Advertising. When Will Real Innovation Occur


Vacuum or TaxiFor all the research, targeting, “brilliant creative” and dollars spent on Madison avenue’s advertising industry, a click through rate of 1% is outstanding?   And, Ad Execustives say “ results” are not a top factor driving media buys…rate deals are.”

Im no advertising expert.  In fact, the last post was fun with “visuals” from advertising.  I only came to “marketing” through public relations and politics.  And, you know my view of the social web is about micro and niche connections that matter for you and your business, with some “mass” media spillover if that happens.  But these several points just make me really wonder about advertising?

  1.  From Digiday:  “On the burning fields of digital media, where everyone knows click-through rates have fallen to horrific lows in the 0.07 percent range, a strange bright flower is growing. Facebook’s new in-stream ad units are generating unheard-of click-through rates of 1 percent or higher. WTF? Is Facebook giving away the store?… The mobile engagement could range from about a 3 percent CTR to a 6 percent CTR — it’s very high — and the desktop newsfeed gets a little lower, like a 0.5 percent CTR to maybe a 2 percent CTR.  How are CTRs of 2 percent or higher possible?  Smith: The content is the biggest difference between the right-hand rail ads that traditionally Facebook is running and the newsfeed ads. When you’re running in the newsfeed ads, you have the ability to start to tell a story to generate genuine content, whereas the right-side rail ads are just classified ads. The other big difference here is that newsfeed ads show up in your mobile feed”
  2.  “In what appears to be a significant shift in the criteria they use for valuing the media companies they do business with, ad executives say the ability of a media supplier to generate “ad results” is no longer the most important factor for getting on a media plan. Other factors, including “aggressive rate deals,” are now considered marginally more important factors.”
  3. Here is another issue with big data and advertising:  “They assume that the frequency of your clicks is the same as your level of interest or the degree to which the material “moves” you. But only our fellow humans will ever really understand what we care about. Our care — our deeply felt investment in the world — is always context dependent.”

For a long time I have wondered why do so many apps and social websites that arise from this period of technological and social innovation ultimately end up relying on advertising as the monetization tool?  Look at Instagram, Twitter, Pinterest and more to come…

Then you read all this stuff about the huge uptake in mobility and the huge opportunities to monetize…again they default to advertising for monetization.  Did you ever see a mobile ad you liked or that didn’t get in your way? And by the way, isn’t clicking on it about the most intrusive thing you have ever done as off you go to another website or ad outside the app…and then you have to find your way back. This makes for good mobile user or customer experience with a big financial upside thanks to advertisers?   Surely, there is a better way.

And, by the way, sponsored stories on Buzzfeed, Gawker and others are simply what we traditionally called “advertorials” – they are still pay for play, which is advertising.

I wish someone who is really smart (not me) would actually innovate a new business model period.  Surely there are other options to either subscriptions paid by users and/or advertising.

Shel Israel and Robert Scoble in Age of Context talk about pinpoint advertising: “making marketing relevant to our needs, where we might embrace the companies that send those messages.”  They note the age of context with sensors and mobility will drive down advertising costs and increase response rates.  Jay Baer in Youtility points to content strategies that do that as part of well thought out content marketing.  Doc Searls’ “The Intention Economy” or vendor relationship management actually puts us in charge of when we want to receive marketing messages.

In the meantime, as the big advertiser noted to Shel Israel, “screw the 98% that hate the noise, we are getting rich off the 2% that respond.”  Seems to me that is a market ripe for disruption.

Effective content and targeted social strategies that connect your business and your customers in meaningful ways has to be a better way to go than the spray and pray of Big Advertising and its’ “outstanding” 1% click through rates of Facebook.

Wouldn’t it be great if an app came along that allowed us to decide what we wanted to hear about and at that point would allow marketing messages to come through (sort of Like Facebook “likes” except that Facebook takes more liberty and it’s so-called social graph understanding seems awful) — perhaps then charging the business for access to us and our wants.  That would start to flip the model.  Maybe Pinterest or someone else wants to really take a risk and become innovative? On the other hand, maybe I’m a dreamer.  Someone has to have a better model?   Do you?

2 thoughts on “Advertising. When Will Real Innovation Occur

  1. Agree with you here Richard… The big advertising model will be disrupted. Honestly, I’m surprised the model has survived intact for as long as it has. I think they’ve stuck with it this long because many don’t understand the alternatives.

    I can say now from experience that lots of brands are still wrestling with the content side of things. Specifically, making the transition from the old (shouting marketing messages) to the new (becoming relevant storytellers). While easy in concept, very difficult in practice for lots of companies.

    1. Lionel, I think eventually a social network will emerge that does not rely on advertising for its financial well-being in the same way magazines,newspapers Facebook and Twitter do. That will really throw the ad industry into change- not to mention the content marketing. Agree on brands wrestling with this and go read Mitch Joel’s blog post on “no one is seeing your content”…interesting times indeed

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