The Rise Of Digital Oligarchies

It wasn't long ago that naive digital utopians labeled the web the "information superhighway" and promoted it as the great democratizing medium that would give us all a voice.

For a good laugh, here's a quote from Arianna Huffington from 2012...

"Thanks to YouTube -- and blogging and instant fact-checking and viral emails -- it is getting harder and harder to get away with repeating brazen lies without paying a price..."

Yeah, right. I'm just curious about what universe Ms. Huffington resides in.

In fact, what was promised to be the "information superhighway" has turned out to be an autobahn of stupidity, pornography, narcissism, fraud, terror, bullying and disinformation. The only saving grace is blogs.

Yes, that's a joke.

For marketers, the digital fantasists promised a world in which online democratization would allow the smallest start-up to challenge the large corporate monsters. Sure, any minute now.

In fact, we are currently living in a business environment in which the consolidation of economic power into the hands of a few massive entities is unprecedented.

Outside of China, Google and Facebook completely dominate the internet. There are literally millions of publishers on the web trying to earn a living. Google and Facebook account for 72% of all the online media revenue.

There has never in history been a duopoly that so dominated a medium. And was so free of governmental restraint. Or self-restraint, for that matter.

They are not just selling media space like the TV, radio, and print people are. They are weaving their way into the fabric of the world's leading companies.

According to Ad Age, Google and Facebook now have teams of people who are embedded in the marketing departments of over half the world's 50 leading brands. They are not just vendors to these companies, they are part of the process of developing marketing and advertising strategies.

They are so far ahead of the traditional media, they might as well be from another century...oh, wait a minute. They are.

I have often written about the pitiful efforts of traditional media to fight against the tidal wave of online media. They pathetically believe that they are going to survive on the crumbs of online media revenue that Google and Facebook spill, and so they are too timid to confront online media directly (the result of which can be found in yesterday's newsletter.)

They have no strategy to defend their businesses -- other than whining. These guys can't find their dicks with a flashlight.

But let's stop picking on traditional media for a minute and have a look at how the cozy relationships between Google, Facebook and their marketing partners might be working.

Apparently P&G and Unilever have been bragging that because of their close relationship with Facebook, they were not surprised that Facebook had been overstating video viewing times by up to 80% for two years. The above-mentioned Ad Age article says... "P&G and Unilever...weren't blindsided by the recent revelation that Facebook overstated average video view times." 

Really? So here are some questions I'd like answered:

• If P&G and Unilever knew that Facebook's numbers were bullshit, why didn't they say something?

• Or, why didn't they tell Facebook? 

• Or, did they tell Facebook and Facebook did nothing? 

• Or, did they conspire with their pals at Facebook to keep it quiet and have a good laugh about it?

It's got to be one of these.

WTF kind of bullshit is going on here?

Digital Data Denial

One of the great paradoxes of our industry is that the people who are constantly haranguing us with the indispensable role of data are the most active group of data deniers.

Every day there are conferences being staged, meetings being held, and presentations being made at which digital experts are standing up and intentionally misleading the attendees by glossing over or completely ignoring key data about online advertising. To wit...

• It takes 10,000 display ads to generate 6 clicks
• Over half of all display ads that are bought are unviewable
• Only 9% (at most) of display ads get even 1 second of attention
• 80% of people who are aware of ad blockers use them
• About 2/3 of millennials have ad blockers installed on their devices
• Ad fraud is out of control and no one knows the true level of ad fraud
• None of the reporting about online traffic or clicks is reliable

These are some of the most critical data points about online advertising and they are almost never voluntarily disclosed by anyone in the online ad industry.

Instead, they use misdirection strategies to focus on tangential data that looks material to the undiscerning eye, for example...

1. Sociological data
2. Anecdotes

In the first case, they give us irrelevant sociological data about, for example, how much time people spend with social media. This may be interesting but has nothing to do with the effectiveness of social media marketing as a tactic. We're marketers, not sociologists.

In the second instance they present us with anecdotes disguised as data. We'll hear an amazing case history that is two standard deviations from the norm and is not repeatable. But they imply it is representative and that there are great lessons to be learned from it.

Having critical data is an important component of marketing decision-making. And the people who spend the most time yapping about it seem to be the people most likely to sidestep it.

Everyone Disgusted With Ad Industry

In a story this morning, Campaign US is reporting that morale in the U.S. ad industry is dropping faster than panties on prom night.

Here are some stats from the report:

• In 2015, the percent of people working in advertising who rated their morale as "low" or "dangerously low" was 34%. This year it has fallen to 47%

• This is a drop in morale of 36% in just one year

• 63% of the people with low morale said they are actively looking for a new job.

• By far the number one reason for low morale -- at 73% -- was "company leadership."

Couple that with these facts... 

• Almost 60% of clients in a recent report said they were planning to do an agency search this year 

• The Association of National Advertisers (ANA) says that unscrupulous financial practices among agencies is "pervasive."

• Almost 3/4 of marketers say they are dissatisfied with the state of online advertising

The only honest conclusion you can draw is that there is a depressing level of unhappiness awaiting anyone who has to deal with the contemporary advertising business.

While alarming, I'm afraid it's not surprising.

Under the "leadership" of the financial sharpies, lawyers, and accountants who now control the agency holding companies, the advertising business has become a confused and chaotic mess.

A business that valued ideas and creativity above all else is now a pig's breakfast of insufferable bullshit, dreadful jargon, stupid gimmicks, and amateur bumblers producing horrific crap.

Morale has dropped because standards have dropped. Standards have dropped because the "leaders" of our industry don't know what business they're in.

In a recent talk I said that wherever I go in the world I hear the same two things:

"Advertising isn't as effective as it once was, and advertising isn't as creative as it once was. It's hard for me to believe that these two things aren't related."

It's also hard for me to believe that the precipitous drop in morale isn't also related.

The holding company model has been a disaster for our industry. Their obsession with data and metrics is simply a misdirection strategy by bewildered awkward behemoths that can't produce good work.

We have reached such a level of effete absurdity that maintaining that the central business of ad agencies is to produce good ads is now controversial.

There is only one hope. It is for marketers to wake up and remind the agency aristocrats what they're getting paid for - great advertising, and nothing less. All the rest is footnotes.

Until marketers insist that their agency's first, second and third priorities are to create great ads, the level of satisfaction across the ad industry will continue to plummet, and the advertising business will continue to degenerate.

Agencies Profiting From Online Ad Fraud

We know that fraud is a major problem for online advertisers. But we don't know how big a problem it is. Estimates range from 2% to 90% -- which is another way of saying we have no fucking idea.

The ANA (Association of National Advertisers) estimates that ad fraud will cost marketers $7.2 billion this year. But this estimate is based on assumptions that are imprecise at best. If any of the assumptions baked into this estimate is incorrect or inaccurate, the number could go up or down dramatically.

The $7.2 billion number represents about 5% of worldwide online ad spending. To give you an example of how fuzzy this number is, the WFA (World Federation of Advertisers) says that the actual amount of fraud could easily be 30% -- or six times this.

Believe it or not, if fraud accounts for just 10% of the online advertising system, in 9 years ad fraud will be the second largest source of criminal activity in the world, second only to drug trafficking.

And ad fraud carries with it almost no risk. According to Hewlett-Packard Enterprises, ad fraud has a higher payout potential and lower risk factor than any other type of online crime.

The scary part is that according to knowledgeable people, organized crime is not yet a major player in ad fraud. With so much money there for the taking, it is only a matter of time.

We might assume that the big gainers from online ad fraud are the criminals themselves. But according to the WFA, the group that gains the most is actually the legitimate marketing industry.

Below you'll see a chart which shows how money flows through the ad fraud "ecosystem." I'm not going to pretend for a minute that I understand all this stuff, but the key point is that most of the money that is being extracted from advertisers as a result of ad fraud is done by the marketing industry before the crooks enter the picture (click on the chart to read it better.)

The more skin an agency or agency holding company has in the "money-flow" chain (e.g., agency of record; trading desk; DSP; ad tech provider, etc) the greater is its potential for revenue derived indirectly from ad fraud.

In fact, as far as agencies and other marketing entities are concerned, fraud seems to add to their revenue stream.

This is not to say that agencies or marketing companies are complicit in ad fraud, but it is to say that they are inadvertently some of its biggest beneficiaries.

One can only wonder how much more seriously ad fraud remediation would be taken if the unintentional beneficiaries were being punished instead of rewarded.

The 3 Stages Of Online Advertising

I believe that long after I’ve left the advertising world for a better one, people will look back and say that the era of online advertising could be divided into 3 stages.

Stage 1: "Fools Rush In"

This is the stage we’ve been in for the past 10 years. Tens of billions of dollars have been flushed down the digi-drain by marginal marketing meatheads trying desperately not to fall behind the stampeding herd in the pursuit of up-to-the-minuteness.

Egged on by bumbling amateurs… oops, sorry…online experts, they have thrown every dollar they could find at the mythical “brand advocate” who was sitting at home exhausted after her Herculean “customer journey” just waiting to express her “brand love” to cyberworld once she received the bat signal in the form of a Twitter post.

It would be wonderful if this stage could continue forever because it's been a lot of laughs. But I’m afraid it’s had its day.

Stage 2: "Wait A Minute"

A US Senator named Everett Dirksen once said the three most important words in the English language are "wait a minute." We are about to transition into the “wait a minute” stage.

All the marketing geniuses and their agency enablers are no longer going to have free rein to piss money away on infantile digital daydreams.

Suddenly, c-suite lemmings who were pressuring marketing departments for more and more delusional online schemes, are starting to say, “Hold it. What are we getting for all this money?”

The numbers, metrics, and data that just one year ago were proof of how amazing the web is are suddenly morphing into proof of how fucked up it is.

We are just at the beginning of this stage and it’s not going to be nearly as entertaining as the first stage when “the stupider the better” was the rule (Tell us your Philadelphia Cream Cheese story!)

Instead we’re going to be slowly tortured by dueling flavors of data-death. It's going to be painful.

Stage 3: "Oh, Now I Get It"

Sometime in the future — could be 2 weeks from now or 10 years — someone’s going to figure out how to use the web for advertising in a sensible way.

There will be numbers we can trust, people we can trust, and results we can trust.

When you see this happen, please drop me a line.

The Walking Dead

As we've all been told a thousand times by marketing and media geniuses, television is dead. Here are a few examples:

Business Insider: "The Death Of TV As We've Known It Is Finally Here"

Forbes: "Why Television Is Dead"

Politico: "TV Is Dead. Now What?"

Tragically, here at the Ketel One Conference Center overlooking the campus of The Ad Contrarian world headquarters, we've been a little negligent recently in chronicling the death of television. So today we're going to do a little catching up.




Nielsen just released its Total Audience Report for the second quarter of 2016, so let's have a look at how the dead are doing:

    •    On average, adults 18+ spent 4 hours and 9 minutes a day watching live television.


    •    This is over 4 times as much time as they spent online on a laptop or desktop 


    •    It is over twice as much time as they spent connected on a smartphone


    •    They also spent more time listening to radio (almost twice as much) as they did online on a laptop or desktop 


    •    They spent more time listening to radio than they did connected on a smart phone.


Of course, listening to our chattering experts you'd never know any of these facts because... well, let's be honest here... because mostly all they're capable of doing is listening to each other babble and then repeating it.

OK, so maybe TV isn't quite dead yet but it's certainly dying quickly, right? Here's proof:

Business Insider, "TV Is Dying, And Here Are The Stats To Prove It."

The Motley Fool: "It's Official. The TV Industry Is Dying."



Money, Inc: "Need Proof That Cable TV Is Dying? This One Stat Trumps Them All."

Except... live TV viewing fell from 4 hours and 11 minutes last year to an alarming 4 hours and 9 minutes this year.



Personally, I'd like to die at this rate.

When you consider the quantity and range of incredible new media options that are available, there is one crystal clear truth that the clueless lemmings in the marketing and media world have completely misread -- the stunning resilience of television.

Data, Facts, And Principles

Data beget facts. Facts beget principles.

Without facts and principles, data is useless.

After years of studying planetary motions, and compiling data, Copernicus uncovered a fact. The fact was that the Earth revolved around the sun. Until then, the data made no sense.

After years of studying the facts of bodies in motion, Isaac Newton developed a principle -- all bodies with mass seem to attract each other (we call it gravitation.) Until then, the facts were confusing.

Right now, the online advertising industry is drowning in data, but has generated almost no useful facts or principles.

Nobody can agree on anything related to online data. Other than the collection of it is obnoxious and intrusive.

The encyclopedia of things we don't know about online advertising since we started collecting "big data" is comical.

• We don't know where our ads are running
• We don't know who's viewing our ads or if they're even human
• We don't know who's clicking on our ads or why or, again, if they're even human
• We don't know if anything we're told by online experts is true because everything they tell us seems to turn out wrong
• We don't know if any of the data we're gathering online is real or has value

As my friends in Brooklyn would say, we don't know shit.

Traditional advertising is far from science. But over the years we have been able to develop some facts and derive some principles. Are they perfect? They're barely adequate. But at least they provide us with some guideposts.

Online advertising has a very long way to go. Until we have reliable data we won't have facts. Until we have verifiable facts, we won't have principles. Until we have established principles we'll continue bouncing around in the dark.

Data is just a pile of bricks until someone builds a house.

Advertising's Lost Generation

It started over 15 years ago.

The web was becoming wildly popular. Agencies were quickly becoming consolidated into oversized, lumbering behemoths. The ad industry desperately needed a facelift to hide the fact that it had devolved from an industry keen on creativity into a clumsy financial contrivance of Wall Street sharpies.

In order to align itself with the new gods of business - the wunderkind of Silicon Valley - the ad industry quickly adopted the customs, language, and conceits of that world.

Among the most oppressive of those conceits was the worship of youth.

“Young people are just smarter,” said a smirking Mark Zuckerberg.

Of course, Zuckerberg wasn’t the world’s only arrogant prick. This attitude - though mainly unspoken - became a prevailing ethos in the advertising world.

But advertising is not like science and math where the brightest tend to excel while young. Advertising has more in common with literature and art. Artists and writers tend to do their best work in their 40's, 50's and 60's.

Nonetheless, the agency business has demographically cleansed itself of mature people. Today, while 42% of the adult population of America is over 50, 6% of the population of advertising agencies is over 50. This is not an accident.

If you were over 40, you were very likely a dead person walking.

If you dared to question the received wisdom of the people who were “just smarter" than you, you might as well turn in your badge. You were done.

Not surprisingly, the advertising industry is suffering. It is broadly acknowledged that the quality of advertising has reached an all-time low and is in free-fall. We are learning how foolish and misguided we were.

But the satisfaction of seeing the ad industry floundering and in disrepute is small solace for the pain of driving for Uber.

This post is dedicated to the thousands of talented ad people who were trampled in the insane stampede of advertising’s cultural revolution.

The billions of dollars that marketers have pissed away on idiotic schemes concocted by bungling amateurs will never be recovered. And neither will the careers of the thousands of people who tried to warn us when we were too smart and too smug to listen.