Misintermediation

One of the early principles of online marketing was disintermediation -- a typically dense and obnoxious word that digi-dweebs used to mean "eliminating the middle man."

The thinking went like this: Levi's makes jeans. People buy jeans. The web will allow people to buy jeans directly from Levi's and eliminate the unnecessary costs of distribution, promotion, and retailing that are necessitated by middlemen.

Before the tech crash of 2000, it was widely believed that online economic activity would overtake traditional brick-and-mortar activity by allowing disintermediation.

This belief -- still held widely by simpletons who have no idea how humans or business work -- is still floating around.

As usual, in the delusional world of modern day marketing, the fact that online commerce constitutes just 6% of retail activity (US Dept. of Commerce, Q2 2014) and good old brick and mortar retail activity constitutes 94% of retail business activity is of no consequence. Facts don't mean much these days.

To a large extent, the web has not disintermediated anything. Amazon doesn't manufacture clothes, books, bicycles, cameras, CDs, and wine. Neither does eBay. They're just a different kind of middle man that happens to be on line instead of at the mall.

So disintermediation has turned out to be largely a pile of hooey.

Now let's cut to an interesting piece I read this weekend by a guy named John Stoughton. Stoughton's piece is called "Disintermediation and the Curious Case of Digital Marketing – revisited."

Stoughton is a communications planner at a UK agency and seems to know his material very well. I say "seems to" because I could only understand about 1/3 of his piece, but what I understood seemed smart.

Stoughton made several good points, but the one that interested me most was his point that for a medium that was supposed to disintermediate everything it touched, the web has misintermediated the living hell out of advertising. (By the way, misintermediate is my term, don't blame him.)

In fact there is so much misintermediating going on -- so many middlemen in the buying, selling, bidding, and placing of online ads -- that no one even knows what the hell they are buying or where the hell it is running.

Traditional advertising is pretty simple. I buy the back page of the NY Times news section and I see my ad on the back page of the NY Times news section.

When I buy a banner ad, on the other hand, the astonishingly arcane black box of adtech kicks in.

According to a video called "Behind The Banner" here's what happens when a web page loads (I have taken the liberty to edit some of their copy):

• When a person visits a web page, a request is initiated for an advertising impression

• An impression request is generated based on what the web page knows about the person

• The impression request is forwarded to the publisher's ad server

• The publisher checks to see if this impression matches any of its pre-sold ad inventory

• If the impression hasn't been fulfilled, it is sent to one of several ad exchanges

• Servers looking to bid on the impression may communicate with other servers to augment the data they have on the person visiting the site

• Next, an auction takes place in which third parties bid on the chance to fulfill the impression

• The impression is sold to the highest bidder, for the second highest bid price

• The banner is then sent to the web page and appears to the user. The selection of one of the advertiser's banners can trigger a whole new process

• This whole thing takes less than 1/4 of a second

And what is the result of all this misintermediation?

• Nobody knows where their ads are running

• Almost half of online ad impressions may be fraudulent

Which just goes to prove, once again, that the advertising industry can complicate the shit out of anything.

Rats Deserting The Social Media Ship

A few months back I wrote that the foundations of social media marketing were crumbling (here and here.) Well, now the walls are caving in, too.

You know you're in trouble when the press and the pundits turn on you. The way this game works is that the chatterers first fall in love with your story -- they don't just report it, they amplify it. And then when reality rears its ugly head, like rats, they scramble for the exits.

You know the trouble is serious when they start referring to "the hype" as if they weren't the bozos who disseminated it.

That's exactly what's happening with social media.

Last week, a silly Gallup study (based on self-reported nonsense) and a study of Facebook engagement triggered a flood of anti-social media reporting in the press.

• The Wall Street Journal headlined its story "Social Media Fail to Live Up to Early Marketing Hype"  

• The San Francisco Chronicle went with "Tweets And Likes Don't Translate Into Buys" 

• Avinash Kaushik, online marketing guru, wrote a blog post entitled "Social Media Advertising Does Not Influence Purchases" 

• According to BusinessWeek, "Tweets, Likes, and Shares Don’t Make Us Buy Stuff, Americans Say" 

•  CNBC weighed in with... "Facebook Brand Engagement Plummets, Study Shows"

• And the website Marketing Land headlined a story..."For Major Brands 'Engagement Has Plummeted' On Facebook"

Of course, the fact that the Gallup study is pure hogwash and "engagement" has always been complete bullshit doesn't change the fact that social media marketing is a giant flop.

While the press is jumping ship on social media, there are still a few stalwarts who are heavily invested in the delusion of social media marketing. These people are paddling very hard to save the cause by trying to shoot holes in the Gallup study. They are on a fool's errand. It's true that the Gallup study is garbage, but this tactic won't resurrect the stinking carcass of social media marketing.

The social media industry has no one to blame but itself. They created and instigated the astounding hype about social media marketing and refused to rein in the zealots and maniacs in their midst whose immoderate and provocative rhetoric created an environment in which a backlash was inevitable.

The people I really feel sorry for in this whole ridiculous saga are the agencies with integrity who lost good accounts by being honest with clients. They tried to tell cement-head clients that social media was criminal hype. What did they get for their trouble? Fired.

Meanwhile the vacuous jargon monkeys who promised social media magic walked away with nice accounts.

The sad fact is that agencies still can't tell their clients the truth about social media for fear they'll be thought démodé.

Welcome to the golden age of bullshit.

Why Are Agency Blogs So Unpopular?

Agencies are often asked this question: If advertising is so effective, why don't you advertise?

The answer they usually give is this: Our potential customer group (target market) is so small that mass market advertising is imprudent. Instead we use marketing techniques that are more productive for a company like ours that needs to talk to a very small group of prospects one at a time.

This semi-baloney usually satisfies the questioner.

But this excuse only holds up because of the expense of traditional advertising. The same excuse can't be invoked for their lack of effective use of social media or content marketing. That stuff is "free."

Agencies are constantly haranguing their clients about the need to harness the magic of social media and content marketing -- and the expertise they can deliver if the client will just pay them to do it -- and yet the social media and content marketing efforts of agencies is somewhere between pathetic and non-existent.

Blogs are a perfect example. I recently checked two websites that measure the popularity of advertising and marketing blogs. (As you would expect with online metrics, the lists are alarmingly inconsistent -- on one list this blog is #21 on another it's #55.)

But here's the amazing thing. Put both lists of top 50 advertising and marketing blogs together and you find exactly one agency blog. One.

Now if I'm not mistaken, agencies are supposed to be the experts at social media and content. I mean, companies pay them handsomely to produce this stuff.

Considering that virtually every agency in the universe has some kind of blog, and considering their unique expertise at producing "compelling content" and their amazing online marketing skills, you'd think agencies would dominate the lists of advertising and marketing blogs.

Why don't they?

There are only two possible explanations. The first is that they are not competent to create anything that anyone wants to read. I doubt that this is the reason.

I think the real reason is the second possibility -- they're full of shit.

They tell their clients to invest in the awesome power of social media and content marketing, but they are unwilling to do it themselves. They won't spend their own time and money on this magic, but they're eager to spend their clients'.

Apparently what's good for the goose is not good for the gander.  After all, the goose lays golden eggs.
 

(By the way, there are several excellent agency blogs. Two of my favorites are written for their agencies by Dave Trott and Vinny Warren.)

(Oh, and while we're chatting....you'd think clients would have the sense to hire people to do their social media work who have proven their skills by being successful at it, instead of agencies who have proven their incompetence by being terrible at it. But that would be way too sensible. Sorry.)