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18 March 2017

Is Advertising at a crossroads?

Tag(s): Marketing, Business, Technology
It is quite a few years since I was personally responsible for a large consumer advertising budget. As a board member of Sony Europe Consumer Products we looked after circa €100 million and as MD of Pentland’s International Brands I had a considerable global budget. But I have never lost interest in the subject, read the trade press and am still in touch with people in the business, both client and agency side. But over the last few years I have increasingly observed what seems to be a collective madness as CMOs put more and more of their advertising dollars into a black hole variously described as digital, social, and  mobile media. This almost entirely unproven form of media comes at the expense of well-established proven traditional media like newspaper and outdoor although TV revenues still hold up.

The argument that the purveyors of this stuff use is that increasingly people are living their lives through such media. Since that is where the audience is that is where you must go to talk to them. There are two problems with this. Firstly it’s not true. Secondly it does not work most of the time. Increasingly advertisers develop something they call ‘content’. Usually this is video. It’s streamed across various types of social media such as Facebook, YouTube and Instagram. There are lots of different types of video – from linear TV to online video to subscription Video on Demand (VOD) services like Netflix. The average person in the UK watches 4.5 hours per day of video in total and TV accounts for three quarters of it. With advertising the proportion is higher because we exclude the BBC. So TV accounts for 94% of all video advertising. That’s in full and with the sound turned on. For people aged 16-24 who according to one so-called expert I read recently “many of them know no other world but digital and few of them watch live TV”;[i] in fact for 16-24s TV advertising accounts for 87.6% . To put this in perspective, YouTube accounts for 0.6% of video advertising for all individuals and 1.4% for 16-24s.[ii]

Audiences for TV advertising are measured independently and the results are transparent and consistent over time. Facebook marks its own homework and had to admit three major errors in its metrics last year alone. Facebook charges you for any one clicking on a piece of video. But 94% don’t get to the end of the ad. The Media Ratings Council standard allows for an ad placement to be chargeable if 50% of the pixels are viewable for at least a second. A second. Got that? Keith Weed, CMO at Unilever called for 100% viewability to be the standard at the industry’s annual bash in Cannes.[iii] But what really matters is independent verification.

It seems that some CMOs are finally waking up to this. The biggest advertiser in the world is Procter & Gamble. Its Global Marketing Officer Marc Pritchard recently came out and admitted that much of P&G’s budget had been misdirected and it would revert to more traditional methods of communication. In a keynote speech to the ANA’s annual meeting on Orlando in October, 2016 he spoke of the creative canvas as a metaphor of the art of advertising.

When marketers are at their best, he said, they paint a brand masterpiece. But often brands including P&G’s own brands produce crap. Technology enables both. It connects people with brands – search, social, mobile, native, tweets, snaps, chats, and e-commerce. And artificial intelligence and virtual reality are now here. But technology brings some awful guests to the party – viewability problems, ad-blocking, ad-skipping, endless ad load times, and some really bad advertising. He described the digital advertising supply chain as “murky at best and fraudulent at worst.”[iv]

P&G took a long hard look at itself to see why it fell into the “crap trap”. Its conclusion was that in its quest to do dynamic, real-time marketing in the digital age they were producing thousands of new ads, tweets, and chats every year with marginal quality control. They thought that the best way to cut through the clutter was to create more clutter, more ads and change them constantly. They decided to stop creating noise for noise stake and raise the bar on creativity. They are now focused on creativity, quality and diversity. Interestingly Marc began his career at P&G in the accounting department before he transferred into brand management. Perhaps he needed the cool logic of an accountant’s brain to cut through all this crap.

Another of the ‘awful guests’ is ad fraud. Many of the so-called clicks on the ‘content’ are in fact made by robots. These are programmed by criminal conspiracies. I am not saying that Google and Facebook are the architects of these but they provide the platforms and they collect some of the money. Recent research suggests that over half of all internet traffic is composed of automated bots rather than actual human eyeballs, meaning it isn’t clear who, if anyone, is being reached by online adverts. Global use of adblocking software is currently at more than 600m devices. In the UK its 27% of internet users or 14.7 million people.[v] And the problem gets worse as the industry response to this has been to develop technology enabling advertisers to track users across different browsers, so that you will be able to receive messages targeted especially for you, no matter how much you try to escape by switching devices or browsers. I[vi] I’m not sure even George Orwell could have thought that one up.

But The Times recently introduced us to a new, even more unwelcome guest, that of the terrorist. Something has gone seriously wrong if an ad for Waitrose appears at the bottom of a video calling for viewers to wage jihad. The Times' assertion was that big brands are thus unwittingly financing extremism and pornography. Again the reason is that the robots have taken over through what is called “programmatic advertising”. ‘Programmatic’ is another wretched technical term for a means to deliver hyper-targeted ads to specific audiences, at large scale, across multiple platforms. But as is so often the case with marvellous promises of advances in technology, the application of adtech has often been somewhat lacking. Audiences on ‘long tail’ sites and in objectionable environments are given equal standing to quality, premium environments such as The Times or The Telegraph, but at much lower rates.[vii] Thus advertisers don’t have a clue where their advertising is going to finish up.

I have sometimes felt on my own in my view that online advertising is ineffective, inefficient and a waste of money. But recently I have been encouraged by not only Marc Pritchard’s comments but those of other leading figures. The excellent Mark Ritson, a leading academic who is a regular contributor to Marketing Week, has for years banged on about the decline in marketing standards as marketers have been seduced by the illusion of digital at the expense of sticking to their proper jobs of building brands. Martin Sorrell in a recent piece in The Sunday Telegraph discussed the concerns that advertisers and their agencies have about vulnerabilities in the digital media supply chain. In the same piece he quoted independent research by Newsworks, the marketing body for UK national newspapers, that revealed that newspapers can increase the overall effectiveness of an ad campaign by 300%. Studies worldwide show that people are more engaged when reading a newspaper than they are when using social media.[viii] And Jeremy Bullmore, the doyen of British admen, in his excellent column in Campaign said “the mindless embracing of new platforms was indeed a fashion and like many fashions, is beginning to look quaint. By contrast to reassert the value of traditional advertising media, which long ago earned classic status, is nothing other than a timely return to common sense.”[ix]

All of this has a more serious point. It is not just that social media are poor vehicles for advertising and at least some people are waking up to it. It is also that these media platforms are entirely financed by advertising and or the selling of personal data. If the advertising dollars stop coming it is difficult to see how Google and Facebook, now gigantic corporations, at least by market capitalisation, can survive. Google has other businesses but none of them make money. The search engine is profitable and some of its more specific advertising may work perfectly well. Indeed I know of one example of advertising working well on Facebook, but that’s a very specific case of direct advertising.[x] A small advertiser can do that. A large advertiser can’t in any significant way.

In 2016 people woke up to the fact that they’re living in a filter bubble. Digital algorithms choose our content for us and huge earth–shaking events such as Brexit and Trump’s election victory were able to take millions of people by surprise because the buildup was in someone else’s bubble. As Chris Clarke writes in a fascinating piece on the Internet in Campaign “When you spend your life in a filter bubble, where most of the content you get is designed to make you feel good and ‘like’ it, you lose empathy and critical faculties. Alongside the impossible speed of change, many people’s brains have shut down, leading them to become like selfish toddlers; pure suspicious id. In this context, fake news, spread by internet trolls, fuels incredible anger.”[xi] (See my blog The Perils of the Internet 9th May, 2015)

[i] “Will brands regret rushing into digital?” Campaign 10th February, 2017
[ii] “TV in the video world” Thinkbox /the Marketing Society 2016
[iii] “One thing Pritchard’s speech failed to cover” Maisie McCabe Campaign 24th February, 2017
[iv] “Digital ads are at a watershed moment” Maisie McCabe Campaign 17th February, 2017
[v] “Is adblocking a declining problem for mobile markets?” Campaign 24th February, 2017
[vi]Ad Nauseam” Private Eye February, 2017
[vii] How can we restore faith in programmatic for brands?” Hamish Nicklin Campaign 17th February , 2017
[viii] “Newspapers remain tried and trusted amid the social media revolution” Martin Sorrell The Sunday Telegraph 12th March, 2017
[ix] “On the campaign couch with JB” Campaign 24th February, 2017
[x] My friend Roy Schneider owns a resort in Honduras. He tells me that he gets great results asking Facebook for details of people who live near US cities with direct flights to Honduras and have been scuba diving in the last year. He then directs messages to these people and gets a high conversion rate.
[xi] “Reclaim the Internet” Chris Clarke. Campaign 24th February, 2017

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