What kind of ROI do your online ad dollars deliver? If you have no idea, you’re not alone – according to OptiMine, an online analytics company, 61% of advertisers say that they are challenged to reliably measure the ROI of digital advertising.
This is not a small problem – it’s foundational to the way advertising is conducted online. Display is a tremendous waste of money if you’re “spraying and praying” – buying media based on the loosest targeting imaginable. Additionally, you typically measure activities (impressions and clicks) rather than outcomes (leads and sales). Remarketing, content marketing and even the agency and publisher compensation structure (rather than points on media, how about points on performance?) should all be examined if you really care about getting to a reliable ROI. Clients should be pushing their agency partners to explore and scale new forms of paid on new platforms. 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 is partly culpable in 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 apocalypse 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. This is borne out in the fact 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! The company, in an attempt to stabilize ad revenues, reduced inventory last quarter. It didn’t work.
I’m sorry if it hurts to also point out that the ad content you’re making is probably incredibly boring, and that’s just not good enough any more. You don’t know whom 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. Content is not going to get better until you can actually understand the role in plays in the purchase cycle. You need to start “thinking outside the banner” as David Zinman, CEO of Infolinks, a smart ad unit platform, puts it. Learn where and when to invest to support the important milestones in your consumers’ decision journey. If you are the right thing in the right place at the right time, they will click. And then they will buy.
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 (IP addresses, search queries, clicks, conversions) and turning them into business intelligence that can help you better understand and optimize how your customers are getting to you. Online, however, there are privacy issues: in order 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? Highly forgettable display advertising? 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.
[A modified version of this post originally appeared in Marketing Magazine]