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This article is by Featured Blogger Dr. Augustine Fou from his Blog Page. Republished with the author’s permission.
Advertisers think their ads are targeted
Advertisers have been paying extra for ad tech targeting for years. The theory was that they could target ads down to the level of the individual -- the right ad to the right person at the right time. Right. In theory. However, in practice, the targeting based on surveillance doesn’t actually work as well as the ad tech companies promised. How do we know it’s based on surveillance and how do we know it doesn’t work well? As a consumer, remember those ads that contain the exact item you looked at on Amazon? That happens because they collected data, without your knowledge or consent, on what products you looked at and what websites you visited. They call this “behavioral targeting.” Ad tech vendors then set a cookie in your browser to track you so the next time you show up on a website, they can target you with an ad that contained that exact product. They hope that reminding you of the product you just looked at would increase the chances of you buying it.
But, more often than not, the targeting is more like “creepy ads following you around the Internet” -- e.g. the consumer already bought the item or they were researching gifts for someone else. The inferences that ad tech algorithms make about “who they are and what they like” based on what products users looked at or what sites they visited are incomplete and inaccurate. So the ads targeted based on these inferences are equally bad. Practically every consumer has experienced bad behavioral targeting -- everything about their online “behaviors” has been collected by non-consensual surveillance, but the ads are still notoriously badly targeted. Advertisers think their ads are targeted, but consumers know the ads are useless. When was the last time you saw an ad, thought it was relevant, or clicked on it? Like I said, advertisers think their ads are more targeted because they paid for more targeting parameters.
Advertisers think their ads are seen
Anecdotal evidence and personal experience tells us this is not true. A decade of eye-tracking studies also bears this out -- it is called "banner blindness" -- the simple fact that humans know where NOT to look, to avoid seeing ads. More recently, the scourge of digital ads got worse when programmatic ad buying got more widespread. The problem got so bad that consumers took matters into their own hands and started protecting themselves against the volume of bad ads and trackers by using ad blockers. Ten to twenty percent of humans block ads on desktop computers. Bots don't block ads, because it's their job to cause the ads to load. So if you are still advertising via programmatic spray-and-pray, your ads are disproportionally going to bots, versus humans. And finally, about 1% of 1% of your ads are shown to humans and paid attention to. One percent of an advertiser's dollar goes towards showing ads in the best scenario  and of those ads shown to humans, they command about 1% attention, according to a new study by Lumen Research . Is it a wonder to question whether digital advertising even worked if your starting point is 1% of 1%? Wouldn't a TV ad, print ad, or outdoor billboard be much better, off the bat?
Advertisers think their influencers influenced
Advertisers have also long thought that the influencers they paid to hawk their products actually influenced sales. But consumers have other ideas. They can easily tell when it’s a paid endorsement or product placement even if it is not disclosed properly as such. Advertisers also believe that “most or all of the content they create resonates as authentic with consumers” while “only 13% [of consumers] said content from a brand is impactful and a mere 8% said influencer-created content would highly impact their purchasing decisions,” according to a report from Stackla. Brands that advertise on social media think they are reaching and influencing consumers; but consumers say “UGC impacts purchase decisions... just not the kind from brands that don’t resonate as authentic.” Like I said, advertisers think the influencers they paid influenced more sales.
Advertisers think their digital marketing worked
Finally, advertisers that shifted most or all of their ad budgets into digital via “digital transformation” think that their digital marketing works, simply because it’s digital. But few fully comprehend that in the best case scenario, only about half of every dollar goes towards showing ads. Three industry-wide studies over the last five years have corroborated that half of every dollar spent in programmatic channels goes into the pockets of the ad tech middlemen, instead of towards “working media.” If TV and print publishers told advertisers that half of their dollar was not used for working media, every advertiser would be up in arms about that; but yet few do anything when they find out that they’ve been incurring a “50% ad tech tax” for their digital ad spending.
The 50% tax occurs before any forms of fraud are taken into account. In digital marketing today, the large quantities (“scale”), low CPM prices (“cost efficiency”) and high click through rates (“performance”) are highly addictive to marketers. They keep buying it, even when they realize that all of the above were created by bot activity. They’d rather not admit that they’ve been ripped off. They prefer the video-game-like experience of buying programmatic digital ads to doing the hard work of real digital marketing. To be clearm the vast majority of traffic on long tail sites are generated by bot activity (“scale”). That's how those sites can sell ads for low CPM prices (“cost efficiency”). Those bots are also programmed to click on ads to make it appear that users are engaging with the ads (“performance”). But again, when was the last time you as a consumer deliberately clicked on an ad? So all that scale, those low prices, and high clicks are quantity metrics that are easy to collect and easy to report. They have little to nothing to do with real business outcomes.
But what about the sales we are seeing? Are you sure those sales wouldn’t have happened anyway without the digital marketing? Over the years, some advertisers have found this out for themselves. P&G paused $200 million in digital spend and saw no change in business outcomes. Chase reduced their programmatic “reach” from 400,000 sites showing their ads to 5,000 and saw no change in business outcomes. Uber found out they were getting ripped off by mobile ad exchanges that were claiming credit for app installs that had already happened. And remarketing vendors are falsifying Google Analytics and attribution platforms to make it appear that they drove sales that had already occurred. So unless you have the systems and methods in place to measure true incrementality, those sales you are seeing may not have been caused by the digital ad spending. You are simply spending digital ad budgets at the same time as the sales occurring. That’s correlation, not causation.
So what is an advertiser to do if the above are true? Advertisers believe their ads are targeted but consumers don’t think they are. Advertisers should stop paying extra for ad tech targeting parameters that are costly and don’t work well. Instead of microtargeting down to the level of individual users, advertisers should think of targeting as the avoidance of waste. For example, a shaving product does not need to be marketed to women, or boys. So two targeting parameters, male and above 16 years old will be sufficient to avoid wasting ad dollars. “Contextual” or “cohort” based targeting is also good, just like when selecting the magazines and websites that are most pertinent for your brand or product. Influencers are also good - specifically the ones who are genuine fans of your product. If they describe why they like your product and how they use it, that will create far more influence than any influencer you pay to talk up your product. And finally, realize that there are not shortcuts to good marketing. You can’t just buy your way to business outcomes. Vast scale is irrelevant if ads are shown to bots. Low prices are irrelevant if ads shown on long tail sites are not seen by humans. And the illusion of higher click through rates doesn’t necessarily translate into more sales. Run experiments (including turn-off experiments), measure for true incrementality of business outomes. That’s how you can make digital marketing work really well for you.