's largest agency network, currently derives about 1/3 of its revenue of $16 billion from digital work and is aiming for 45% to come from the web within a few years.

Not only is income from digital sources rising, smart agencies have discovered how to squeeze more profit from this income than from traditional advertising.

For one thing, online work is never done. A website is never finished, a social media or content program always needs feeding, and display advertising always needs optimizing. If you're charging by the hour -- and your profit is built into your hourly rate -- more work always means more profit.

But when you're doing traditional work and you're on a monthly retainer or fee, more work means less profit.

The ad industry has become the web's lapdog -- exaggerating the effectiveness of social media marketing, ignoring the abominable click-through rates of "interactive" advertising, glossing over the fraud and corruption, and becoming a de facto sales arm for the online ad industry.

Self-interest has come into conflict with responsibility.

Guess what's winning?


Sara said...

You should be invited to be a speaker at Cannes Lions Festival this year.


Bob, I agree with most of what you've said here. But I'm calling bullshit on "65% of web traffic is phony." Simply not true. And, how interesting is it that the company that published the phony bot traffic study - sells bot protection? I looked into my company's web analytics and a whopping 0.03% of visits were from bots. Statistically insignificant- similar to the 0.07% of traffic from Social Media.

dmarti said...

Great piece but the most important problem is in the big picture.

Surveillance marketing creeps people out (not just privacy freaks: 86% of users have taken privacy measures online. )

Because "nobody knows where their online ads run", the people who are temporarily in charge of great brands are undermining them by associating them with bottom-feeder sites and creepy tracking practices.

dmarti said...

Or 0.03% of traffic was from bots written by people too lazy to try them on the same analytics tools you use. (Seriously though, it's a game, like spam vs. spam filters...some days more bogus stuff gets through, other days either the filters have it under control or the scammers are busy running DDoS or Bitcoin mining)

Jim said...

Internet allows advertiser to drill down to see what is converting or not. I don't see traditional advertising allowing this.

Pirrip said...

This type of comment frustrates me as it makes online ads sound like they have solved all metric challenges. How does Coke "drill down" to see that their online advertising has caused me to throw another multipack in the trolley on the grocery shop? To try and give you some credit, I guess you are referring to businesses with an online sales channel. Even in this case, this utopia of accurate ROI from advertising is not common. Consumers are 10 times more likely to return to purchase direct to the site rather than via the online click through.

Guest said...

so basically what you're saying is that Coke can't look at the numbers before and after SuperBowl and calcualte the difference?

Brad said...

All those company ads amount to 22% of the influence over customer selection. Your channels partners are 43%.

Advertising is out. Online channel engagement is the smart way to influence customers. (yep, blatant self promotion!)

bob hoffman said...

If you want to promote your business, do it elsewhere. If you want to comment, I am happy to publish your comments. However, please do so in English instead of this putrid marketing babble.

Brad said...

Hi Bob, thanks for the feedback.

I must admit i'm new to this whole self promotion thing so it really is appreciated.

I also think that providing some real information instead of just an opinion might be helpful for some of your readers.

I'll edit the post to tone it down a bit.

Brad said...

Here's a really cool interview with Fred Wilson that seems pertintent. Tells advertisers they need to not rely on digital advertising with the major networks like facebook. Instead they should be content producers and use that to generate engagement on their own properties, and gives Redbull as a great example.

Junior said...

Hey Bob,

I enjoyed your talk at AdWeek

You're 100% right that we do need to tone down the profits we take as it is not honest in the least bit.

But how does an agency get to know how the web works for their clients without using it? I am sure the only way you learned was through trial and error. Don't you think the web needs to be scratched, kicked, pinched, poked and prodded till we can figure out how to turn these numbers in our favour?