NPR has a podcast called Planet Money.
Recently they did a show about Facebook. If you have 20 minutes I suggest you listen to it here. The show aired a few days after the Facebook IPO.
They did an interesting experiment. They took a small, popular pizza place in New Orleans called Pizza Delicious that was looking to expand, and paired them with a social media marketing expert in San Francisco who advises large companies on Facebook strategy. Together, they created a Facebook ad campaign for Pizza Delicious, and tracked the results.
Here are the highlights:
The NPR and pizza people thought that the target for the Facebook campaign should be people on Facebook who say they like pizza.
The social media expert disagreed. He said that Pizza Delicious had 2,000 fans on its Facebook page, and the target for the campaign should be the friends of Pizza Delicious' fans. This is very common Facebook ad strategy. In this case, 74% of people in New Orleans (224,000 people) were friends of someone who was a fan of Pizza Delicious.
The pizza owners explained to the social media expert that Pizza Delicious' customers tended to have ties to the Northeast where, presumably, people appreciate good pizza. The consultant then recommended that they further narrow the target by cross-tabbing friends of Pizza Delicious with people who live in New Orleans but are fans of Northeast cultural entities e.g., The NY Knicks; NY Rangers; Carmelo Anthony; NY Times, Notorious B.I.G., New Jersey Nets, bagels, etc.
They came up with about 15,000 people who lived within 10 miles of New Orleans, were friends of the pizza place's fans, and had some cultural connection to the New York area.
According to the NPR reporter, she felt the targeting was "perfect...We were golden. This could not miss."
They placed the ad. Soon after the ad began appearing on Facebook the NPR reporters started receiving calls from the pizza owners. Not a single person had clicked on the ad. Not one.
The next thing they did was toss out the advice of the social media expert, and developed their own strategy and started running new ads. These ads "killed" -- twice as many responses as normal. Because Facebook puts more weight behind ads that get good response rates, the ads ran a lot. In fact, they appeared over 700,000 times.
One result was that they quickly added 10% more fans to their Facebook page. However, as the owner says, "through a long night of asking every single customer where they found out about Pizza Delicious, none of them said they found out about us through the Facebook ad. Zero people."
As the NPR reporters said, it's way too early to say if this Facebook campaign will be successful. Also, I am not a big fan of using anecdotes as representative of anything other than the case in point.
On the plus side, those 700,000 ad appearances cost the pizza guys a grand total of $240. and they got a $10 donation from someone who wanted to help them expand.
According to a valuation expert from the Tuck School of Business at Dartmouth, in order for Facebook to justify its IPO price, ten years from now they will have to attract 10% of all the ad dollars spent on the planet. Not just U.S. ad dollars, but all ad dollars -- Chinese, Brazilian, Ukrainian, and Tunisian. And not just 10% of online ad dollars, but all ad dollars -- TV, radio, print, outdoor, blimps, balloons, butt-danglers, hooter-wobblers...
Let's just say I'm skeptical.
Thanks to Jason Headley for the heads-up on this story.
July 23, 2012
July 18, 2012
Why Interactivity Makes Advertising Less Effective
The advertising and marketing industries had a dream. The dream was that interactive media would revolutionize advertising and make it far more relevant and effective.
There's only one problem. Consumers have shown no interest whatsoever in interacting with advertising. None.
Click through rates on display ads continue to drop and are now below one in a thousand. Every attempt at interactive TV has been a dismal failure. YouTube has thousands and thousands of TV spots and ostensibly "viral" videos. The overwhelmingly majority of which have never been viewed by anyone but the director's mother.
What marketers still refuse to comprehend is that, at best, advertising is a minor annoyance. It is pretty clear that most consumers are willing to go to substantial lengths to avoid it.
Which makes the ability to interact with a medium the enemy of advertising.
This is nothing new. Radio advertising became less effective with the invention of the push-button car radio. As soon as a crappy ad came on we interacted with the button. It is also why TV advertising became less effective with the invention of the remote. TV spots were a lot more effective when you had to drag your ass off the sofa to change the channel.
People who can easily interact with a medium to avoid ads generally will. But there are a few exceptions to this. Happily there are some very talented people in advertising who can create ads that are so interesting, beautiful, or funny that people will not try to avoid them. Unhappily, there are very few of these.
The other exception occurs when people are shopping. Someone looking for something is willing to interact. Just like she once would interact with the yellow pages, she will now interact with Google.
These exceptions notwithstanding, easy interaction with a medium is not the advertiser's friend.
But there is apparently no end to marketers' ability to delude themselves, and also no end to ad hustlers' willingness to feed these delusions. The latest delusion is "content."
The same crowd that sold us interactive advertising as a marketing miracle is now selling us "content" as the new magic elixir. You see, if we engage the consumer with compelling online content...
Well, guess what? Consumers are at least as eager to avoid our "content" as they are our ads. Most "content," like most advertising, is dumb and self-serving and offers nothing of interest or value to consumers.
Which is just another way of saying that the only way to get most consumers to pay attention to advertising messages is to force them to -- the much-ridiculed "interruption model."
The lovely fantasy of advertising interactivity has been undermined by an unfortunate fact of nature -- no one in his right mind volunteers for advertising.
To put it succinctly, consumers are far more likely to utilize interactivity to avoid advertising than to engage with it.
There's only one problem. Consumers have shown no interest whatsoever in interacting with advertising. None.
Click through rates on display ads continue to drop and are now below one in a thousand. Every attempt at interactive TV has been a dismal failure. YouTube has thousands and thousands of TV spots and ostensibly "viral" videos. The overwhelmingly majority of which have never been viewed by anyone but the director's mother.
What marketers still refuse to comprehend is that, at best, advertising is a minor annoyance. It is pretty clear that most consumers are willing to go to substantial lengths to avoid it.
Which makes the ability to interact with a medium the enemy of advertising.
This is nothing new. Radio advertising became less effective with the invention of the push-button car radio. As soon as a crappy ad came on we interacted with the button. It is also why TV advertising became less effective with the invention of the remote. TV spots were a lot more effective when you had to drag your ass off the sofa to change the channel.
People who can easily interact with a medium to avoid ads generally will. But there are a few exceptions to this. Happily there are some very talented people in advertising who can create ads that are so interesting, beautiful, or funny that people will not try to avoid them. Unhappily, there are very few of these.
The other exception occurs when people are shopping. Someone looking for something is willing to interact. Just like she once would interact with the yellow pages, she will now interact with Google.
These exceptions notwithstanding, easy interaction with a medium is not the advertiser's friend.
But there is apparently no end to marketers' ability to delude themselves, and also no end to ad hustlers' willingness to feed these delusions. The latest delusion is "content."
The same crowd that sold us interactive advertising as a marketing miracle is now selling us "content" as the new magic elixir. You see, if we engage the consumer with compelling online content...
Well, guess what? Consumers are at least as eager to avoid our "content" as they are our ads. Most "content," like most advertising, is dumb and self-serving and offers nothing of interest or value to consumers.
Which is just another way of saying that the only way to get most consumers to pay attention to advertising messages is to force them to -- the much-ridiculed "interruption model."
The lovely fantasy of advertising interactivity has been undermined by an unfortunate fact of nature -- no one in his right mind volunteers for advertising.
To put it succinctly, consumers are far more likely to utilize interactivity to avoid advertising than to engage with it.
July 12, 2012
Display's Dismal Dysfunction
For years here at Ad Contrarian global headquarters, we have been questioning the marketing industry's delusional enthusiasm for online display advertising. Despite consumers' ongoing indifference, and the pitiful performance of this form of advertising, marketers continue to pour billions of dollars into this black hole.*
There are naive clients who insist on throwing their money away on display ads despite the admonitions of responsible agencies. And there are agencies who continue to hustle these ads to clients with a combination of digital jive talk and misleading data.
Finally, there are some in the industry who are getting fed up with the deceptive "metrics" and hype, and are starting to see that the emperor has no clicks. An article from Reuters recently laid out the case for the dysfunctional state of the display advertising industry.
But facts don't bother the display ad apologists. Despite the fact that 15 years of display advertising have failed to produce a single major consumer-facing brand, and TV advertising has produced thousands of them, you can still find spurious data to prove that display advertising is more effective than TV.
Accordingly, I have written a little poem that you might want to use as the first slide in every agency Powerpoint presentation. Maybe you've met someone like this:
*There is a sensible strategy for utilizing display advertising which you can find here.
There are naive clients who insist on throwing their money away on display ads despite the admonitions of responsible agencies. And there are agencies who continue to hustle these ads to clients with a combination of digital jive talk and misleading data.
Finally, there are some in the industry who are getting fed up with the deceptive "metrics" and hype, and are starting to see that the emperor has no clicks. An article from Reuters recently laid out the case for the dysfunctional state of the display advertising industry.
- Display ad prices have dropped about 50% since the dot-com boom.
- Last week, Microsoft had to write down essentially all of its $6.3 billion investment in display ad network aQuantive. Reuters says: "Microsoft's spectacular capitulation is the latest admission of failure on display advertising."
- Facebook is desperately attempting to justify its IPO price by flooding the market with display ad inventory, further deflating prices.
- ValueClick has lost half its value since 2007.
- In 1998, Yahoo was getting a CPM of $25 for banner ads. By the end of 2011, that had dropped to $11.50. Yahoo, too, is worth about half what it was worth in 2007.
- Despite the promise of pinpoint targeting, it looks like display is becoming the province of the exact opposite type of advertiser -- the tonnage direct marketer who used to buy the 2 am TV inventory. One industry veteran calls display "...a ghetto for bad direct-response."
- Display advertising has become so devalued that according to one industry insider, Microsoft may be considering giving away display ads.
But facts don't bother the display ad apologists. Despite the fact that 15 years of display advertising have failed to produce a single major consumer-facing brand, and TV advertising has produced thousands of them, you can still find spurious data to prove that display advertising is more effective than TV.
Accordingly, I have written a little poem that you might want to use as the first slide in every agency Powerpoint presentation. Maybe you've met someone like this:
There once was a digital guyTell the truth. Where else do you get ad poetry?
Who was brilliant at pie-in-the-sky
Sooner or later
He'd torture the data
To prove that elephants fly
*There is a sensible strategy for utilizing display advertising which you can find here.
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