August 29, 2016

Waiting For Answers

I've been traveling and speaking in Australia and New Zealand and haven't had time to post to the blog. Here's a post reproduced from my newsletter from Sunday.

Two weeks ago Procter & Gamble shook up the world of advertising by announcing that because of disastrous sales results they were discontinuing their "precision targeted" display advertising on Facebook and putting that money into mass targeted advertising.

This created big headlines because:
- P&G is not just the world's largest advertiser, but is widely recognized as the world's most sophisticated advertiser
- P&G  has for years been shooting their mouths off about the remarkable effectiveness and efficiency of precision targeted online advertising, and has, in fact, moved more than 1/3 of their advertising dollars on line
- Precision targeting is the foundation on which online display advertising is sold
Having been traveling in recent days in Australia and New Zealand, I have been trying to follow the fallout of this announcement. I probably have missed some things, but it seems to me that there has been very little of a material nature that has come from this remarkable story. All I've seen are variations of the same story repeated over and over.

I'm waiting to hear what other major advertisers have to say, and, most of all, what the large agencies have to say.

While one company's experience is certainly not definitive evidence of anything, it seems that talk of other major marketers having second thoughts about their (ill-considered) headlong rush into the magic world of online display advertising are rife.

I am particularly anxious to hear what agencies have to say.

There is something about agency silence that is screaming at me. This year we've had a lot of very negative news about online display advertising:

  • Corruption 
  • Fraud 
  • Kickbacks
  • Ad blocking
  • And now, ineffectiveness

  • Not a single one of these stories has been broken by anyone in the advertising industry. The stories have come from outside the agency world -- from the trade media, or clients, or researchers.

    You've got to ask yourself why?

    If agencies are supposed to be the experts on the effective use of media dollars, how can it be that they knew nothing about all these problems? Is it possible? Does it even pass the smell test?

    The answer is no. The most likely scenario is that they've known what's going on and have been playing a double game.

    I believe agency leaders have been hiding the ugly details from their clients behind an impenetrable smokescreen of "big data" horseshit. In other words, blinding them with pseudo-science.

    Online advertising has two very compelling attributes for agencies: it is lucrative. and largely incomprehensible. Most clients, even the most sophisticated, think they know what's going on. But they don't. Ask P&G.

    Agencies have sold their clients a truck load of baloney. It is slowly coming unraveled. Sadly for clients, the only place for them to take their business is to another agency that's been peddling the same baloney.

    If I Were A Client...'s what I'd be asking my agency:

    1. Is P&G right?
    2. If not, how do you know?
    3. If yes, why haven't you told us?

    That should be good for a few laughs.

    August 17, 2016

    Will The P&G Story Bring Down Ad Tech? Please?

    The recent announcement by P&G that it is discontinuing "precision targeted" advertising on Facebook because it isn't working calls into question the entire strategy behind much online display advertising.

    Online display advertising has been sold to us as superior to traditional advertising because it presumes that reaching the perfect individual is more economically advantageous than reaching a broad demographic type.

    For the most part, offline advertising is sold on demographics while display advertising is sold on data-driven targeting.

    While P&G's experience should not be taken as conclusive proof of anything, it suggests that for big brands the demographics model is more economically efficient than the data-driven model.

    Their experience with Fabreze air freshener was cited by The Wall Street Journal as an example of how highly targeted advertising failed.

    For Fabreze, P&G targeted people with pets and people with large families. The presumption was that these people would have a significantly higher likelihood to purchase an air freshener than the public at large. Sales stagnated.

    Then P&G targeted all adults over 18 -- a very broad swath. And sales picked up.

    Presumably P&G had the good sense to use the same creative so they knew what variable they were testing.

    If P&G's experience turns out to be projectible -- and it has been reported that other marketers are having similar experiences -- the whole model of online advertising, based on data-driven "precision targeting" and tracking -- and enabled by ad tech -- needs to go right down the toilet. It's a sham.

    What a wonderful thing it would be if this turns out to be true.

    Imagine an internet without ad tech...
    • where the current obnoxious practices are acknowledged to be wasteful and counterproductive
    • where you are not being stalked 
    • where you are not being inundated with ads for stuff you bought 3 months ago 
    • where you are not slowed down waiting for someone's crappy ad to load
    • where your data plan money is not being wasted loading some company's ads 
    • where people are not opening files on you every time you take an action 
    • where ads are bought directly from publishers and not run through the black box of unnecessary, creepy networks and middlemen inhaling half your ad budget.
    Is this really possible? Can this really happen?

    In a rational world? Yes.

    In the contemporary world of advertising? Not a fucking chance.

    August 15, 2016

    P&G Gets It Half Right

    Procter & Gamble, the world's largest advertising spender, made big waves last week when they announced that they were taking a shit-load of money out of "precision targeted" Facebook advertising. Their cmo said...
    'We targeted too much, and we went too narrow'
    P&G is discovering too late what a growing number of big-time advertisers have found out -- the headlong rush into "precision targeted" display advertising has been a mess.

    The age-old strategy of data-based direct marketers (which is essentially what "precision targeted" online advertising is) is proving to be a failure for brand marketers.

    By 2013, P&G had moved over 1/3 of its ad dollars online.

    In 2014, P&G cut ad spending by 14%.  Why were they cutting ad spending? The usual delusional horseshit about online advertising:
    “...effectiveness and the consumer impact of our advertising spending will be well ahead of the prior year, optimized media mix with more digital, mobile, search and social presence..." said their cfo.
    And what has been the result of all this optimized media brilliance? In the past 12 months, P&G's sales results have been a disaster, with an alarming sales drop of 8%. And when you're P&G, 8% equals 6 billion dollars.

    As regular readers know, I have been warning advertisers about the bullshit they have been sold about "precision targeting" for years.

    But let's be careful before we blame targeting for all the problems of display advertising.

    It goes deeper than that. It's not just the targeting that's the problem for big marketers. It's the nature of the beast.

    Online display advertising has evolved into electronic junk mail. If you're a direct marketer, or if you're running a short-term promotion, maybe display can be effective. But if you're a brand marketer, it's a sinkhole. Ask P&G.

    P&G is not moving money out of Facebook, it is just re-arranging its Facebook investment to buy reach instead of "precision targeting."

    But buying more reach is not the same as getting more impact. And from the corner office here at The Ad Contrarian Worldwide Headquarters, it still looks to us like display advertising, in any quantity and on any platform, has very little impact.

    As we reported here a few weeks ago, a recent study shows that the amount of attention consumers pay to display ads is shockingly low.

    There is a little voice inside me whispering that P&G is actually covering for Facebook by converting their "targeted" dollars to "reach." Something is telling me that perhaps P&G is locked in to an advertising contract with Facebook and is just doing what it can to waste less money.

    It may take a few years to find out what's really going on here. Stay tuned.

    And one more thing...

    There's something that's bothering the shit out of me about the P&G story.

    There has been a lot of bad news about ineffectiveness and fraud in online advertising in the past year. Why does it always come from research companies, news media, or clients. Why does it never come from agencies?

    How can it be that the people who are supposed to be the experts never know?

    Can it be that agencies really do not know what the fuck is going on in their own business and have to be told by researchers, news media, and clients? Or are they playing a double game?