 The average response rate for junk mail is 1.38%.
The average click-through rate for marketing email is 6.64%
The average open rate for a thirty-second television commercial is…oh, right, we don’t measure TV spots that way. Yet.
But that’s precisely how we assign value to ads on humankinds’ most immersive and engaging medium to date.
The average click-through rate on banner ads is 0.2%. About seven times worse than junk mail.
What a disgrace. And I’m not talking about the click-through rate.
The Internet can deliver a brand experience that makes TV feel like a manicure in a massage parlor. And, yet, Internet advertising sinks to the lowest-possible performance denominator.
It’s a story made for TV. Literally. The TV guys couldn’t have scripted a better, more self-serving misuse of the technology that should be killing them.
The problem, for brands at least, traces back to the roots of the Internet. Commercially-speaking, it was an unsponsored medium. The Defense department funded the Internet’s early days. No soap selling there.
At first, online hobbyists donated what content their geek-club friends could see. Ad-free from the start, a growing audience breathed in ever more news and videos like so much air from Mother Earth. No ads in air. No ads on the Internet.
The Internet should have commercialized properly as audiences grew. Surely the VCs thought as much while funding the bejesus out of every imaginable start-up in the late ‘90s.
Instead, thousands more websites emerged to feed a growing audience with ever more content, tools, applications, games. Valuable things. The things you’d expect to pay for. Except you and I didn’t pay a nickel. The VCs paid for it. Waiting, surely, for those sites to actually make some money off of the people visiting.
Didn’t happen. Instead: lots of unemployed dotcom-ers and legions more hooked on free content.
By the time broke and dying publishers figured out they could make real money from their millions of site visitors, the damage was done. The interruption-free Content Entitlement Act had been adopted by Internet nation.
And it was about to be compounded.
The basic consumer line was this: you make me watch/experience/deal with an ad and I’ll take both eyeballs elsewhere.
Publishers blinked. They chose audience over money. Instead of creating ad units that people would be forced to actually see/use/engage with (also known as the kind of ads brands would pay good money for), they tucked a few more invisible banners into more and more pages.
They’ve been trying ever since to sneak brands back onto the screen in a meaningful way, and get them to pay more than what current banner ads are worth, which is basically nothing in far too many cases.
Meanwhile, Google happened. Suddenly all online advertising (or just plain all advertising?) can and should be measured for effectiveness. Immediate effectiveness.
And, not that you’d ever accuse banner ads of contributing much to longer-term measurements anyway, but it’s a mute point in Clickopolis.
If website publishers DID actually force visitors to see/use/engage with truly interactive ad experiences, it’d take about 2 days for this conversation to happen:
Brand manager: What’s the click through rate on that new Yahoo ad unit?
Deputy assistant brand manager: .1%
Brand manager: Pull it.
And, yet, with a 0.0% click through rate on that same brand manager’s TV campaign, the commercials keep rolling, $million after $million.
As we know, they don’t measure clicks on TV ads. They measure sales and have been since TV was born 70 years ago. Recall, TV was initially sponsored by soap, not the Department of Defense.
And why do they measure TV ads by sales? Because TV ads actually influence the way we think and feel, which, it turns out, has a lot to do with what we buy.
The Internet could take this power of persuasion to the next level. It offers everything TV has, plus entirely new dimensions of experience, connectedness and interaction.
But to make it work we’ll have to interrupt people’s online experience and look beyond click-through rates for measurement.
Meanwhile, marketers should spend more of that banner money on spam and junk mail. It works better.
By now you know Facebook filed yesterday to go public. I learned about it on Twitter.
Shortly thereafter, Digiday Editor-In-Chief Brian Morrissey astutely posted five initial thoughts about Facebook advertising.
He got me thinking: Facebook sees advertising as, basically, an “afterthought,” and, yet, they did $3.15 billion in advertising last year.
Pity the rest of us who spend every waking moment thinking of little but advertising and would celebrate, and retire on, the rounding error there.
Three point one billion dollars.
Do you know what it costs, advertising-wise, to get, say, 80% of America to know a new brand? You do? We’ve been trying to figure that out for decades. But, let’s say $100 million is a safe bet. OK, let’s say $200 million is a sure thing.
$200 million. Or, put another way, $.2 billion. As in, the bit that’s to the right of the decimal point on Facebook’s ad number. Like, the part you’d just drop if you were in a hurry. So, even though Facebook takes a page from the “Good to Great” model and notes they have but one measly percent of all the ad money spent on every type of advertising imaginable ON EARTH, trust me, $3.15 billion is a big advertising number.
Speaking of Facebook ads, they’re puny, easy to ignore and not exactly setting the world on fire performance-wise (Adweek Report: Facebook Ad Performance Is Abysmal, Jan 31, 2011). Some folks still don’t know Facebook even has ads. My kids know about them because they click on them by mistake.
Pretty much what you’d expect, really, from an afterthought.
Can you remember a Facebook ad? I can. It’s for a pair of pants that’s supposed to make a man’s butt look better. I think it’s for a brand called Bonobos, or something like that. I’ve never bought a pair, but I’ve seen the ad a lot.
Outside of certain CIA budgets, advertising on Facebook may be the quietest $3.15 billion ever spent.
So, to me, the fascinating question is this: why did advertisers spend $3.15 billion on Facebook ads last year?
I think the answer is “irrational exuberance” in Internet adland.
Social media is all the rage. Everyone’s on Facebook. Brands want to be “Liked” by lots of people. And, when you advertise on Facebook, not only can you mirco-target your “afterthoughts” to microscopically-precise audience segments, but you can also track in glorious detail the effect of your little ads, complete with charts, graphs, colors, percentage changes and conversion ratios. And there is practically no barrier to entry. All you need’s a credit card and fifty bucks or so to get started.
It’s really quite fun to see those little ads actually grow those numbers week after week. “And here you can see the number of people who ‘Liked’ us grew another 2.7% this month.” Very gratifying, really, for the brand folks who’ve always had to sing and dance a little when the time came for demonstrating the latest campaign’s success.
Oh, but, there is one thing that very clean & simple, eternally-heading-in-the-right-direction Facebook ad dashboard doesn’t show: how much more (or less) soap you sold last month.
Hey, as long as my boss is cool with that, so am I.
Alas, the lure of riding a wave with eternal growth that’s socially encouraged and cheap and easy to invest in is deceiving marketers about the real market value of what they’re buying.
If you bought a house in 2006, you know exactly what I’m talking about.
It’s Super Bowl time. The ad community is lathering up for the “Oscars of the ad business.”
I’m setting my sights pretty low.
One person’s view, but Super Bowl ads lately have underwhelmed. I’m trying to remember one now. Oh yes, GoDaddy. Well, I don’t remember the ad, exactly. I do know what GoDaddy does, though, which puts me in the minority. Since they’ve been peddling soft porn Super Bowl spots I’ve purchased ten or so domain names. From Network Solutions.
Wait, I’m being unfair. It’s not really the Super Bowl. It’s advertising in general.
Talk to me about the great ad campaigns of all time.
What, the crowd-sourced, do-it-yourself snack work didn’t make the list? Nothing with chimps? How about the new light beer campaign launched on the Big Game last year (They did launch one, didn’t they? Don’t they always?) Wait, pop-culture-driven colas always have good work. Oh, right, they did a fundraiser instead. Or, maybe that was the year before.
Why are the all the truly great ad campaigns things of the past?
Because it’s too hard to measure their success. Here, have a look –
CEO: “So, that ad campaign you ran last year, how’d it do?”
CMO: “Great!”
CEO: “Really? How do you know?”
CMO: “Everyone loves it. Ad recall and brand image numbers were through the roof. We shattered our purchase intent norms. And sales rose 17%.”
CEO: “How do you know the sales increase came from the advertising?”
CMO: “Well, you can’t know for absolutely certain, but when all those other numbers go up and then sales go up, we feel pretty good that they’re related.”
CEO: “You feel? The guys from Google don’t feel anything. They know. They always know for an absolute fact how many people clicked and then purchased.”
CMO: “Yes, well, people can’t click on our TV ads to buy yogurt. At least not yet. And, even if they could, I’m not sure they would.”
CEO: “I need better than ‘I feel.’ The board could give a crap about how you ‘feel.’ I need to see the ROI on that campaign. We spent $40 million on it. How much more yogurt did we sell because of it?”
CMO: “It’s not like online advertising. We can’t just see some kind of definitive conversion ratio.”
CEO: “You’re fired.”
Trust me, the next CMO doesn’t try to make anyone “feel” anything. That’s why you can watch 100 commercials this week and not “feel” like buying a single product advertised.
What a bummer!
Meanwhile, rest assured people are getting promoted out of cubicles everywhere counting all those website hits and Facebook likes and Twitter mentions, scrutinizing conversion ratios and pay-per-click trends, and analyzing which mobile platforms yielded higher page view numbers.
I hope it’s a good game at least.
You may have heard lately that online video sites like YouTube and Hulu are launching more original content.
Hard to resist, from their perspective.
Imagine having hundreds of millions of people come to your site every month to watch somebody else’s content. In YouTube’s case, that somebody else is you and your pet videos. On Hulu it’s re-runs of real programming.
Anyway, where were we…oh, yes, hundreds of millions of people. And the ad revenue that comes with them.
You know what this reminds me of?
Grocery stores.
All those people, all that money going to Kraft, General Mills and Coca-Cola. I’d like to have been the guy pitching the supermarket CEO with bar charts and this idea: “Let’s just sell our own soup and paper towels and keep a whole lot more of the money ourselves!”
If Hulu makes the shows that people watch on their site, they can keep all the ad revenue instead of paying the folks who own the reruns they’re airing now.
And, if the show’s any good, they can draw more people to their site since it probably won’t be available elsewhere. More people = more ad revenue. The irony is that if the show’s really, really good, it’ll probably end up on TV.
If being the operative word.
Quick, tell me your favorite original content, online-only show.
We’ve had, what, five years of decent enough bandwidth during which someone could have created a legitimate online national programming hit. I’m talking Glee, not College Humor (look it up). Why hasn’t it happened? It’s not for lack of audience. Everyone is online.
Here’s why: because it’s practically impossible to create a hit show. Just ask NBC, they’ve been trying for years. And, by try, I mean they pay boatloads for the best writers, directors, producers, and actors in the world. Then, they promote the hell out of every new show. And still, no Friends replacement.
Personally, though, I’m glad the online folks are going after original content. I think it will drive us to more of an iTunes content consumption model than the ridiculous album-like equation we have currently. Today we’re forced to buy 6000 channels and a gazillion programs every month, even though we only watch about ten of them. If Hulu or NetFlix or even Yahoo or AOL can make it so I only have to pay for the programming I watch, I’m better off by at least fifty bucks a month I figure.
Tough as it’ll be to create original content with mass appeal and audience online, one thing’s for sure: it’ll never happen if they don’t try.
Hey, once upon a time HBO just showed re-runs, too.
 I love the song Strawberry Letter 23 by the Brothers Johnson but I had to buy the whole album to get it Maybe the answer to the agency problem isn’t an agency. At least, not in the way we’ve always thought about them.
Agencies today are like albums in an iTunes world. But the talent and technology does exist to change the paradigm so clients get what they want more efficiently and cost-effectively.
On an album there were usually a few songs you really liked. But to hear them, you had to buy the whole album. You bought a lot of tracks you didn’t want so you could hear your favorites.
Now, of course, you just buy the songs you want.
And, you pay only ninety-nine cents for them, not nine bucks for the album. You get more of what you want for less. The record business, on the other hand, gets beaten to death.
Clients today need and want more songs but are kind of stuck buying albums.
Imagine being a client today. You need: tv, print, radio, out-of-home, online banners, paid search, organic search, mobile apps, mobile banners, mobile search, mobile text, a Facebook page, Twitter feeds, and a LinkedIn profile, not to mention qr codes, branded content, in-game advertising, product placement and, now that your MySpace page doesn’t matter and your boss gave up on a viral YouTube video, you also need a location-based check-in program and, for now at least, a Groupon deal.
As a client, where do you go for all that?
To agencies. And not just one or two of them.
And what, exactly do you get at each agency? Well, there’s the receptionist, the CEO, the CFO, the bookkeeper, the lawyer, the CMO, the account guy, the senior account guy, the intern, the strategist, the project manager, the planner, the comms channel guy, and, thankfully, some creatives , developers and designers who come up with ideas and make something for you to use.
You want a TV ad? Buy the ad agency album. Mobile app? That’s on a different album. How about search? Different album.
That’s a lot of albums. A lot of receptionists and bookkeepers and account guys and senior account guys and CEOs and CMOs and strategists you have to buy just to get the actual products and services you want.
As a client, wouldn’t it be nice to go to one place and get everything you want from one place?
Wait, I think I hear [fill in name of ad agency holding company CEO]: “We have everything you need in our portfolio of two thousand three hundred and forty-four companies, and we will provide you with a fully-integrated team of world-class talent in every possible discipline led by a single point of contact who can manage these resources even though they reside in sixteen different profit centers and four countries.”
No need to waste space here detailing the hideousness of this fantasy. Google “Enfatico.”
The people who actually produce the things that clients need are like songs. And, for the past 100 years, these people have worked mostly at agencies. They’ve been packaged in agency vinyl.
Right now, there is no iTunes for marketing and advertising solutions.
But, there could be. All you need are talented people un-tethered from agency anchors, and the right way to connect them with client needs and projects.
As for the former – the independent talent? That inventory’s growing every day. If you’re great at what you do and can make a good living enriching yourself and your own life rather than adding another million or two to [fill in name of ad agency holding company CEO again], then guess what?
The second part — creating the right way to connect these folks with client needs and projects — is not as fully formed.
Emphasis on the right way.
The genius of iTunes wasn’t the uncoupling of songs from albums and making them available as singles on an mp3 player. Kazaa and a host of others beat Apple to that by a few years. They also made us part with the better part of too many nights and some portion of our hard drives, thanks to a brutal user experience and rampant viruses.
Apple made it clean, easy and legal. They secured the delivery.
For the new agency model (environment? operating system?) to work, clients will need their form of secure delivery, too.
Specifically, they will need strategic, reliable and cohesive teams.
Maybe the agency of the future will be more like a producer or talent manager who provides clients with just the right, and right amount of, talent, and guarantees effective delivery. They’ll do this by dealing with a lot of contracts and admin and coordination you’ll never see – just like iTunes gets you the songs you want, never you mind how they make it happen.
Impossible? When was the last time you bought a CD…
We are all media now.
Yes, thanks to social media, each of us distributes content to an audience. Or, more precisely, we distribute to an audience quickly and easily, en masse, at all times.
To be fair, we’ve always had audiences. It just took awhile, relatively speaking, to write them letters, or call them, or, back in the ‘90s, email them.
Now, I tweet something, you re-tweet it to your 75 or 7500 or 75,000 followers and, voila, distribution! Ditto for posting on Facebook.
Professionally, this is great news. Since you’re media now, companies want to find you, reach you and get you to pass along their messages to your audience.
My CFO likes this for a couple reasons.
First, there are A LOT of you. That’s always good.
And, second, you’re a lot easier to work with than real reporters at what we used to call “the media.”
I’m over-generalizing here, but, basically: you don’t fact check, you don’t mind that there’s clearly an angle, you don’t typically offer an alternative view, and you don’t have to ration space like those poor folks on the news or at the paper. That makes you a little, um, less discriminating.
Alas, you know that too-good-to-be-true feeling?
Like when the Redskins win their first couple games. Or your mobile ad gets a 1.64% click-through rate (trust me, it’s a big number in the world of banner ad click-through rates).
That’s the sense I have about working the global public on behalf of companies, brands, politicians, movies and whatnot. And for the same reason.
It’s early.
And it’s too easy to publish. We don’t have to think and we don’t have to work. We see something, we click a few buttons, we’ve distributed. It’s like finding a new voice.
My two-year-old just found his. Enough said?
Honestly, I don’t know how much noise we can handle before we turn on the Internet’s version of noise-canceling earphones.
For now, I’m reminded of a Talking Heads’ line in “Psycho Killer:” “You’re talking a lot, but you’re not saying anything.”
That came out in 1977. Before social media. Before the Internet. Before “reply all.”
To what were they referring? The 6 o’clock news?
Maybe the signal-to-noise imbalance is as old a concept as sound itself. Maybe it’s just human nature to communicate to the extent possible, like gas fills space.
Brace yourself. Social media is a big space.
In which case, John Lennon may be our best guide. He wrote “Julia” in 1968, borrowing from a 1926 Khalil Gibran line. In it, he confesses, “Half of what I say is meaningless.”
You still there?
There’s been a lot said lately about what Yahoo! has done wrong. Here’s something they’re doing right!
Yesterday, they introduced what they’re calling the Yahoo Living Ad unit for tablets. Finally, someone is creating ad units that not only take advantage of what digital has to offer (rich, storytelling experiences AND interactivity), but that people will actually see. The ad only comes in two sizes: full page and 1/3-page.
Definitely check out the demo here.
Yahoo! had this to say about the new ad units: “Living Ads combine the interactivity of digital with the emotional engagement of broadcast, inviting consumers into a uniquely immersive brand experience. “
Under the heading Deeper Branding Opportunities they say the ads “create a highly tactile experience. The ads use video to increase engagement, as well as capitalize on the motion-sensing capabilities of tablets. The creative interacts with the consumer, making the ads (HERE’S MY FAVORITE PART –>) virtually impossible to ignore.”
And hats off to the talented folks over at Alexx Henry Studios for bringing this to life. It won’t be long before the ads are better than the content on which they are placed.
Way to go Yahoo! I know you’re in a bit of survival mode right now, so here’s to hoping the Living Ad is very aptly named.
I love coffee. I drink it everyday.
I especially like strong, freshly-brewed coffee. I seek it out and pay extra for it. I have a favorite kind, but I generally consume a mix over the course of a week. A different brand here, an espresso there, a cappucino after dinner.
But flavored coffee does nothing for me, especially hazelnut. I never buy it.
Strange, isn’t it? Just one variation on the theme and I go from active in the category to absent.
Now, let’s talk about banner advertising. Again.
Imagine you sell hazelnut coffee, and that most of the world shares my disdain for it. What do you do? You lower the price, of course. And still you have boatloads of unsold beans.
Well, you think, there are SO MANY places on earth to sell hazelnut coffee, I just need to make it more available! And so, you put hazelnut coffee stands and hazelnut espresso machines and special 3-D holographic augmented reality hazelnut coffee experiences on every empty street corner you can find. In fact, you litter the world with hazelnut coffee. With all this new supply, hazelnut coffee prices drop even more. Rents are not met on many corners. Some return to selling shish kebabs.
And then, Eureka! An algorithm! It tells you exactly what time of day, which street corner and which sales pitch will most likely yield a sale. You have found marketing nirvana: the right message to the right person at the right time. This being math, an entire industry grows to predict the likelihood of purchase and to negotiate the best rates on all those street corners.
And, at the end of it all, you have even more unsold hazelnut beans getting sold for even less money. How can this possibly be?
Because people don’t like hazelnut coffee.
It doesn’t work for them.
That’s how brands feel about banner advertising, and rightly so.
I was at another data conference recently. Some very smart and even some quite wealthy people spent a couple hours going over a chart like this one to explain how banner advertising is bought and sold today (source: Progress Partners):
Wow! Does it have to be this complicated? Well, yes and no. While the online ad industry (not including search) continues to push a basic product (banner ads) that customers (brands) don’t want, then, yes. It actually is quite complicated to try to get people who don’t want what you’re selling to buy it anyway.
But do brands hate all advertising? Absolutely not.
They just hate to be ignored.
And that’s exactly what they get with today’s banner ads. Like hazelnut does for me and coffee, banner ads offer brands a variation on advertising they abhor.
You see, brands can’t stomach invisibility. Unfortunately, for the banner industry at least, invisibility is their signature flavor.
Tell me again about your favorite banner ad? Or, about ANY banner ad? Take invisibility out of online advertising and brands will flock to them.
In other words, lose the hazelnut. That will simplify things greatly.
College. Mushrooms. Vegas.
Think you know where this story goes? Hang on.
Two guys at Rensselaer Polytech Institute get seriously hooked on mushrooms. They just can’t stop thinking about how fungal mycelium bonds wood chips together. Inspired, they work on new ways to use mycelium as a resin.
Four million dollars in grants later, Eben and Gavin are building their second manufacturing plant in the northeast and planning a third in Texas so their mushroom-based, foam-replacing packing material doesn’t have to ride the train from NY to one of their big customers, as in Dell. Steelcase buys their stuff by the trainload, too.
Did I say manufacturing plant? Looked more like a bakery to me, seeing Gavin’s prez yesterday in Vegas (he was a keynote speaker at the National 4R Conference sponsored by the US Chamber of Commerce – @chamberbclc). Racks and racks of pans (think L-shaped bundt cakes).
Five days on the rack, no sun, hardly any energy at all, and, presto! No more office furniture dinged in shipping and no more foam packing material.
Check them out: ecovativedesign.com (@ecovative) It’s a great story.
Two things really struck me, beyond the sheer awe that mushrooms can do this and that two guys figured it out: 1) the role of public money in getting this company off the ground (or, from under the bed, as Gavin tells us — the mushrooms needed darkness and they didn’t have a lab); and 2) the role of nature as manufacturer.
I have a bias against government subsidies. Using taxpayer money to artificially create demand and markets strikes me as, well, unsustainable.
But this mushrooming business altered my position, if not my reality. Yes, the EPA gave these guys some money. As in, you and I gave these guys some money. Would Kleiner Perkins have funded them? Maybe, though the social media, casual-gaming play isn’t jumping out at me here (Mushroomville?).
I didn’t ask Gavin if he would have taken private equity to get started. I didn’t get that vibe from him. He used the word “bootstrap” a lot.
Are we better off now that Ecovative Design exists? Environmentally, I’d say yes. This stuff practically makes itself, breaks down in soil in 30 days, and replaces a fossil fuel-derived staple. Since we pay the EPA to help make us better off, environmentally, that’s my bridge to OK for using public money to help these guys get off the ground. It’s a new bridge and for now it hangs on the difference between stimulating supply and creating demand.
Now, if there’s something seemingly unnatural about how Ecovative Design got its early financing, there’s little but nature turning their mushrooms into dent-free desks and servers.
Here’s the recipe, lifted from their site: “We actually grow EcoCradle™ using mycelium, a fungal network of threadlike cells. This mycelium grows around agricultural by-products like buckwheat husks, oat hulls, or cotton burrs to any shape we make. In 5 – 7 days, in the dark, with no watering, and no petrochemical inputs, the mycelium envelops the by-products, binding them into a strong and beautiful packaging part.”
Strong and beautiful, indeed. Hey! Turn out the lights and shut off the water! Rare commands in the product manufacturing business.
Smells like a good balance sheet coming off those racks, too.
Every March I teach five 30-minute classes to 8th graders during career day for the Fresh Air Fund in NYC. I always start the same way: tell me about your favorite ads. Hands shoot up. This year:
“Geico!” (sexy grandpa) “Doritos!” (finger licking good) “Sun Drop!” (drop it like it’s hot).
Then I ask what they do more: watch TV or go online. They do plenty of both, but online wins.
And where do you spend most of your time online? Used to be two or three sites. It’s all Facebook now.
So, I ask, tell me about your favorite ads on Facebook.
Have you ever asked a newly-minted teenager about yen-to-dollar ratios? Because then you’d know the look I’m talking about.
Then, just to drive it home, I ask how much it costs them to spend all that time on Facebook. This is in their wheelhouse. “Nothin’.”
And, finally, for the true test, I ask: Why is it you spend so much time online and you have no trouble remembering all these TV ads, but you can’t remember a single ad on Facebook?
This girl looked at me like I’d just asked for the time of day and replied just as plainly: “Because on TV they MAKE you watch the ads and on Facebook they’re just these little square boxes off to the side that are so easy to ignore.”
“Liposuction!” It turns out one kid did recall a Facebook ad after all. He couldn’t remember the brand.
That’s pretty much it in a nutshell.
But, just to belabor the point, here’s eMarketer’s CEO saying it in a March 29, 2011 report:
“TV advertising is on course to return to prerecession levels,” said eMarketer CEO and co-founder Geoff Ramsey. “While the growth of online advertising has been robust, it hasn’t stopped brand advertisers from keeping the bulk of their budgets flowing through TV sets.”
And now we know why.
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