P&G and WPP: How shit hit the fan in digital marketing
mumbrella.com.au
mumbrella.com.au
1)Agencies charge on a % of total media spend, and are thus incentivized to spend more.
2)Advertisers net benefit from expected lifetime value and revenue generation, but are often reticent to share this type of information to an agency.
Agencies are commonly unable to get access to business-level health metrics such as churn, RPU, LTV, and thus optimize to top of the funnel metrics that often do not correlate with attributable lift but do correlate with showing the value of increased levels of spend. Such metrics include click-through rate, viewability, brand awareness and safety, fraud mitigation, etc.
This, combined with the improved ease of use for major digital platforms (I know quite a few startup CEOs who manage all of their PPC/Facebook ad spend), is why the agency model has started to fail. And that is a good thing.
The less intermediaries that touch an advertising campaign, the less likely it is that we as consumers will see an irrelevant ad.
Digital ads had the most wow effect at the time of google's text ads and Internet yet not being a general demographics' thing.
Back then, they were able to show numbers, but not now.
First generation internet users were mostly highly technically literate, high income professionals. Now, the user ratio has reversed.
You can argue that putting efforts to find a needle in a haystack was still paying off when the majority of needles were of incomparably higher marginal value than they are now: consumer goods clicks, say, are lower value than commercial equipment sales clicks, yet you still have to put an equivalent or greater effort to datamine somebody to make them buy an accursed face lotion even if the number of face lotion buyers is 1000 times bigger.
This is a tragedy of the Internet ad industry. There is a finite amount of eyeballs, and the amount of companies with a substantial money wanting to sell you a face lotion will always eclipse the amount of companies who market unique, relevant, specialty products one may actually be actively looking to buy.
>unique, relevant, specialty products one may actually be actively looking to buy
This is because the number of people who buy normal lotion is 1000x the number of people who buy unique specialty lotion. Why would the advertising be different than the market?
>First generation internet users were mostly highly technically literate, high income professionals. Now, the user ratio has reversed.
The internet reached the masses - how is that a negative for advertisers? They have more people to advertise to.
>yet you still have to put an equivalent or greater effort to datamine
This isn't true. For lotion you buy lotion related keywords, for commercial equipment you need in-depth research about those products, use cases, industry terms, and the queries people use.
No, I can't imagine anybody randomly buying a random face lotion online, and I say that as somebody who did a stint in adtech for a few years with access to "crown jewels" of a major advertising brokerage conglomerate. People barely click on FMGC ads even if being force fed, I would've shown you the digits if not for NDA. Their purpose is impressions, even if they are not explicitly billed on PPM basis.
The lion share of ad inventory of any tier 1 ad vendor are for "stuff people buy in Walmarts," and yes the total revenue from FMCG ads is mind boggling and defies any attempt at rational understanding.
Even if the sole point of an ad is to keep the product on top of somebody's mind, it will be of very very little payoff to an advertiser. Though, one can reason that a gigantic big fat FMCG co. bathing in cash can still easily afford doing so even if is patently stupid. This is because even if their bang for buck is approaching zero, it is still better than none for them.
>This isn't true. For lotion you buy lotion related keywords, for commercial equipment you need in-depth research about those products, use cases, industry terms, and the queries people use.
I counter your argument. In both cases, the adtech efforts needed to sustain a barely functioning campaign eclipse all other hurdles. Extreme targeting is the key - even if it sucks, it sucks less than investment in almost anything else including £1k per hour big name marketing consultants.
How it looks on technical side: huge effort at industrial scale purchasing of "cubes" - huge databases of cookies with their statistical and fuzzy logic data from thousands of companies, including the black hat scene. Other than cookies, analogous data come from email list vendors, IMEI/phone number db vendors, vendors of stolen contact lists, search histories, GPS data and etc. All of this is barely enough to for a sustained campaign for F500 FMCG.
Was this back when Google included the referrer URL with each needle?
It has little to do with having a large amount of money to spend on ads and more the level of severity of the problem your product solves for the 'eyeball.'
Humans have some needs that are greater than others, and ad dollars spent at alleviating pain or providing for those needs will always get at the most eyeballs. Entire industries - born online - have developed around capitalizing on solving for these needs.
I need money - Predatory loans and credit card offers. I need to be skinnier - Nutraceuticals (Dr. Oz), weight loss, vitamin crazes. I need to be beautiful - Skin care, facial lotions. I need to be less lonely - Online dating, pornography.
The list goes on. The point is - there are more people looking to be skinny, beautiful, rich, and married with children than there are people looking for 'commercial equipment sales.'For now, and until targeting gets smarter and consumers opt to share more data about themselves, those products will win the majority of ad clicks.
We'll get there. (eye roll) Maybe decentralization is the way? :). I'd love to give the Google/FB duopoly a kick in their 'walled garden.'
I would just add that, agencies have clients that are nice to have in their portfolio but they give more work than they invest.
So you have a business model built on % of investment - something that worked very well for massive TV Campaigns budgets (plus the rappel you'd get from TV Networks) - applied to time consuming campaigns that required a lot of FTAs.
I just don't agree much on the "ease of use" - the digital media landscape is quite complex.
A proper digital media campaign (part of a media campaign) has media managers, digital media managers, PPC Managers (let's say they manage FB and Google advertising for the sake of simplicity), AdOps, and Programmatic Teams - you can add on top of this SEO teams, Social Media teams, etc.
Yet advertisers don't want to move one inch on this business model - let me tell you i've seen them criticizing how many hours a proper Search campaign takes, with no knowledge of the matter. Some, like you've said, are bringing in people for digital media management, campaign management ... hell some are building their own PBUs!
I don't think it will work. It's not something new: it was done in the past with TV, and they come to realize the cost of the know how being stuck on their end it's too expensive.
Oh and P&G, and many other advertisers are to blame here as well - the marketing/brand managers don't want cuts on their budgets, so they make reckless decisions, wasting money just to claim they invested it and will require more budget in the next fiscal year.
Media owners are also suspects, the greed made them dependent on Google and Facebook... now their brands are diluted.
Unfortunately agencies failed with the golden egg goose - attribution modeling... attempts were made but it's not something trivial.
As a consumer I don't want to see any ads, in particular I don't want to see well targeted ads because they are the ones most likely to change my behavior.
Come to think of it, they do. They show you trailers at the top of the page. I'd rather they just had a 'show me trailers' button, I would probably click that every now and then.
It's different when you want to research something, like buying a mobile phone, when you go to their channels and pull in reviews, advertisements, etc.
I think advertisement should be taught at school, so everybody can recognize when they are being pushed/nudged into feeling something. Because I think it does a whole lot of damage to society (obesity, stress, debt, etc).
I know it sounds depressing like that, but have a nice day :)
Also, ensure your marketers’ self-worth is not tied to the outcome of the campaigns they’re running; or else they will hide bad outcomes.
I regularly shut off campaigns if there’s no evident benefit of keeping them on, regardless of what the industry says. For instance, a lot of people talk about retargeting, but I have not seen any success with retargeting after trying with 5-10 clients.
I also discovered that Twitter charges you for accidental clicks on your ads even if they know they’re accidental. Also, these accidental clicks made up >90% of clicks on one campaign I ran.
It’s reassuring to see the big players come to the same realization.
A couple folks I've worked with over the years go out of their way to highlight some of the bad stuff, and use it as learning material for future work. But it's usually coupled with "hey, we're partway through this, but the numbers are looking pretty bad right now, we should probably stop this now and rethink things". That said, I've generally only been at the smaller-self-serve side of things - the ability to stop/start campaigns with 5 and 6 figure budgets is probably a different ballgame.
If agencies have no access to business metrics, isn't this burden upon the advertiser to evaluate the campaigns in terms of business metrics?
Media agencies have their own kpis of success - a campaign can have a good performance media wise, but have little to no impact on the business.
You can say: "well... blame the creative agency for their poor campaign concept!" ... you can say that... except they work with what they have: a specific brand and a product/service.
No agency controls distribution, pricing, placement, quality, customer service, and many other variables that dictate the success of a campaign.
It's easy to blame agencies because they are outside organizations. You are a pitch of way of cleaning your bad decisions as a brand or marketing manager.
The client is always right, even when the client is wrong.
If a campaign isn't working, I talk to our client about it and if I think I can fix it, I'm open about that too. It's easy to spend tens of thousands of dollars on useless ad spend optimized for the wrong things, and it's unfortunately the responsibility of the advertiser at this point to show their client what metrics actually matter, how to track them, and to give the client the ability to check in whenever they feel a need to.
This shouldn't be the case, but I think a lot of companies hire people that are technically illiterate to run marketing and they just chase eyeballs.
But how do I know these users wouldn't have bought anyway?
I bought some very expensive high heels as a treat for myself. They don't make them in my size, I bought them because they're beautiful and put them on display.
In the following weeks I received lots of advertising for those exact shoes. Not for high heels generally, not for nice frocks, and certainly not for glass display shelves, just endless adverts for the same exact pair of shoes.
Somewhere a "digital advertising executive" is telling their client that these adverts were very highly correlated with sales of the shoes. Of course, they'll disclaim, correlation isn't causation. But it is - that's their dirty secret, just the reverse of the causation pretended to. Advertise to people who are already buying the product, then say "See advertising works".
The shoes are the most blatant example because they're so noticeable (I did not spend that much on shoes which are merely a pretty red colour or covered in sparkles) but I even saw this for mundane things like a Seagate hard disk. I purchased the disk a week ago, immediately I began to receive adverts for it, and they tailed off after a few days. Every single penny spent on that advertising was wasted, I already _bought_ the hard disk. The online grocery store I sometimes use actually builds custom adverts with my exact list of groceries in it, then advertises them to me the day after I order them for delivery, again a human looking at this can see instantly that it's insane, but so long as you don't understand time's arrow (and an advertising algorithm has no a priori reason to do that) then the correlation looks really good...
I always assumed the point of this advertising approach was that it's messy, but it works. Someone who just bought shoes probably won't be buying a new pair ASAP, but there might be better odds than for any random person. Maybe they like shoes, maybe they'll return them, maybe that's their go-to gift for friends.
I genuinely hadn't thought it might just be an exercise in fudging correlation numbers to make ads look more successful than they are.
Most people seem to have a reasonable understanding of the "sales" side of the advertising business, where you are trying to get someone to buy your products. That's not what this is. This is the marketing spend, where you are trying to get people to know about your product.
This isn't your typical search engine, facebook or retargetting spend. A very large amount of this is video and/or display advertising, and the intention isn't to drive click-though. Instead it is to drive "brand awareness".
The theory here in the FMCG (fast moving consumer goods - think toothpaste or shampoo) segment where P&G plays is that a consumer needs to be familiar with a brand before they make a choice to buy it - especially if it is more expensive.
So the sequence goes:
Make people aware of brand (brand advertising: TV ads, Video ads, Stunts etc)
Get people to try brand (special offers, discounts, co-selling)
Let retailers fight for the sales between themselves (display setups in shops, retailer discounts, recommendation engines in online shopping, maybe click-through advertising)
This "brand awareness" is something which is much harder to measure (I think survey panels is the state-of-the-art still). The digital advertising industry still hasn't solved multi-touch attribution in the sales side of the business, and this is way earlier in the buying cycle.
I have to admit, I love this whole situation. Online advertising has long stopped being useful and it's becoming malignant hurting the medium in so many ways. It seems that ad networks don't bother at all to fix any of the problems from privacy to malware and whatnot. So fuck them. Let them wither and die for all I care.
With classical stuff like Liberapay, patreon and buy me a coffee and more fancy stuff like Cryptocurrencies, we should finally be able to fund our stuff differently.
Can't wait to see this one on hackernews in a few days. Is 2018 going to be the worst year yet for digital ads?
Hard to take someone seriously when they talk like that. Also it's hard to take the publication seriously when they write nonsense like that. It sounds like local car company or mattress company advertising. "These prices are so low that it will have you screaming!".
> Is 2018 going to be the worst year yet for digital ads?
Worst year yet? Digital advertising has been growing by at least double digits for the last 10 years.
It surpassed TV ad spending last year.
https://www.recode.net/2017/12/4/16733460/2017-digital-ad-sp...
Digital ad spending is going to increase. It's where the young people are.
It might dip as the corporate elite try to control social media, but for it to have the "worst year yet", digital ad spending would have to drop by 99.99% of last year's spending to get to 2000s level spending. We already surpassed that the first week of january.
Then what is? What were you referring to when you wrote "worst year yet"?
> If your agency's sales drop by 20%, it doesn't console you to know that the industry overall is much bigger than it was in 2000.
You didn't mention a particular agency. You mentioned digital ads in 2018. So that's what I responded to. Of course there are going to be winners and losers within any industry.
They're noise that might, at BEST, bias the result of a decision I was already willing to make. (IE: I know I'm going to go somewhere for lunch and MAYBE an ad makes me pick one place over another.)
Really I see ads being useful only in three categories:
* Reminding a prospective customer your store exists
* Reminding a prospective customer what you sell
* Getting a customer to crave something you can provide.
The last one is arguably amoral. Encouraging (needless or extra) consumption and trying to make someone dependent on the ad buyer for happiness. It also sounds a lot like what drug dealers do.
Even that third category, if a product was adding actual value or quality, needn't be done that often to reach effective saturation.
Literally the definition of advertising
Now maybe I'm unusual. Long ago, I did get used to an Internet without ads. And was sad when malware and ads started showing up. But given the increasing prevalence of ad blockers, I'm not that unusual.
So anyway, average view time of 1.5 sec for ads seems about right. Especially if that average includes lots of zeros.
case in point: LiveCD is a branded capitalization.
Maybe I was innately more susceptible to advertising than most. And maybe that's why I've developed such extreme defense mechanisms.
Even before the Internet, I routinely ripped ads out of magazines, before reading them. Or added sarcastic commentary to ones with article copy on the back. And I remove logos from clothing and such.
But maybe we'll see more of that. Even so, if it appears on more than one site, blocklists could be maintained. Advertorial text in sites could also be detected and blocked.
That really depends on what you are trying to sell. A SaaS? Sure. But when your job is influencing which candy bar people select in the supermarket, you stare into exactly the same informational void, until you apply the crude but tried toolkit of ad effectiveness measurements that has been developed for broadcast. The traditional answer to that kind of advertisement task has been to just use blanket media if you don't need much targeting or direct affordability. But when a sizable part of the market just does not expose themselves to broadcast anymore, that might be insufficient, no matter how much money you throw that way.
Is that necessarily true? Most supermarkets have a 'loyalty card' program which requires the shopper to provide her name, address and date of birth. The supermarket could sell all their data to Facebook, which would then have the fine-grained information needed to allow the candy-bar company to very effectively target their ads.
It might not even require a loyalty card - the shopper's credit card info or security camera picture might be enough to accurately link her to her Facebook account.
some examples:
for smallish advertisers (this is not P&G, I understand) agencies can negotiate much better terms, because agencies are buying in bulk.
and if you are interested in performance marketing with clearly measurable results, building a good internal team could be a challenge as well.
so, it's not a slam dunk.
plenty of model innovations are out there, but P&G ain't that kind of brand.
It's more than that. As a small business managing your own ads you can get your account suspended without explanation and any way of recourse just by raising some flags. But being a WPP subsidiary you get assigned an account manager that guides your team trough the process, shows up with presentations, gives early access to tools and ad formats not (yet) available to the general public and makes sure your doubts get resolved before the ad goes live. If you get flagged, they call you to help fix things.
Keep in mind WPP spent $2B on Facebook in 2017, which is 5% of Fecebooks $40B revenue that year. Similar with Google, WPP brought in ~$5B out of $110B Alphabet's revenue.
The key subject of the conference was to be the loss of trust from consumers due to the indiscriminate collection of personal data by advertising companies / channels.
The discussion wasn't around whether or not the advertising industry should curtail this data collection, or perhaps be more responsible with it's use. The discussion was about how to change the customer's perception that this data collection was a bad thing at all. I then realised how out of touch this industry was with reality. As the article stated "Reality was always there for anyone who wanted to see it. An idiot blogger I know has been writing about it for almost 10 years."
I'm admittedly anti-advertising (especially the current approaches to "digital" marketing) but I do see it's worth when done in a responsible, balanced way. This insight into the way the industry reacts to the concerns of the customers has only confirmed my previous negative opinion.
I'm not sure if cutting out these "holding companies" from the equation will result in any change from the customer's point of view. It will probably just end up with P&G hiring a bunch of WPP staffers to run their in-house operation. This may kill off a few industry middle-men, but it will probably just result in higher profits for P&G with no benefits to the consumer at all.
The big question here is, were the famous Super Bowl "Tide Ads" created by the Tide brand team, or an external consultant!?!?
Maybe P&G are emboldened to publicly speak out due to the success of that campaign?
That was when I first understood how valueless online ad sells are. In the sophisticated model we had (which filtered out bots, spam, paid for clicks, etc), P&G was in some instances paying at least (I only had our costs) $1000 CPM for views. Of course, in the data they saw, the numbers were far far lower.
Providing transparency to the marketers enables them to provide better targeting, more efficient spend, and in turn provide a better experience for their customers.
One other note pertaining to agencies. They'll continue to exist but the world where they can just blindly spend money is coming to an end. Previously they'd have a random ad buyer in the agency just go and spend the money. Those days are coming to an end and the free margin is going to instead go to reward those agencies that more effectively manage spend.
More transparency --> More insights --> More efficient spend --> Better overall experience.