Friday, June 1, 2012

Advertising: Influencer or Scam

I came across this post the other day on Pando Daily, Advertising is Hated — and Failing, by Philip Bump. Here's how he opens:
People hate ads, with two exceptions: A) Sometimes one particular ad campaign will strike the public fancy, or B) Sometimes people happen to be in the ad business and, thus, are paid to like ads.
As professional marketers, we often get lumped into group b. Love it or not, some aspect of the advertising industry probably pays our salary, feeds us, and keeps us warm at night. Advertising is the superpower-creator that transformed Google into GOOG, and it's often looked to as the hopeful savior for next generation internet functionality -- we all just need a little radioactive spider or an intense dose of gamma radiation and we would also be kicking ass and taking names -- or at least, that's the theory.

Advertising is also the last lifeboat on the sinking ship of business model viability. It's the, 'we can't figure out a way to convince people to pay for this' approach. Take Twitter as an example. Millions of users around the world, it's been an instrumental communication tool in many recent global events. But they struggle with how to make money. And they have to make money because 'public good' became obsolete sometime after the creation of the first national parks. So they turn to ads.

Quoting again from the Pando post:
In general, people hate ads so much that they’ve made ad avoidance an art. A tool that facilitates skipping ads is now part of a standard cable sign-up package. There is software that removes ads from webpages. Ads are used as a punishment, such as in the case of Spotify and Pandora, which will intersperse their music offerings with ads unless you pay them not to. Their ads might as well be cobbled together like ransom notes out of various typefaces from the newspaper.
Why Ads Don't Work
Before Google Adwords, all advertising was the same. Essentially, it was a interrupt of your existing attention thread with the hope of drawing your focus into a thread for a period of time. Most modern advertising still revolves around this interrupt model. But people hate the interrupt. The interrupt is an intrusion, an invasion, and seldom a value add.

Adwords is an entirely different model. With Adwords you are engaged in a search transaction and the ads provide a supplement to the results. Theoretically, they are paid for and placed by businesses with some expertise in the content area, so your chances of landing on useful content are increased. And because Google used a content relevancy calculation to prevent spam from surviving in Adwords, you weren't usually assaulted by irrelevant content. Instead, it was a potential shortcut to content that you were searching for in the first place. At the same time, whether it's because of the way that they've changed their layout or because people are more selective about what they click, I've noticed that my Adwords campaigns don't produce at the level they did five or six years ago.

Modern advertising has significantly improved its content relevancy optimization methods. Platforms like Facebook know so much more about you that it's possible to deliver very targeted ads. But the real question for online advertising is not whether you can display them, but what do they do for the user.

People often want to look to print media for guidance, but display ads in print media can provide a visual break from text. Imagine giving someone who normally reads People Magazine a copy of a scientific journal -- they would be so bored, they probably wouldn't do more than flip through a few pages.

And as for ads in video, most of us that have grown up with broadcast television have an entirely different relationship with commercials. With broadcast television, advertising also functions as a brief intermission break -- run to the bathroom or to the refrigerator. It's a pause button in the broadcast of the live moment. These days, broadcasters have added so many advertising breaks that most broadcast television is unwatchable. And when you can download or stream the video -- and use the pause button at your discretion -- who needs the forced commercial breaks?

The Times They Are A'Changin
Consider General Motors recent move to abandon advertising on Facebook. In case you missed that story, here are some different posts that I found with some connect-the-dots elements in them.
You can come away with a number of different perspectives on why they might have dropped the program. But however you look at it, their programs clearly weren't delivering enough ROI to make continuing a no-brainer.

In the early days of Adwords, Google's content network looked like a great deal for businesses. Here was an opportunity to do low-cost brand-based advertising in content relevant media. Unfortunately, it was also a big driver for the growth of content mills and click fraud. Put a different way, if you set up algorithm parameters where anyone can publish and get paid for ads, somebody else will set up a system to try and plunder that payment system. Put in a more web-modern way, as traditional media and publishing models were disrupted, we all learned that while it was possible to create an algorithm for relevant content, not all content is equal. In the end, what we also learned is that, in a B2B environment, content network advertising is a sucker's bet.

Ad Networks Optimize the Appearance of ROI
Perhaps the best example of of gaming the system comes from some old Techcrunch posts (looking back through my Blogger drafts, I'd written a long post about this, but I never published it). This post, How To Spam Facebook Like A Pro, details some of the ways that ad networks can manipulate the publishing system. It's a great read.

Big Data is a powerful advertising tool. For all of those things that Facebook knows about you, you can probably bet that they have a pool of users who are more likely to click on ads. If you wanted to serve up some hot juicy click-through numbers, it's a fair bet that you could run an optimized algorithm that's more likely to get your clicks -- even if it's just grandma who double-clicks on anything that moves. So if Facebook, the company that knows so much about you and your habits, can't convince GM that their ads work, what does that say for the little pop-up ad that screws up the interface on your phone and the company that's paying for that space?

The revolution is nigh. Sooner or later, the 'advertising' bubble will burst and everyone that has pinned their hopes on the economy of you-and-I-clicking-on-that-thing-that-we-really-weren't-looking-for-but-was-in-the-way-of-what-we-were-trying-to-do will be on the front-line of the collapse. It won't be a happy day. And worse, it probably also means that many of the services that you count on, that you know and love, will go away. All of their revenue (and any prospective funding) will dry up in the shifting winds of 'viability' fashion.

Or perhaps the rest of the world will evolve to match the ad-driven business model... your view of Yosemite will begin after the following 3 second video.

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