Why Online Ad Industry Can't Reform Itself

Online advertising has a very simple problem with a very simple solution. But it's a solution that will never happen.

Like all advertising, digital advertising is annoying. No sane person voluntarily signs up for any kind of advertising, but we tolerate it in other media. TV ads and radio ads and newspaper ads may be a bother, but they're a minor bother.

Online advertising has gone way beyond that and become a plague. It hounds us, tracks us, interrupts us, slows us down, costs us money and is more than just a nuisance, it's a scourge.

The result is that there is a rebellion going on among consumers. Two hundred million of us have downloaded ad blockers. This is causing a big problem in digi-world.

The solution is simple. The online ad industry should do what all other media do and show some mature restraint. They should voluntarily end tracking, they should limit the "load factor" of their ads so they don't cost us money, they should ban auto-starts, page takeovers, pop-ups and other forms of ultra-intrusive ads.

The result would be beneficial to all. Consumers would be much more tolerant of online advertising, and online publishers could sell their ad space at a better price by not having to compete with the sleaze merchants at the bottom of the internet cesspool.

But this will never happen. The reason it won't happen can be found in a logic principle called the "fallacy of composition." The fallacy of composition says that something that is good for the whole is not necessarily good for the individuals that comprise the whole.

For example, it may be a very good thing for the online ad industry to stop tracking, but it would be a disaster for Facebook. Facebook sells its ad space to advertisers based on its ability to know who you are and what you want. How do they know that? They track the shit out of you.

Consequently, the idea that a web publisher will voluntarily give up his "value proposition" for the good of the industry is a fantasy. It will never happen unless and until some organization or agency imposes standards on the industry.

The online ad industry has a lot of problems. They say they can't do much about online fraud. Maybe that's true. They say they can't do much about unscrupulous publishers. Maybe that's true.

But they can do something about "worst practices" and they are not. Leaving it up to individual publishers, or individual agencies, or individual clients is not working and never will. The fallacy of composition will see to that.

Online publishers, greedy agencies, and clueless marketers are creating a nightmare for themselves. When it all blows up in their faces they'll have no one to blame but themselves.

Annals Of Literary Criticism

 

Dear Geraldine:

So nice to hear you're not a prude. I understand. You're just someone who doesn't like references to sex or sexual activity or adult language. That's not being a prude! That's just being a...something else... like a chipmunk or something.

You are so right about there being no place for the "f-word" in marketing. Marketing is a virtuous and much admired profession. We should never permit the unsavory habits of art and literature to sully our blessed calling.

You know, I've tried reading some of the so-called "works" of Ernest Hemingway and James Joyce and D. H. Lawrence and Allen Ginsberg, and Norman Mailer and Erica Jong and Nora Ephron and Philip Roth and John Updike. What a REAL turnoff.

Why do they have to use that word that I'm not even going to describe as the letter "f" and then the "-word" thing because all that does is make me think of the actual word which makes me REAL REAL sick and all I can picture are disgusting, sweaty body parts all wet and slippery jiggling around. And then I have to take a sponge bath or drink some tea (herbal) or something.

I mean, what's wrong with "doggone it" or "jeepers?" I'd like to know that from some of these so-called "hep cats."

Can I ask a favor? Next time you write a review of a book of mine, please don't say "f -word"  because I find it a REAL REAL REAL turnoff. Maybe you can call it "the word that makes everyone throw up who is NOT a prude" or something.

Next I want to thank you for taking the trouble to read 2 pages of my book before you wrote your review. Believe it or not, some people will write a review after reading only 1 1/2 pages. Lazy b-words.

Knowing that there are awesome people like you out there who are NOT prudes and have the integrity to finish 2 pages before posting a review makes writing so much more gratifying.

Your friend (or should I say f-word?)

Bob

Waste Not, Grow Not

There's a restaurant in my neighborhood that's very popular.

You can go there any evening about 7 pm and I can predict with absolute certainty that every table will be occupied and there will be 80 people there. But I can never predict which 80 people it will be.

It's the same with toasters. I can tell you with absolutely certainty that tomorrow there will be 1,500 toasters sold in the United States. But I have no idea who will buy them.

Also tomorrow there will be about 500,000 t-shirts sold (I'm making these numbers up.) But who's going to buy them? No idea.

Marketers used to deal with these uncertainties in a reasonable but wasteful way. We would use experience and knowledge of the market to anticipate the type of person who would be most likely to eat at a restaurant, purchase a toaster, or buy a t-shirt. Then we would direct advertising at these types of people.

Because we used mass media, this media strategy had the disadvantage of being wasteful. Most people we reached would not be in the market for, say, a toaster.

But it also had three advantages: First, we would reach just about everyone who we thought would be looking for a toaster. Second, we reached an awful lot of people who we did not think were interested in a toaster, but were. And third, it reached just about everyone who would someday buy a toaster.

Advertising has changed. Now we believe we can predict exactly who will be buying a toaster tomorrow. We believe we can identify not just the most likely group of people, but the actual individuals.

All we have to do is follow them around the web and find out where they've been, collect the  data and soon we'll know when they're ready for a toaster.

The idea is to make individual targeting so precise that it replaces demographic likelihoods as the basis for media strategy.

So far this has been a spectacular failure. Each of us is currently inundated with dozens, if not hundreds, of online messages a day -- banner ads, emails, social messages, etc -- that are assumed by  marketers to be particularly relevant to us and reflective of our individual purchasing needs and behaviors. We pay almost no attention to any of them. They are essentially invisible.

The math tells the story. A generous number for display advertising is that it generates 8 clicks in 10,000 exposures. A generous number for Twitter interactions is 4 engagements in 10,000. It's hard to get much closer to zero.

We are thinking like direct marketers, not brand marketers. We are ineffectually using "precision targeting" to try to engage the perfect individual, and by eschewing mass media we are harming our brand in three ways.

1. We are not reaching those within our target segment who are not active on line or whose data we haven't mined.

2. We are not reaching the unexpected toaster buyers, of whom there are legions. 

3. We are not building a brand. Mass media advertising may be "wasteful" by the nearsighted standards of digital and direct marketers. However, some very wise people have pointed out that the nature of what we call "waste" may, in fact, be the very stuff that brands are built on.

Think about it this way. In 2002, Apple spent tens of millions of dollars in mass media to advertise the iPod. There were hundreds of millions of people who were exposed to iPod advertising who had absolutely no interest in an iPod. After 14 months, advertising had reached hundreds of millions of people, but Apple had sold 600,000 iPods.

Many marketers would call the enormous amount of money that Apple spent promoting the iPod to the uninterested "waste." But was it?

Today hundreds of millions of people who had no interest in an iPod own iPhones. Isn't it more than likely that the iPod advertising of 2002 had significant impact on the iPhone buyers of 2007 and beyond?

• Didn't it make the Apple brand more appealing?

• Didn't it raise interest in mobile devices, particularly Apple mobile devices?

• Didn't it set the stage for the phenomenal success of Apple in the mobile device category, that made Apple the most successful company on Earth?

Or think about it this way. Why have almost all the brands in your supermarket been built with "wasteful" mass media advertising and none with the "precision targeting" of online advertising?

Understanding business is understanding that markets don't move in straight lines, people don't think in straight lines, advertising doesn't work in straight lines.

If you're a brand marketer and you want to grow, you have two choices. Be wasteful or be invisible.