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?

    August 10, 2016

    All The Marketing Geniuses Have Been Wrong. Duh.

    For years now I have been spouting off about the wrong-headedness of online "precision targeting" versus mass media.

    In 2012, in a post called Either Facebook Is Nuts Or I AmI wrote...
    "Big brands need big reach, not the diminishing returns of finer and finer targeting...They (Facebook) needs to forget about "precision targeting." It's bullshit and it's not working...They need to sell reach."
    In 2013, in a post called The Hidden Danger Of Precision Targeting I wrote...
    "One of the great benefits of mass media is that it lacks precision targeting. It reaches all the users in your category, including the users of your competitor's brand."
    In 2014, I wrote The Power Of Sloppy
    "Have you ever wondered how McDonald's and Coca-Cola and Nike and Toyota and Apple and all the other enormous worldwide brands became successful? For one thing, they were sloppy. They had to be. They didn't have big data or precision targeting. They couldn't punch a key and immediately identify left-handed Lutheran dry cleaners who rode recumbent bicycles. So they had to use mass media and talk to everyone. Not only did they not suffer for it, they prospered from it."
    In 2015, in a post entitled "What If Targeting Doesn't Work" I wrote,
    "What if all the 'precision targeting' we do is mostly unnecessary complexity masquerading as knowledge? "
    Earlier this year, in Waste Not, Grow Not, I wrote
    "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...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."
    And then there was this.

    This week, my years of aberrant ranting finally got some vindication when The Wall Street Journal ran a story entitled "P&G To Scale Back Targeted Facebook Ads"
    "Procter & Gamble Co., the biggest advertising spender in the world, will move away from ads on Facebook that target specific consumers, concluding that the practice has limited effectiveness.
    Marc Pritchard, P&G’s chief marketing officer, said the company has realized it took the strategy too far. 'We targeted too much, and we went too narrow'
    P&G could be the bellwether on how consumer goods companies and big brands use digital advertising. Over the past year some marketers, specifically consumer product companies, have discovered they need to go 'much more broad' with their advertising "
    I hate to be the one to say "I told you so"...wait a minute. No I don't.

    August 03, 2016

    Further Thoughts About Kev

    Last week I did something unusual. For the first time in my recollection, I posted on this site on a Saturday morning.

    What motivated me do so was reading the now infamous interview with Kevin Roberts on the Business Insider site.

    Being outraged by his stupidity, I started to write immediately. I intended to post it, as usual, on Monday morning.

    But something told me that this was going to explode in a hurry and that if I wanted to say something original I had to do it immediately. So I posted then and there.

    As regular readers know, over the years I have been particularly harsh with Roberts. I was annoyed by him before it was cool.

    But something is bothering me now and I can't get over it.

    When it comes to free speech, I'm kind of an absolutist. I think it is a healthy thing for people to be able to express their opinions - no matter how ignorant or offensive - without fear.

    As a self-styled contrarian, I have often been out on a limb and been ridiculed for it. That's fine. If you're gonna shoot your mouth off you have to be prepared to face the consequences. But it's easy for me, I can't be fired from my blog.

    The fact that Kevin was put on "administrative leave" or whatever the hell they call firing these days, bothers me. It bothers me that governments cannot punish us for what we say, but companies and clients can. (Update: Roberts resigned this morning)

    I fully understand that business big shots can do substantial damage to their companies by saying dumb things. And I also understand that Publicis has a responsibility to protect its employees and shareholders from the harm that can be done by this kind of ignorant bombast.

    But I wish there was a way to accomplish that without creating an environment in which people in our business are going to think twice before they express an unpopular opinion. No matter how stupid it may be.

    As Rory Sutherland said
    "People in advertising say stupid things all the time. If you are a creative person, it's part of the job description. You see how far you can push the line, rather as in stand-up comedy. That's what ideas are for - in evolutionary terms they are experimental actions. I always argue that the value of an advertising agency is that it fosters a culture where you can make stupid suggestions and still get promoted: many great ideas start with a kind of daft, Pythonesque suggestion, which is then beaten into more sensible shape - the kind of stupid suggestions you couldn't make in a government department, or a client company. I am thus slightly wary when people are fearful of speaking freely."
    I don't know what the answer is. How do you discourage stupidity without restricting the right to be stupid?