March 27, 2017

Online Advertising Is Corrupt At Its Core

Let's forget for a minute about the growing Google scandal.

Let's forget the kickback scandal unearthed by the ANA.

Instead, let's go back to first principles and focus on the nature of online advertising, and why - at its core - it has become a corrupt and dangerous thing.

It all started with a big fantasy. The fantasy was this -- people would want to interact with online advertising.

We were told that online advertising would be far more effective than traditional advertising because it would be interactive. This fantasy lived for a few years until reliable data arrived and it became clear that consumers had virtually no interest in interacting with online advertising. In fact, click rates (the only possible way to interact with online advertising) were so low, platforms like Facebook refused to divulge them.

There are two ways online publishers make money - traffic and clicks. In light of the indifference consumers were demonstrating toward display advertising, publishers needed to find a way to generate traffic and/or clicks to attract advertisers and make money.

A crisis was averted when they hit on a solution: Disguise advertising as something else.

When you see a TV commercial, a billboard or a magazine ad, there is no question what it is. It is an attempt to sell you something. These ads may be annoying, stupid, or tiresome but there is no doubt about the nature of what they are or what their motives are. They are ads and they want to sell you something.

Online advertising is different. It has become devious, non-transparent, and unscrupulous. It is intentionally confusing and its motives are often unclear. It does everything possible to hide its real intent.

Yahoo is in the top 5 websites in the U.S. by visitor count. Here is a a screen grab from this morning's (as I write this) front page news feed.

Let's ignore for a second the unspeakable crap that Yahoo considers front page news. One of the leading stories on this front page is not a news story at all. It is an ad disguised as a news story (it's the Stephen Hawking "story.")

Yahoo also deceives us about the security of our personal information. According to 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...”

But 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 person who runs their email and messaging services because " would have hurt Yahoo’s ability to index and search message data..." That means simply this -- they wouldn't be able to read our email and target us with advertising accordingly.

The result? Last year Yahoo announced that half a billion accounts had been hacked.

Google earns its money by misdirection. When you search for "Gloves" as I did here, you get an ad disguised as a search result.

Unless you happen to notice the word "sponsored" in the upper right corner, and happen to know that by "sponsored" Google actually means "this is an ad" you would believe you're getting a search result.

Google has made a minimal effort to identify ads (as is required by regulation) including a little yellow "ad" badge on most paid ads. However, the overall look and feel of the ads is so similar to search results that half the people can't distinguish between a paid ad and a legitimate search result. There is only one possible explanation for this - Google is intentionally blurring the lines.

This is not the only way Google strives to deceive. According to The Wall Street Journal, the Federal Trade Commission has reported "... Google Inc. manipulated search results to favor its own services over rivals’, even when they weren’t most relevant for users...the FTC’s bureau of competition found evidence that Google boosted its own services for shopping, travel and local businesses by altering its ranking criteria and “scraping” content from other sites. It also deliberately demoted rivals."

The Wall Street Journal also recently reported that "ads for products sold by Google and its sister companies appeared in the most prominent spot in 91% of 25,000 recent searches related to such items."
The Journal says, "The results show how Google uses its dominant search engine to boost other parts of its business and give it an edge over competitors....After the Journal shared the analysis with Google on Dec. 15, many of the ads disappeared... Google declined to comment on the disparity." I bet they did.

Facebook uses the names of its users to create phony testimonial ads which falsely imply that your friends and family are endorsing the brands in question. This practice amounts to hijacking user identities and disguising them as product endorsements. The ad below appeared in my Facebook feed today.

I have contacted both Nathan Krinsky and Susan Tillem, the people referenced in the ad, and have confirmed that neither of them knew they were being used in this way.

When Mr. Krinsky was questioned about this his response was, "how did they get my name?" He said he had no awareness of their using his name, he did not give permission nor did he "like" the advertiser.

Actually, he did give permission but didn't know it. The permission for them to engage in this deceptive practice is buried deep in the agreement he signed when he opened a Facebook account.

There is only one explanation for this -- Facebook is intentionally exploiting a legal loophole to deceive us into thinking our friends are endorsing products which they are not endorsing.

Many of the ads in my current Facebook feed are identified as "suggested posts." I wonder what language it is in which "suggested post" means "ad?" As usual, they are doing their best to confuse what is an ad and what is not.

Social Media is a gross abuser of reasonable advertising standards. The most dangerous outcome of this has been the perversion of the news industry.

First is fake news. The ability of fake news to make money for its creators is enabled by adtech (the automated buying and selling of advertising space.)  In very simple terms, a fake news story runs on a social media platform, attracts traffic and clicks, which signals programmatic (automated) systems to buy advertising on the site. Below is an egregious example of a "successful" fake news story.

A second corruption of journalism is the ascendancy of clickbait. Since online publishers only make money from clicks and traffic, the use of clickbait tactics to attract traffic has become more economically rewarding than good journalism.

In the current model, good journalism can actually have a negative economic effect. The valuable people you attract through good journalism are tracked and re-targeted to at a lower cost site. Or your story is hijacked, aggregated and republished somewhere else. You'll never believe what happens next!

Third is the development and acceptance of "native advertising" as a legitimate form of journalistic activity. Despite its euphemistically lovely name, native advertising is nothing but advertising disguised as news.

Legitimate news organizations, desperate to make money at all costs, have been seduced into  producing and running thinly disguised advertising pieces masquerading as news. The rot has gotten so deep that some once-reputable news organizations have actually set up studios for the creation of this crap, and are going so far as to oversee its wide dissemination on social media channels on behalf of its clients.

It's hard to overestimate the damage that online advertising has had on the credibility of our news media. The fact that we have a populace that no longer knows what to believe from a media industry they once trusted, is not an accident.

Advertising and marketing people are generally good, hard-working people with worthwhile motives. We want to help our clients and we don't want to damage people or society. But we have been sleepwalking on a slippery slope of deviousness and deceit that has been advanced by a tech culture which has embraced - let's not kid ourselves - an ethos of malleable ethics.

There is decay, corruption and deceit now sitting at the heart of online advertising.

March 23, 2017

Adidas And Television

Adidas made some headlines this week when their new-ish ceo announced that they were no longer going to use television advertising and were going to put all their advertising money online.

The purpose of this move, according to the ceo, was to quadruple online sales in the next 3 years.

A few thoughts:
  • First, this doesn't sound like a change in ad strategy as much as a change in business strategy. 
"All of our engagement with the consumer is through digital media and we believe in the next three years we can take our online business from approximately 1 billion (euro) to 4 billion (euro) and create a much more direct engagement with consumers." 
From this language, it sounds like Adidas is switching from a typical retail sales strategy to an online direct response strategy.
  • The only problem is, from numbers I've been able to dig up, only 6% of their sales are online. Adidas annual sales are about $17b, about $1b of which is the result of e-commerce. The risk-reward element seems completely out-of-whack to me. Do you really want to spend 100% of your advertising money to support 6% of your sales?
  • This change in strategy could cause serious erosion of distribution at retail. I doubt that retailers will be happy about Adidas spending all its money to support its own online store sales and no money to support theirs.
  • Over several decades, Adidas has spent hundreds of millions - if not billions - on TV and other traditional ad media. In so doing it has established a successful and well-known brand. Milking the brand of its value by converting it to direct response may provide some short-term sales lift, but is likely to do damage long-term.
  • By the way, what TV advertising? I watch almost nothing but sports on TV and in the recent past I can't remember the last time I saw an Adidas spot. This means one of three things: either the whole "no more TV" stuff is horseshit, or their media buying is lousy, or their creative is so weak I can't even remember it. 
  • Or maybe he is not envisioning a refocus to direct response and believes he can boost all sales with a purely online advertising effort. Let's do some math.
    In the past year, Adidas grew by 16%. Projecting that growth over the next 3 years they would be at about $25.5 billion in sales. Quadrupling their online sales without growing their retail business would leave them with about $20 billion in sales. So even if they achieved their magnificent online growth, they still have to grow their retail business by about 10% annually to get to that $25.5 number. I'm curious to see how well they can do at achieving 10% annual growth in offline sales with 100% online advertising. This should be fun.

March 20, 2017

The Future Is The Place To Be

When I'm shooting my mouth off at some conference the question I get most frequently is this, "What's the future of advertising?"

I have no fucking idea what's going to happen 10 minutes from now, how the hell am I supposed to know what's going to happen "in the future," whenever the hell that is? For all I know, someday someone might click on a banner ad. Who knows?

But conference goers and press reporters can't help asking that question. They've been trained to do this by marketing yappers.

You see, marketing gurus are usually so confused by all the horseshit generated by their industry that they can't even figure out what's happening now. So they've learned to hide in the future.

The great thing about talking about the future is that you don't have to know anything. You just make shit up and nobody can refute it.

And when the future comes, who's going to remember the baloney you predicted 10 years ago? Meanwhile you make a lot of money and get a lot of press with impressive sounding horseshit.

This strategy also works great for CMOs...
BOSS: Why is business so shitty?
CMO: Well, we're preparing for the future...
Sadly, when the future shows up 18 months later and business is still shitty the CMO gets thrown out on his ass and is replaced by some other nitwit who thinks he knows what the future looks like.

The present, on the other hand, is a dangerous place. It's a place with actual facts. There's accountability. When you say something about the present there's a way to check on it. So if you're a buffoon with a Powerpoint and a bag full of clichés stay away from the present. Nothing to see here. Head for the future - it's your happy place.

One of my personal policies when I do talks is to never talk about the future. The present is bad enough. The only time I do so is to ridicule predictions made by marketing geniuses. Always good for a few laughs.

I try only to speak about what's currently happening. Not horseshit about stuff that may or may not happen in 10 years. A good deal of what I talk about is how different the present is from the once certain predictions of marketing futurists.

I go to a lot of conferences (hey, it's a living) and I have to listen to a lot of speakers. It's pretty easy to know pretty quickly who the bullshit artists are. They're the ones who are telling us what the future is going to be like and warning us that we'd better be ready for it or we'll be left behind. And being ready for it usually includes buying into some baloney they're selling. 

The futurists know nothing that you don't know. Well, I'm wrong. They know one thing - they know how to turn bullshit into a speaking fee.

And they always have an escape valve. When you point out that a prediction of theirs was 100% dead-ass wrong, they give you this -- "just wait, you'll see."

In other words, they kick the can farther into the future. It's a no-lose proposition.

So I have some predictions to make about the future...
  • Social media will replace advertising
  • The 30-second spot is dead
  • Google glasses will be everywhere
  • TV will die
  • QR codes will change advertising
  • Interactive TV will be huge
Just wait, you'll see.

March 15, 2017

Ad Industry's Dangerous, Misguided Policy

A coalition of advertising trade associations joined the Trump administration yesterday in calling for the rejection of an FCC regulation created to protect consumers by restricting the collection and sharing of personal information by internet service providers like Comcast and AT&T.

The regulation would have given consumers far more control over their personal information by requiring them to opt-in before the ISPs could use or sell their personal information.

The actions of the advertising industry in this instance are deplorable -- but hardly surprising. The ad industry is losing its grip. We can't control ourselves.

Jonathan Schwantes of the Consumers Union has said,  "Consumers deserve to know—and have a say in—who is collecting certain information about them and how it’s used."

Listen to this bullshit from the 4A's, AAF, ANA, DMA and IAB...
"Without prompt action in Congress or at the FCC, the FCC's regulations would break with well-accepted and functioning industry practices, chilling innovation and hurting the consumers the regulation was supposed to protect."
Yeah, right. Well-accepted practices like stalking us, selling our personal information to the highest bidder, enabling creeps and criminals to hack info about us. We wouldn't want to deprive them of innovations like that. Heck no.

It's not bad enough that the amount of information online marketers and media companies now have about us is alarming. Now we have to let Comcast and AT&T into our pants.

Adtech - the computerized media exploitation of the fruits of tracking - is allowing criminals to steal our personal information, and governments to spy on us by tapping into marketing data. It is destroying our trust in the news, and repulsing our customers.

What is it going to take to make the ad industry understand what we are enabling?

Everything the ad tech industry and the online media honchos have ever told us about privacy and security has turned out to be 100% undiluted horseshit. They are incompetent, irresponsible, and dangerous. They cannot be trusted with private information about us.

It's time for sensible, responsible people in the advertising and marketing industry to get off their asses and do something about this.

Along with some others, I am speaking at the World Federation of Advertisers next month in Toronto on the subject of tracking and adtech. It will be an audience of hundreds of the world's largest marketers who are unlikely to be sympathetic to my point of view.

I can't wait to give it to them with both barrels.

March 13, 2017

Another Decade, Another Miracle

This is one of those blog posts you write when you’re on a transatlantic overnight flight and you haven't slept a fucking wink and you’re groggy from taking way too many drugs that aren't doing shit.

But you have to be alert when you land because you have all kinds of obligations that you foolishly agreed to when you imagined a pleasant flight with kindly air hostesses pouring champagne, and a gentle few hours of nocturnal reverie, instead of a smelly dark cabin with the faint aroma of fresh-squeezed urine emanating from every closed door.

Yeah, one of those posts.

So if I get a few details wrong, like what decade I’m talking about, I don’t want any shit from you people. Please click this button if you agree to our terms.

So while I was not sleeping, I was thinking that every decade I worked in the ad business there was always a miracle that was going to make advertising finally reputable, orderly and grown up. A real honest-to-god business with predictable and reliable outcomes.

In the 70’s, the miracle was marketing. Suddenly every agency was flush with freshly minted MBAs right out of the best schools in the country. Mostly they were nicely scrubbed frat boys who made us street rats feel somehow inadequate. They had actually read books about advertising and spoke a language that was impressive if you didn’t listen too closely. Sadly, they were mostly dumber than stumps but luckily they weren't allowed to do too much damage.

By the 80’s the frenzy over the MBA’s had grown stale as it turned out that their only reliable competence was for choosing the right wine. The 80’s gave us the miracle of research. Out of some dank and pungent caves in the basement of your client’s headquarters emerged a new species of researcher. They were proto-nerds. They had all the characteristics of nerds but none of the charm. They had no idea what any meeting was going to be about but somehow came armed with studies to refute whatever it was you were planning to advocate. It was a kind of bizarre and evil ESP.

Bless Jay Chiat’s heart, he saw to it that by the time the 90’s rolled around the client research people were sent to bed without dinner as the research function was cleverly ripped away from them through the genius of account planning. See, you research geeks view everything from the company’s standpoint. We ad geniuses see it from the consumer’s standpoint. This became one of the greatest misdirection operations in advertising history and the power of its brilliance can be seen in many agencies yet today as account planners are still allowed to walk the halls and, in some compassionate agencies, even speak.

But planning's Decade Mirabilis ended abruptly as the year 2000 approached and online advertising became the new miracle. The web was the answer that everyone needed. The agency industry was tired and lifeless. Clients were restless and cranky. Advertising was stale and expensive. We needed something new, modern, exciting, and cheap. We also needed something that no one had a fucking clue about so we could make shit up. Something that we could build all kinds of dreamy expectations around. Online advertising was a godsend for everyone. Until it turned out to be a devilishly clever bento box of lies, fantasies, crime and mark-ups.

In our current decade we're finally on to a true miracle - data. At last, a scientific-smelling miracle that will make advertising reputable, orderly and grown up. A real honest-to-god business with predictable and reliable outcomes!

Yeah, and I’m the fucking Queen of France.

And While I'm Being Cranky...
...if you haven't yet listened to my interview with Marketing Today, do so now. Here.

March 08, 2017

State Of The Agency World

I was interviewed recently on "Marketing Today." The topic of the interview is the state of the agency world.

Here is the interview.

March 07, 2017

Ad Industry Lost At Sea

If we had access to the internal financials of WPP, IPG, Omnicom, Publicis and Dentsu, here's what I think we would find.

We would find that in the past decade they have invested heavily in technology, data and analytics and not at all in creativity.

In fact, I would bet the farm that in each of these holding companies the proportion of salary devoted to the creative area has dropped in the past decade.

The financiers, accountants, investors, and Wall Street wise guys who now control the ad business are betting on the wrong horse. There is only one element of marketing at which agencies have an advantage over other suppliers -- creativity.

Consultants can provide clients with better strategy; data and analytics companies can provide clients with better numbers; "martech" companies can provide better technology services. But no one can provide better creative ideas.

And yet agencies -- who are always telling clients that they need to differentiate -- are de-emphasizing their only unique differentiator.

The Pivotal Research Group reported this week that clients are starting to bring programmatic media buying in-house. This is not a good sign.

They surveyed 200 of the world's top advertisers and found that 15 had established in-house media operations. Pivotal called it a "relatively significant escalation from the last time we explored the topic." But they concluded that "we expect to hear of more marketers participating in such activities. But at the same time, we also expect that the depth of involvement many of them will have with agencies may expand as well."

I'm not so sure. It seems to me that there is a slow but steady leakage of marketing services away from agencies and toward either specialized firms or in-house operations.

Agencies are diversifying into areas at which they have disadvantages, and are letting the one area at which they have a distinct advantage languish. This is just plain bad strategy.

New media types, new communication models, and new media distribution modes are developing every day. Agencies are hiring for the technological aspects of these new practices. But the real winners will be the agencies with creative ideas to make these new modes come to life.

Circumstances change but principles don't. The ad industry is first and foremost about ideas. Any agency that believes technology can mask an insufficiency of imagination is looking for trouble.

March 02, 2017

Invisible Advertising

A few months ago I was contacted by one of the world's largest marketing companies. No names.

They were instituting a review of several brands and wanted my advice on how to properly conduct a review. I spoke to the global head of this and the worldwide head of that.

I gave them my advice in one sentence. Look for the agencies that make the best ads. All the rest is trivial.

Marketing today is a battle to be noticed. There is so much of it. It is so loud and so relentless. There are so many ways to throw money away.

But the worst way to throw money away is by doing invisible advertising. What is invisible advertising? It is advertising that looks, sounds, and smells like everyone else's advertising. It has no impact and leaves no trail. It appears and disappears in a second. It is a total waste of money.

We have become so focused on irrelevancies that we have forgotten the first principal of advertising -- it doesn't matter how well you sing if no one hears you.

Here are some ways advertisers wind up with invisible advertising:

1. Confusing strategy with execution. They spend six months on strategy and three weeks on execution. They think that because they have a strategy that has been tested to death that their work is done. Their work has not even begun. The consumer never sees your strategy statement or your briefing documents. All she sees are your ads. And if your ads suck, the whole thing sucks.

2. Doing "360˚ media." This is one of the biggest and dumbest of the media clichés. First of all, no one can afford to do 360˚ media. Second, it's counter-productive -- you wind up sprinkling a little media here and a little there and have no impact anywhere. It is far better to do one medium well than 10 media poorly. The objective of media strategy is to find a way to have maximum impact, not maximum dabbling.

3. Digital first: Of all the dumb ways to piss away dollars, this is the dumbest. It is the equivalent of choosing the medicine before you know what the ailment is. You would have to be an imbecile to have an ideology that advocated for "bus sides first." The medium needs to fit the objective. But, as always, when it comes to online advertising all the rules of logic and prudence have been suspended. It is perfectly ok these days to have the answer ready before you know the question.

There is only one aspect of advertising that is absolutely critical -- you must be noticed. That means you must make good ads.

Dave Trott had a great piece about this a few days ago. As Bill Bernbach said - "If nobody notices your ad, everything else is academic."

There are plenty of sins we advertisers commit. But the most costly sin of all is to squander our money running invisible advertising.