Big data, attribution and the end of spray and pray
You probably don’t know what kind of ROI you’re getting from your online ad spend. Don’t worry, you’re not alone. According to analytics company OptiMine, 61% of advertisers say that they are challenged to reliably measure the ROI of digital advertising. Of course, you have no one to blame but yourself.
You’re wasting your money if you’re still just “spraying and praying”—buying media based on the loosest targeting imaginable. And chances are you’re measuring activities (impressions and clicks) rather than outcomes (leads and sales). Publishers and social media sites know that display is not the future; it has become the default in an unsustainable, cannibalistic sprint for revenue because it fits into existing models, not because it delivers value.
According to Mike Volpe, CMO of Hubspot, an inbound marketing company, you are more likely to do one of the following than click on a display ad: complete Navy Seal training, be accepted at MIT, get a full house while playing poker, climb Mount Everest, give birth to twins or survive a plane crash. In other words, most of us will never do any of those things.
Massive fragmentation of attention partly explains this almost ridiculous state of online advertising affairs, with 43% of users having learned to completely tune out ads. Publishers have also made placements and formats so standard that they themselves are responsible for training us to ignore whole sections of the web pages we read.
Adding to this avalanche of irony, sites like Facebook have exploded the number of impressions available for sale at the same time as they have come to rely on display advertising for revenue. It’s not surprising then, that, according to the Wall Street Journal, online ad rates have decreased by more than 50% in the last decade. There is an infinite amount of internet, and supply and demand don’t unplug for anyone—just ask Yahoo. In an attempt to stabilize ad revenues, the company reduced inventory last quarter. It didn’t work.
What’s more, and I’m sorry if this hurts, the ads you’re making are probably incredibly boring. That’s just not good enough any more. You don’t know who you’re targeting, you don’t know what they want and you’re interrupting them with messages that deliver no value. So, uh… they’re ignoring you.
So why do you keep spending your budgets on digital display? Mostly because you don’t know any better.
Attribution (the ability to track users’ actions and assigning value to those actions as part of the sales cycle) is so poor, and most companies have such a lousy understanding of the true (online and offline) customer decision journey, that advertisers and their agencies are perpetually optimizing for the bottom of the funnel, where cause and effect are clear.
You can see this play out in content recommendation widgets like Taboola, which offer “You May Also Like” links on publishers’ sites. A lot of it, sadly, is bait-and-switch direct marketing—taking users to gated content or a sales pitch. If this continues, it could potentially poison the well for yet another promising paid model that might have delivered relevancy and value in exchange for attention.
What’s the fix? Attribution standards need to be set. It’s technically possible to track users’ interactions with your content across multiple devices today. Companies like DemandBase and OptiMine are trying to crack this nut by taking both structured and unstructured (aka “big”) data, such as IP addresses, search queries, clicks and conversions and turning it into business intelligence that can help you better understand and optimize how your customers are getting to you.
Online, however, there are privacy issues. To effectively track on the web and mobile, you need to drop cookies and tokens. Consumers don’t really like that, one might argue, in part because they don’t see the value. They’re giving you their privacy in exchange for what, exactly? If it’s highly forgettable display advertising, it’s not a very compelling deal.
Jakob Neilsen has been warning us about “banner blindness” since 2007, and it’s magical thinking to believe it’s going to get better if you keep doing the same things. Good money after bad? The choice is yours.
Maggie Fox is founder of Social Media Group