P&G To Online Ad World: We've Had Enough

Procter & Gamble, the world's largest ad spender, apparently came out with guns blazing at agencies and media on Sunday at the Inactive, oops, Interactive Advertising Bureau's annual "leadership" conference.

Bravo to P&G's Chief Brand Officer Marc Pritchard for giving the corrupt, fraud-laden, sneaky creeps running the online media world a nice healthy ass-whooping. According to a story in Ad Age, Pritchard told the group...

"The days of giving digital a pass are over... It's time to grow up. It's time for action."

Pritchard laid out 3 criteria for publishers and agencies before they'll get any of his money.

1. A standard "viewability" metric.
2. Fraud protection
3. Third party verification of metrics.

"Mr. Pritchard said the company has vowed to no longer pay for any digital media, ad tech companies, agencies or other suppliers for services that don't comply with its new rules." According to Ad Age.

This is a big step forward. For over a decade agencies have been the lapdogs of the online media industry -- timidly accepting all kinds of arrogant horseshit and slippery numbers from them -- and clients have been paying the price.

Pritchard called online media practices, “murky at best and fraudulent at worst.”

I could nitpick P&G's first two criteria. The viewability metric they are willing to accept is a joke. And fraud protection is very shakey - the fraudsters are way ahead of the cyber security boys.

But I'm willing to accept those imperfect steps as a move forward. The big one is the last one. Are they really going to require Facebook and Google to open the kimono and let us see what's going on through 3rd party verification? That would be big.

Remember, the online advertising industry is essentially two companies: Facebook and Google -- the rest are rats and mice. The FB-GOOG duopoly has been getting away with murder.

As I've said on many occasions, Facebook would never voluntarily open up their metrics to third party verification unless clients threatened to pull money.  Maybe this move by P&G will finally help the advertising and marketing industry grow a pair.

Is The Drunken Orgy Over For Digital?

Is it possible that after 15 years of pissing away billions of dollars on idiotic fantasies, advertisers and agencies are finally waking up to the horseshit they've been sold by the online advertising industry?

Let's have a look at some charts.

This first chart shows us that according to Standard Media Index, growth in online advertising spending in 2016 was about half what it was in 2015.

This second chart shows us that while over the past 4 years, year-over-year growth in online spending has averaged about 19%, in 2016 these numbers dropped a whole lot. Year-to-year growth averaged only 6.8%, quarter-to-quarter in the 4th quarter it average 4.3%, and month-to-month in December it was just .7%. As time goes on spending growth seems to be dropping dramatically.

The third chart may be the most revealing. What it shows is that all the growth in online spending went to Google and Facebook. The rest of the online industry actually lost ad revenue. The amount of the loss depends on whose numbers you choose to believe. The source I used had the drop at 2%. Others had it at 3% and 5%.

The big question is, are advertisers coming to their senses? According to the CEO of the Standard Media Index, the "...trajectory of digital spend has recently hit a major speed bump as brands question the efficacy of the medium."

All I can say is, fucking duh!

The Crazy Logic Of Media Strategy

The more I speak to groups and conferences, the more I am convinced that either marketers are blinded by thoughtless habits or that I have no logical thought process.

In particular I am talking about how marketers ignore people over 50.

I have stated the facts here before, but just for the record, let me repeat them before I get to my argument:

Americans over 50...

• are responsible for over half of all consumer spending
• dominate 94% of consumer packaged goods categories
• outspend other adults online 2:1 on a per-capita basis
• buy about 50% of all new cars
• control about 70% of the wealth in the U.S.
• would be the 3rd largest economy in the world, if they were a country (larger than Japan, Germany and India)
• will grow at almost 3 times the rate of adults under 50 between now and 2030
• are the target for 10% of marketing activity

According to the chief economist for the National Automobile Dealers Association, one baby boomer is economically worth four millennials.

When I review these facts and ask advertising and marketing people why they direct so little media at these people I invariably get some version of this answer, "We want to be a youthful brand."

Let's have a look at the logic of this.

First let's look at the logic as it relates to creative strategy. The marketing cliché is that older people want to be like young people. The argument goes that by using younger people in commercials we are creating "aspirational" imagery which will be attractive to people over 50.

I don't agree with this point of view, but I'm not going to argue with it today. For the sake of argument, let's stipulate that 50-year-olds want to be like 20-year-olds. And let's stipulate that you will sell more cars to 50-year-olds by showing them images of 20-year-olds in car commercials.

Okay?

But why in the fucking world would you direct those commercials at 20 year olds? If your objective is to sell more cars, and people over 50 are 4 times as valuable to you, why in the world would your media target be millennials?

You want to use young people in your commercials? Fine, use young people. But direct the spots at the people who actually buy the fucking cars.

Is this difficult to understand? Am I crazy?

Marketers And Magicians

There was a time about a century ago when magicians were very popular.

Harry Houdini was a rock star. Houdini did tricks that were, and still are, astounding. One hundred years later the world's leading magicians still can't figure out how he did many of his tricks.

At the time, and since then, there have been two schools of magic. One school - often part of the séance and spirituality crowd - claimed they had supernatural powers and were able to do their magic because of their occult abilities.

The other group said, horseshit. It's just tricks. Houdini was one of these. They have become known as the "skeptical movement " (or if you're not a Yank, the sceptical movement) and apply their principle of skepticism to many areas of life, not just magic.

You could include scientists like Richard Dawkins and Bill Nye as well as more contemporary magicians like the Amazing Randi and Penn & Teller among the skeptical movement.

Steven Novella of the Yale School of Medicine says, "A skeptic is one who prefers beliefs and conclusions that are reliable and valid to ones that are comforting or convenient..."

In the world of advertising and marketing there are a great many assertions that are made without proper scientific foundation. Curiously, many of these are made by the very people -- the technology fraternity -- who consider themselves empiricists but are often just true believers in a philosophy that seems scientific because it is technological. But is unproven by actual observation.

A perfect example of this is the blind belief in social media marketing by technophiles because it happens to live online, despite an avalanche of dismal results (88% of senior marketing execs say they have seen no quantifiable results from social media.)

I am often accused of hating online advertising for ideological reasons. While it's true that I largely hate online advertising, it's not based on ideology. It's based on the same skepticism I try to apply to anything I read or hear that is presented with great authority but is rooted in flimsy or unconvincing "research" or vague data that is cherry-picked to prove a point.

I maintain the same level of skepticism toward the questionable brand babble of "traditional" advertising as I do to the wobbly claims of online advertising.

Whether you're listening to the prattle of magicians, the assertions of marketing experts, or the blathering of bloggers, my advice is to always allow yourself the great gift of skepticism.

Social Media Agency Of The Year Award For Not Doing Social Media

Six years ago, I wrote a good post (yeah, there've been a couple) called "Social Media's Massive Failure." I was denounced as an idiot and a Luddite dinosaur.

Of course I was and still am. Notwithstanding that, my post was correct.

Since then I've squealed and whined extensively about the infantile delusion that social media marketing is based on -- the silly idea that consumers want to have conversations with and about brands and share their brand enthusiasms with the world.

I've also written a lot about Facebook cleverly giving up on the fantasy of social media marketing and becoming a traditional media company, selling as many paid ads as they can stuff on a page.

Well, now things have come full circle.

A few weeks ago MediaPost named BBDO as its "Social Media Agency Of The Year." For what? For not doing social media.

"The solution: Utilize Facebook not as a social network, but a 'media channel.'"

Apparently BBDO woke up this year and told its clients to stop wasting their money on "conversations" and "sharing" and start running ads on Facebook.

To appreciate how fucking insane our business has become, you have to read the way MediaPost ties itself into knots trying to make something brilliant out of a conclusion so obvious that even an account planner could have come up with it.

"The strategy was built on a key insight that while Facebook's overall reach continues to expand, the relative effectiveness of “organic” reach for big brands has been diminishing proportionately."

You know what that bullshit means, right? Here's the translation: Social media doesn't work and you have to advertise.

But if you want to work in our business you can't just come out and say that. You need to hide it under steaming piles of jargon. Otherwise, you might lose your job for being "traditional."

No, you have to do what MediaPost does -- take the obvious and make it incomprehensible.

Anyone with a pulse and an IQ above 20 knows that social media marketing is largely a pile of horseshit and the only way to get any value out of Facebook is to buy ads.

But if you know how to write a bullshit "manifesto" or "white paper," and you can further torture the already horrifying language of our industry by tossing in large words with small meanings, you can become "social media agency of the year" by not doing social media.

If the ad business didn't already exist no one would believe it could.

Your Security Is Our First Priority. Never.

If you want a good laugh, go to a major website and read the boilerplate about security. Or read their public statements...

“At Yahoo, we have a deep understanding of the threats facing our users and continuously strive to stay ahead of these threats to keep our users and our platforms secure,” said a Yahoo company spokesman a few months ago.

Bullshit.

This was before they announced that a billion accounts were hacked.

The Yahoo story may not be representative of all online companies, but it is certainly eye-opening. Here's how Yahoo "continuously strives" to keep your information secure.

According to The New York Times, in 2014 Yahoo's chief of security recommended some changes that would make their platform a lot more secure by employing "end-to-end" encryption.

This initiative was thwarted by the guy who runs their email and messaging services because "...it would have hurt Yahoo’s ability to index and search message data..." You know what that horseshit means, right? It means that Yahoo wouldn't be able to read our email.

Once again, their disgusting, obsessive hunger for surveillance and their insatiable appetite to collect information about us trumped any sense of responsibility.

The dimwit who killed this program justified it this way...

"I’m not particularly thrilled with building an apartment building which has the biggest bars on every window,”

How's that for an idiotic analogy?

I got news for you, bub. I don't live in your fucking apartment building but my personal information does and you better put up some fucking bars and they better be the biggest fucking ones you can find.

Based on Verizon's reconsideration of its acquisition of Yahoo, this imbecile may have cost Yahoo a few billion dollars. Maybe there is some justice in the world.

Cocktails In The Morning

Let's face it. Most of what we ad people do is really dopey.

I wasn't much of a creative person, but I've had the good fortune to know some great ones. There is one thing about them that I love.

They work hard and have high standards, but they also have an enduring sense of how silly the whole thing is.

It takes a special kind of intelligence to be diligent about what you do and yet keep that part of your brain alive that realizes it's largely ridiculous.

There is a great deal of nonsense in the advertising business and I think it's very healthy to appreciate the absurdity. All the somber imbeciles who think that what they're doing is terribly important need a good solid whack in the golden globes.

I think I blame it all on conferences. There are way too many fucking conferences. I go to a lot of these conferences because I'm one of the speakers and I get paid. But if I didn't, I wouldn't (I think this is what's called "biting the hand...")

Most of the people who speak are so fucking serious. I'm sorry but after sitting through 8 hours of “The Programmatic Real-Time Digital Insider Summit” you can't help but want to go to your room and watch a good hockey fight. Or go to the bar and start one.

I suspect the reason we lost the war on drugs can be laid at the feet of marketing conferences. How can thousands of people every day sit through these things if they're not high?

I know why people go to conferences. They think anything's better than a day at the office. But they're wrong. They wind up getting the worst of both worlds. They pay for the conference but wind up standing outside the ballroom all day talking on their cell phones to the same bozos they were trying to escape in the first place.

I know what my great creative friends would do to solve this problem. They'd have backwards conferences. They'd start the day with the cocktail party and then have the presentations.

That way, instead of presentations called...

• Real-Time Bidding Algorithms In An Optimized Content Management Environment

we'd have presentations called...

• Boosting Your Personal Brand Through Naughty Videos.
• The Open Plan Office: What Asshole Dreamed Up This Shit?
• Millennials: Pathetic Narcissists Or Unsufferable Bedwetters?
• Working From Home. Yeah, Right. 

Sounds more fun, no?

Why Ad Fraud Thrives

If you're like me, you probably wonder how ad fraud can be so pervasive and harmful while the ad industry -- with billions of dollars at stake -- sits on its fat ass and does nothing.

The aha! moment came to me a while back when I came across and posted the chart below (which I've been using a lot lately.)

It comes from the World Federation of Advertisers and if you think about it, it explains why the ad industry doesn't give a flying shit about online ad fraud.

What this chart shows is that the flow of money within the advertising "ecosystem" (everything in grey) is exactly the same whether agencies are buying real traffic and real clicks or fraudulent traffic and fraudulent clicks.

The fraud doesn't enter the money stream until we get to the green area, by which time everyone in the agency/adtech world has already cashed their checks and is halfway to the Hamptons.

There are two groups of people getting royally screwed by ad fraud. One is too stupid to understand what's going on. The second nobody gives a shit about.

First is dumbass clients who astoundingly are still buying the bullshit they hear from their agencies about "systems they have in place" to identify and prevent ad fraud. You'd think that with all the recent headlines about ad fraud they'd start to connect the dots. But like all suckers, they always think it's the other guy who's getting screwed.

Second is online publishers who told us "information wants to be free" and are now reaping what they sowed. Advertisers are lining up to give their money to Google and Facebook and could not give less of a shit about the million other online publishers out there. In fact, take away Google and Facebook and digital advertising is actually in decline.

The stupidity of the advertisers is beyond explanation. I can understand how they won't listen to half-wit bloggers like me, but how can they continue to ignore the overwhelming amount of evidence that is coming at them daily that shows they are being fucked blind?

I guess they must think there is someone somewhere who's looking after their interests. There isn't.

Their agencies aren't protecting them. It's not that agencies are complicit in the fraud, it's just that as the chart above shows, they have no incentive to do anything about it. As long as clients keep pressing them for lower and lower rates they'll continue to use programmatic methods for buying crappier and crappier crap i.e., fraudulent traffic.

Their CMOs aren't protecting them. It's largely these geniuses who've been ramming digital horseshit down their throats for a decade.

The 4A's (American Association of Advertising Agencies) isn't protecting them. The 4A's has become the lapdog for the Big 6 holding companies, and the Big 6 are feasting on online debauchery.

The IAB (Interactive Advertising Bureau) is a cruel joke. 

The ANA (Association of National Advertisers) seems to know they're getting screwed but have no idea what to do about it other than issue whiny press releases.

So who's going to protect dazed and confused brands from themselves?

To understand this better, let's take a brief detour and talk about basketball and hockey.

Basketball is a game with rules that greatly favor offense over defense. If you're playing defense and you breathe too hard on your opponent you're called for a foul. Consequently, basketball is a game with a lot of offense. You usually have to score over 100 points to win.

Hockey is the opposite. In hockey, the defensive player has some very substantial advantages. You can pretty much maim or kill your opponent, as long as you don't do it with a tire iron to the windpipe, and not be penalized. The result is that 3 goals are usually enough to win a game.
 
In ad fraud, all the advantage is to the offense -- that is, the fraudsters.

Fraudsters have tremendous incentive to be aggressive. They can make enormous amounts of money. What incentives do agencies, ad tech companies, or the 4A's have to play defense? Are they going to make more money? No. It may even cost them money.

The only people with an incentive to play defense are 1) the advertisers, who still don't understand the connection between demanding the lowest possible rates and getting the worst possible crap, and 2) the publishers, who can only make a living by feeding advertisers "non-human" traffic.

It's a clown show extraordinaire.

Display Ads: My 3¢ Worth

My New Years day Type A Group Newsletter drew some attention. Being a lazy-ass bum, I thought I'd kick-off the blog year with it. Check out the numbers -- as you know, copywriter math is always suspect, but I used sources that are usually reliable. Here we go... 

Turning Ad Dollars Into Pennies
 
First let me wish you a Happy New Year.

If you're any fun at all, you probably have a massive headache right now. But if you don't, don't worry, I'm about to give you one.

Today we're going to "follow the money" and watch as a dollar of your online display advertising budget magically evaporates into 3¢ of value. I'm going to provide a shitload of links to all the sources of this information so you can stuff 'em down your cmo or your agency's throat... not that you're that kind of person.

Kindly step into my lab...

First we start with a dollar. We give it to our media agency to buy some display advertising for us.

According to the World Federation of Advertisers (WFA) here's what happens next:

• First, your media agency takes about 5¢ in service fees.
• Then their trading desk takes about 15¢.
• Then their Demand Side Platform (DSP) takes about 10¢.
• Next, some other ad tech middlemen take about 25¢ for targeting, data, and verification.
• Then an Ad Exchange takes about 5¢. 

This chart which I have excerpted from the WFA sums it up nicely.

So before an ad appears, 60¢ of your dollar has already been spent on...something. I don't know what. I guess "technology" or "process" or something equally vague.

All these middlemen will say that they add value to your media buy by precision targeting your ad at your perfect customer at the perfect time. Right. So maybe instead of 6 clicks per 10,000 ads (yeah, that's about average) you'll get, who knows, maybe 8. Break out the champagne!

On the other hand, Proctor & Gamble, the world's largest advertiser, says that all the precision targeting actually got them fewer customers.

Well, the good news is, you still have 40¢ left.

But the problem is, you can't get 40¢ worth of advertising for your 40¢. You see, according to The New York Times, Digiday and other reliable people, only about 50% of online ads are "viewable." 
 
This is because online ads often don't load in time for a person to see them. Or they appear "below the fold" where they are not visible. Or a fraudster sends a pixel that says it's an ad. Or ads are stacked behind one another where they can't be seen (it's a nasty game, this.)

So sadly, we're now going to have to mark your 40¢ down by 50% to 20¢ to account for the  "viewability" problem.

Now we have 20¢ left. 

But, darn it, other kinds of fraud also have to be taken into account.

You see, some of your ads are very likely to run on make-believe websites that have make-believe traffic and make-believe clicks. Of course, you didn't ask for that, but that's what you get. The one thing you don't get are make-believe invoices. Those things are real.

Your agency will tell you that they have protection against fraud. They have cyber-security this and 100%-guaranteed-ad fraud-protection that. It's all horseshit. Do some reading. You will find there are are NO RELIABLE METRICS on ad fraud.

Ad fraud is estimated to be between 2% and 90%. In other words, no one has a fucking clue. Most knowledgeable people (including the WFA) believe it may easily be 30%. No matter what your "cyber-security team" tells you, nobody knows how much fraud there is in online advertising. But everyone agrees it's massive.

Since we accounted for a little ad fraud in our last step, let's be conservative and say that only 20% of your remaining 20¢ will be eaten by fraud. That leaves us with 16¢.

 Let's recap. So far we've discovered that for our advertising dollar we have probably gotten about 60¢ worth of fees and technology, 20¢ worth of viewability issues, 4¢ worth of additional fraud, and 16¢ worth of "viewable real ads."

But our next problem is that not every ad that can be seen is seen. According to Lumen, a research company that measures this stuff, only 2/3 of viewable impressions are actually looked at by someone. Sorry, that just cost us another  nickel.

Well, we're getting down to the end here and we have 11 cents left. There's  just one more value killer we have to account for - people. According to the above-mentioned Lumen group, 75% of the time people don't even spend a second looking at online ads. Even the clowns, I mean, professionals at the Interactive Advertising Bureau won't accept an ad that isn't in view for a second as an "impresssion." This is not helpful to our value calculation. It takes our 11¢ down to 3¢.

So, at the end if the line, on average, it looks like you are probably getting somewhere about 3¢ worth of actual ads seen by actual people for every dollar you spend on display advertising.

I know you may be feeling a little depressed by all the money you've been pissing away. But it's a new year. Please, look at the big picture. You're on the web. How cool is that!