“The online ad industry is a cesspool of surveillance, corruption, and fraud.” — Bob Hoffman, 2015
“Online Advertising Is Corrupt At Its Core.” — Bob Hoffman, 2017
The state of online advertising today can be summed up in a single sentence: “Direct(“Junk”) Mail Outperforms All Digital Channels Combined by Nearly 600%.” Think about that for a minute — after all the hype and more than 20 years of online advertising — good old fashioned junk mail is nearly 6 times more effective than all online channels combined! What’s going on?
The problems with online advertising today are obvious — consumers don’t trust advertising, consumers don’t want advertising, there’s way too much advertising and most of all, because of the Internet, consumers no longer need advertising to get information on the products and services they want to buy.
That last reason — about needing advertising — is why advertising worked in the first place — consumers needed advertising because until fairly recently, advertising was the easiest available source of information about the products and services consumers wanted to buy.
But that was then and this is now. Once consumers could find everything about any product or service on the Internet — they no longer needed advertising to obtain that information, so there was little reason to tolerate being interrupted by advertising — so consumers installed ad blockers.
Marketers responded with MORE of the advertising consumers don’t want(and now don’t need), because the “advertising food chain” hyped promises of “new and improved big data targeted social media engaged conversations where the specific mode of monetization augments the user experience by providing value delivered in stream,” and marketers bought into it — fraud, viewability problems, kickbacks and all.
Marketers seemed to have forgotten that advertising is also their product and that no company can afford to waste resources producing “stuff”(ads) consumers don’t want or need.
According to experts, “traditional marketing is broken” and the ad-based Internet business model is “bad, broken and corrosive” that has morphed from an “ad-based model” into a “surveillance-based model” that has privacy implications far beyond advertising and marketing. Simply, online advertising is not aligned with consumer demands, values or interests — which is why it works so poorly.
And to make matters even worse, everything is fragmented, online impressions are in a downward spiral of “nearly infinite supply = nearly zero value” and getting more so by the second. The hyper-growth of channels and the amount of information available on those channels is causing “advertising chaos” according to Unilever CMO, Keith Weed and the industry needs to find a way to once again “lead with brands and not channels.”
Advertising has turned into something consumers don’t trust, don’t want and don’t need. Targeting is creepy and getting creepier (see below). And while targeting proponents claim that the latest and greatest targeting capabilities are giving consumer what they want — consumers respond with ever more ad-blocking.
The Details
• Ad-based Search — is effective but not aligned with consumers (search engines want “one more ad,” consumers want “one less ad”), has matured with price per ad in steady decline at Google, and is suffering from the same creepy targeting — causing a growing privacy backlash — FairSearch.org, DuckDuckGo and Ixquick.
• Ad Blocking — On Tuesday, August 25, 2015, at around 9am ET, Howard Stern Just Sent Ad Blocking Mainstream. Doc Searls, co-author of The Cluetrain Manifesto, adds his “two cents” commenting on Apple’s system-level content blocking that will be built into iOS 9. The slides below depict the growth of ad blocking around the world, who’s doing it and why. Ad-blocking has been upheld in the courts and it it unlikely that any jurisdiction in the world is likely to stand against individual privacy vs. advertising. (Still increasing.)
• Display Banners — Are the least effective, most blocked and consumers have developed “banner blindness” resulting in an overall CTR of .06% across all ad formats and placements in 2015 — that’s 6 clicks in 10,000! How bad is that? Consider this: “a blank display ad notched twice the click-through rate of the average branding one.” On top of this, are the viewability problems where more than 50% don’t even have the opportunity to be seen.
• Mobile — Although picked as the new “darling” of online advertising, mobile suffers from measurement problems that stem from the small screen size, the abundance of fraud, and the lack of any viewability consensus. Marketers just can’t seem to crack mobile, and as the newest “next big thing” there are still many problems that need to be solved.
• Native Advertising — is the attempt to mislead consumers into reading ads by disguising the ads to look EXACTLY like the editorial. According to the native advertising sales pitch the words “clearly marked” and “camouflaged,” (or words to that effect) are used in the same sentence and everyone keeps a straight face. Now the FTC has weighed in with strict guidelines to avoid misleading consumers placing the responsibility squarely on the advertisiers and the FTC isn’t messing around.
• Online Fraud — Association of National Advertisers states that ad fraud will cost $7.2 billion in 2016, up 14% over 2015 and projected to increase to over $19 billion in 2018, reaching $44 billion by 2022. Wall Street Journal said “One-third of Traffic is Bogus, March 2014,” an Oxford BioChronometrics, January 2015 study showed when using the advertising platforms of Google, Yahoo, LinkedIn and Facebook, that between 88% and 98% of all ad-clicks were by a bot of some kind (see page 6), and Fortune Magazine, July 1, 2015, said “There’s a ticking time bomb inside the online ad market.” A Google search for “online ad fraud 2017″ — highlights the depth and breadth of fraud — it’s literally everywhere.
• Programmatic Media Buying — The problem with programmatic is obvious — “technological complexity” — you are depending on one machine to coordinate with another machine to target and buy ads on inventory you can’t see, at speeds beyond human interaction and the only verification that all this has actually happened according to your original specifications, is from yet another machine. And it’s all good because, of course there’s no fraud, all the ads are viewable, and your brand is perfectly safe because the people controlling these machines are honest, always have the marketer’s best interests at heart and would never dream of charging for ads that were never viewed by humans — because, well because — all these people are just too darn honest to lie, take kickbacks or exaggerate the results or — not.
• Social Media — Social Networks have become nothing more than private “enclosures” on the Web where companies need to pay to promote themselves just like in any other type of media.(Massimo Moruzzi, author of What Happened To Advertising? What Would Gossage Do?) Brands are using social media more than ever and consumers are ignoring them more than ever — “engagement is falling, despite increased activity by brands.” Facebook has done multiple bait and switches in pursuit of it’s own goals. (Diaspora, Folkdirect, Ello, Wickr all represent a growing privacy backlash against FB).
• Targeted Advertising — is creepy. Most users are NOT okay with targeted advertising. And despite what targeted advertising proponents claim about targeted ads getting more relevant — ad blocker usage is growing at an ever greater pace and Apple included “content blocking” in its iOS 9 mobile operating system for iPhones and iPads on a system level as opposed to the browser level. In 2016, the “growing wave of resistance” to marketers tracking consumers has led consumer groups to ask the FCC to curb targeted ads.
• Video Ads — All formats are interruptive and while there are pros and cons listed for all types — the ad is interrupting what the user is doing — which means that you aren’t measuring levels of engagement — you are measuring levels of annoyance — if the video has actually been viewed at all. Although video advertising has been touted as being the best performing (here’s a study that claims that online video advertising is as effective or more effective than television advertising — naturally the study is from a company that sells online video advertising), it also turns out that a totally blank 4 minute video generated over 100,000 views and the average viewer watched more than half of the blank video!
In summary — there’s a nearly infinite supply of impressions available with a nearly zero value.
The Solution — Demand-Marketing(DM)
All of the above suffer from the same fraud, viewability, and transparency problems — but most of all they provide something consumers DON’T want or need — ads that interrupt whatever consumers are doing.
In contrast, Demand-Marketing(DM) simply gives consumers EXACTLY the information they want, EXACTLY when they want it, from an independent third-party they believe and remember, across all market segments and provide marketers with the one thing impressions alone cannot deliver — credibility.
Demand-Marketing(DM) enables marketers to create the single, most powerful, high-value consumer information platform — without creating yet another predatory media, so marketers control their own destinies.
