October 26, 2016

Digital Data Denial

One of the great paradoxes of our industry is that the people who are constantly haranguing us with the indispensable role of data are the most active group of data deniers.

Every day there are conferences being staged, meetings being held, and presentations being made at which digital experts are standing up and intentionally misleading the attendees by glossing over or completely ignoring key data about online advertising. To wit...
These are some of the most critical data points about online advertising and they are almost never voluntarily disclosed by anyone in the online ad industry.

Instead, they use misdirection strategies to focus on tangential data that looks material to the undiscerning eye, for example...

1. Sociological data
2. Anecdotes

In the first case, they give us irrelevant sociological data about, for example, how much time people spend with social media. This may be interesting but has nothing to do with the effectiveness of social media marketing as a tactic. We're marketers, not sociologists.

In the second instance they present us with anecdotes disguised as data. We'll hear an amazing case history that is two standard deviations from the norm and is not repeatable. But they imply it is representative and that there are great lessons to be learned from it.

Having critical data is an important component of marketing decision-making. And the people who  who spend the most time yapping about it seem to be the people most likely to sidestep it.

October 24, 2016

Everyone Disgusted With Ad Industry

In a story this morning, Campaign US is reporting that morale in the U.S. ad industry is dropping faster than panties on prom night.

Here are some stats from the report:
  • In 2015, the percent of people working in advertising who rated their morale as "low" or "dangerously low" was 34%. This year it has fallen to 47%
  • This is a drop in morale of 36% in just one year
  • 63% of the people with low morale said they are actively looking for a new job.
  • By far the number one reason for low morale -- at 73% -- was "company leadership."
Couple that with these facts... 
  • The Association of National Advertisers (ANA) says that unscrupulous financial practices among agencies is "pervasive."
  • Almost 3/4 of marketers say they are dissatisfied with the state of online advertising
The only honest conclusion you can draw is that there is a depressing level of unhappiness awaiting anyone who has to deal with the contemporary advertising business.

While alarming, I'm afraid it's not surprising.

Under the "leadership" of the financial sharpies, lawyers, and accountants who now control the agency holding companies, the advertising business has become a confused and chaotic mess.

A business that valued ideas and creativity above all else is now a pig's breakfast of insufferable bullshit, dreadful jargon, stupid gimmicks, and amateur bumblers producing horrific crap.

Morale has dropped because standards have dropped. Standards have dropped because the "leaders" of our industry don't know what business they're in.

In a recent talk I said that wherever I go in the world I hear the same two things:
"Advertising isn't as effective as it once was, and advertising isn't as creative as it once was. It's hard for me to believe that these two things aren't related."
It's also hard for me to believe that the precipitous drop in morale isn't also related.

The holding company model has been a disaster for our industry. Their obsession with data and metrics is simply a misdirection strategy by bewildered awkward behemoths that can't produce good work.

We have reached such a level of effete absurdity that maintaining that the central business of ad agencies is to produce good ads is now controversial.

There is only one hope. It is for marketers to wake up and remind the agency aristocrats what they're getting paid for - great advertising, and nothing less. All the rest is footnotes.

Until marketers insist that their agency's first, second and third priorities are to create great ads, the level of satisfaction across the ad industry will continue to plummet, and the advertising business will continue to degenerate.

October 19, 2016

Agencies Profiting From Online Ad Fraud

We know that fraud is a major problem for online advertisers. But we don't know how big a problem it is. Estimates range from 2% to 90% -- which is another way of saying we have no fucking idea.

The ANA (Association of National Advertisers) estimates that ad fraud will cost marketers $7.2 billion this year. But this estimate is based on assumptions that are imprecise at best. If any of the assumptions baked into this estimate is incorrect or inaccurate, the number could go up or down dramatically.

The $7.2 billion number represents about 5% of worldwide online ad spending. To give you an example of how fuzzy this number is, the WFA (World Federation of Advertisers) says that the actual amount of fraud could easily be 30% -- or six times this.

Believe it or not, if fraud accounts for just 10% of the online advertising system, in 9 years ad fraud will be the second largest source of criminal activity in the world, second only to drug trafficking.

And ad fraud carries with it almost no risk. According to Hewlett-Packard Enterprises, ad fraud has a higher payout potential and lower risk factor than any other type of online crime.

The scary part is that according to knowledgeable people, organized crime is not yet a major player in ad fraud. With so much money there for the taking, it is only a matter of time.

We might assume that the big gainers from online ad fraud are the criminals themselves. But according to the WFA, the group that gains the most is actually the legitimate marketing industry.

Below you'll see a chart which shows how money flows through the ad fraud "ecosystem." I'm not going to pretend for a minute that I understand all this stuff, but the key point is that most of the money that is being extracted from advertisers as a result of ad fraud is done by the marketing industry before the crooks enter the picture (click on the chart to read it better.)

The more skin an agency or agency holding company has in the "money-flow" chain (e.g., agency of record; trading desk; DSP; ad tech provider, etc) the greater is its potential for revenue derived indirectly from ad fraud.

In fact, as far as agencies and other marketing entities are concerned, fraud seems to add to their revenue stream.

This is not to say that agencies or marketing companies are complicit in ad fraud, but it is to say that they are inadvertently some of its biggest beneficiaries.

One can only wonder how much more seriously ad fraud remediation would be taken if the unintentional beneficiaries were being punished instead of rewarded.