By Augustine Fou
Source: Forbes
Digital Marketing Is Like Baseball; Mostly The Catching Part
I love digital marketing. I’ve been a digital marketer for 25 years, since 1995. But I hate what’s going on in digital marketing today. Advertisers are wasting billions of dollars doing digital marketing incorrectly. I’ve written about this elsewhere [1, 2] so I won’t belabor the point here. This article will focus on what marketers can do to make it better — i.e. how to do digital marketing, leveraging its unique advantages and making it complementary to other marketing channels like “offline” — TV, print, and radio.
Current State – 2020
It’s 2020, and digital ad spending in the U.S. is approaching $150 billion, and $350 billion worldwide annually. The vast majority of the ads (nearly 90%) are now purchased through programmatic channels, where algorithms bid, buy, and place ads in a matter of milliseconds. The latest estimates put the number of ad impressions at 40 trillion impressions per month, or roughly half-a-quadrillion ads per year. (There are only 7 billion total humans on earth.) These gargantuan numbers are the result of big advertisers using digital with a reach and frequency mentality, carried over from TV advertising, and media-agency-think. They think that showing more ads to more people more often, will increase sales. This worked in TV advertising decades ago, but doesn’t work in digital for a number of simple reasons: 1) there are no constraints on supply, because virtually infinite numbers of long tail sites can be created to generate virtually infinite numbers of ads, 2) there aren’t enough humans spending enough time online, and going to enormous numbers of long tail sites to see those ads, and 3) a good portion of actual humans block or ignore the ads anyway. That’s why more ads to more users (many are bots) more often doesn’t drive more business.
Advertisers then claim they use some magic sauce from ad tech vendors to make ads more relevant, and appealing, to users. They do this by harvesting user data (without their consent) and using that data for targeting the ads. Unfortunately a lot of the data is crap and the insights derived from it are even crappier. So the targeting does not work as well as advertisers assume. Most folks are familiar with the creepy ads that follow you around the Internet, even though you’ve already purchased the product. These are “retargeting” ads, which means the ad tech recorded the fact that you visited a particular site or looked at a particular item; it then shows you ads for that brand or product, with the assumption that you would be more likely to buy it, since you already “expressed interest.”
Too Much Retargeting, Not Enough Prospecting
Jonathan Mendez, a veteran of digital marketing, observed recently “why was the single dumbest form of ad targeting, retargeting, the main system of digital ads the past decade?” This stems from a currently held belief that it’s less costly to sell more to existing customers, than to try to win new customers. Joe Brown followed with “Retargeting = lazy marketing. You just show ads to those that have already decided to buy. I have never seen a test vs control studies showing how impactful they actually are. My own test vs control studies have shown they produce no lift over control.” I have also observed some marketers double down on this concept; pharmaceutical marketers were told to target their ads to “high prescribers” only — those who already prescribe their drug, a lot. They allocate as much of their ad dollars to targeting this tiny subset of “high prescribers” at the expense of showing ads to less frequent prescribers, who could prescribe more, and to other doctors who don’t yet prescribe their drug, but who could start (i.e. more sales).
Common sense would tell you that this overemphasis on retargeting, showing more ads to existing customers to try to get them to buy more, almost makes no sense at all. Think about it this way. A family drinks 4 quarts of milk every week. No amount of milk advertising is going to get them to buy and drink 5 quarts of milk a week. It’s just not physically possible, even if they love, love, love milk and even find the milk ads funny, engaging, and memorable. This applies to products less common than milk too; note the remote-controlled bulldozer ad to the right.