Web analytic' providers keep talking about Marketing being the “New Finance”, and of course they would love that to be the case as they provide some of the data needed to make marketing a measurable practice. With online media we experienced two things: an explosion of media channels and the ability to measure results. Once the hype starts to dissipate, we have to face reality. Yes, we can measure click-through rates, repeated visitors, session length, keywords used and with multivariate testing we can quickly learn which creative approach works best. But, for a relatively new media, we got to price erosion and commoditization fairly quick and each online ad just looks tired and hence responses rates keep falling down with ad prices following same path.
We can also target advertising better, to increase the efficiency of the campaign, and we can use that data to increase campaign efficiency or to prove wrong the few individuals that are still in the stone-age and insist that behavioral targeting does not work as suggested in this eMarketer article here.
Why insist on making decisions based on responses to hypothetical surveys if it is possible to observe what people do in response to a real stimulus? The fact is that behavioral targeting works and targeted advertising always drives a higher response rate. That has been always the case. With direct mailing, with TV ads, with printed media: targeted advertising drives a much higher response rate. Yes, we need to respect privacy, we need to deliver a great customer experience, and we need to keep targeting things to avoid waste and improve customer’s experience. But despite what the survey tries to prove, data shows that targeted advertising based on behavioral targeting drives a much higher conversion rate or click-thru rates, and those individuals are voting with their wallets on whether or not they want to be targeted properly.
But even if targeting is perfect, end-action rates will not be better until we address a fundamental issue in the quest for making advertising better and, in many cases, a viable monetization mechanism for big audiences. The issue is that while marketing channels exploded in the last 50 years, the advertising technique used in those new channels is the same one used 300 years ago with the first ads published in newspapers in the USA (circa 1704) or the first ads in targeted magazines (circa 1742) or the first mobile ads: Posters and Billboards (circa 1800). It is the same display ad, same clever combination of visual element that catches the viewer attention, clever and short copy and clear call-to-action. It is a tired mechanism that is disruptive in nature as it requires the individual to stop what she was doing in order to take action.
Thanks to the explosion of channels, we have the opportunity to reach individuals in a very targeted and optimized way, and the call to action is a click away, but the mechanism is in most cases the same. It is just a sophisticated and interactive display ad that mimics the same old ad of 1704. With web 2.0 we saw many new technologies, a good percentage monetized through advertising, and more than 90% failed to survive because advertising revenue never delivered on expectations, despite having a large number of loyal visitors to those web 2.0 properties. Keyword advertising and search were probably a new fresh mechanism, but to explode the potential of all the new channels like social networks, powerful devices that are becoming a new channel, like the Kindle, VoIP, virtual worlds, etc. we need a new breed of advertising mechanism. Maybe an evolution of web applications, maybe the products can become the advertising mechanism, the product can become the go-to-market in this tired web 2.0 world.
Can you recall a clever and new way to monetize an audience through advertising while leveraging the power of the new channels like social media or interconnected devices? More than 90% of the new ventures from startups or established players are about making display advertising or search advertising better: better targeting, location aware, time relevance, “contextuality”. Those are just elements to battle the commoditization trend of the online inventory.
Clever and targeted display ads will not make Facebook or Twitter and other emerging properties, a viable long term business. Refined targeted display ads are not the way to monetize audiences that got engaged in a session to connect with friends, or to work on a word processing document or a presentation file. Display ads are disruptive, even if targeted, refined and timed properly.
Three-hundred years on marketing channels evolution, the ability to do much better targeting and drive real time responses by having a direct connection with our customers and we are still relying on a three-hundred years old mechanism to do advertising. Maybe is not the channel that is broken, maybe the mechanism is ripe for a revolution.
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