Is online advertising facing its demise?

“What was once digital advertising’s dirty little secret is now its big, ugly problem. Online ad performance figures are dismal…” Adweek, 8/24/11

I think the Ad Contrarian occassionally makes really good insights (all negative of course) into the world of digital communication.  This extract is one of his best.  Thanks to Will Atkinson for furnishing me with it…

Just when you thought banner ads couldn’t get any less effective, oops, click-through rates dropped another 10% last year.

Mashable reports that a Google study, seen as the “the industry standard” reported recently that click-through rates dropped from .1% to .09% in 2010. That means that CTRs dropped from 1 in a thousand to 9 in ten thousand.

So, Mr. Online Advertiser, for every 10,000 times your online ad appeared, you got a solid 9 clicks. Good job.

If you were a shortstop, you’d be batting .0009 

Oh, and by the way, the 9 people who clicked are no more likely to buy your product than the 9,991 people who didn’t.

“A click means nothing, earns no revenue and creates no brand equity.” says Starcom USA SVP/Director, Research & Analytics John Lowell.

Which, I’m afraid, is not a terribly encouraging statement about the value of “interactivity.” 

Meanwhile, undeterred, the advertising industry continues selling clients more and more display ads. In June, eMarketer doubled its projection for online ad spending in 2011. 

You may be asking yourself how display ads — with such “dismal” performance — can continue to provide large income to online publishers? This, my friend, may go down as one of the greatcon sales jobs in advertising history. The logic, again from Mashable, goes like this:

“…banners work like most advertising, which is to say in a fairly complex manner.

For instance, click-through is actually a poor measure of performance. It’s impossible to click through a billboard ad, for example, but that doesn’t mean it’s not effective…

The same is true for TV ads…”

Oh, I see. The now famous “nobody ever clicked on a TV spot” defense. 

So here’s what has really happened. Online ad hustlers experts told us that banner ads were much more effective than traditional advertising because they were so “measurable” and “interactive.” Then the facts started rolling in and they shit their pants refined their message. 

Now the story goes like this: Banner ads really aren’t any more measurable or interactive than traditional advertising. In fact, the erstwhile key metric — the click — don’t mean shit. Now, we are told, banner ads work just like traditional advertising, in a “fairly complex” manner. 

The only trouble with this baloney new story is that you have to be both blind and delusional to believe that some invisible ad on your Facebook page is as conspicuous as a TV spot or a billboard. In fact, while your average TV spot or billboard is an annoying, intrusive pain in the ass, nobody ever complains about Facebook ads. Which is just another way of saying nobody notices the darn things.

It seems that the worse online advertising performs the more of it we can sell. C’mon gang, if we can just get the click-through rate down to zero, we’ll all be rich

A really interesting point of view from luddite land

Thanks to a friend of mine for sending me this article.  It’s an interesting comparison of “new” and “old” media and their respective effectiveness.  The trouble is it’s written by a man with a very large chip on his shoulder.

Funny though…

I’d be interested in your views.

Digital Dream World

It’s a world in which consumers want to have relationships with brands and conversations with marketers. It exists mainly in your dreams.

Oct 19, 2010

-By Bob Hoffman

Welcome to a new world.

It’s a world in which people are eager to interact with ads. It’s a world in which consumers want to have relationships with brands and conversations with marketers. It’s a world that is causing a revolution in advertising and marketing.

Unfortunately, it’s a world that exists largely in our dreams.

Let’s start with a little background. Have you noticed that what was once called “interactive advertising” is now referred to as “display advertising?” The term interactive advertising has been quietly bundled off to its room and told to be quiet.

Advertising interactivity was the first of our pleasant little digital dreams. In this dream, people would be more engaged and interact with our ads, making the ads far more effective. The logic went like this: “Um . . . people like to interact with the medium, so, um, ya know, they’ll like to, ya know, interact with the ads, too.” The only problem is, people don’t want to interact with ads. Bastards.

Click-through rates are now hovering around one-tenth of 1 percent. That means 99.9 percent of the time people aren’t even engaged enough to move a finger. Naive clients, however, bought the fantasy of advertising interactivity lock, stock and pixel.

Slowly and quietly “interactivity” as a rationale for online display advertising was retired before it became too much of an embarrassment. These days, the sales pitch for online advertising sounds remarkably like the sales pitch for traditional print advertising.

But don’t worry. We have a new dream world. It’s a world in which consumers want to have relationships with brands and socialize with marketers online, and have conversations with us. It’s being fueled by the sensational rise in popularity of social media. However, I’m afraid this dream will turn out to be every bit as misguided as the last one.

When social media experts start talking, I get the same feeling I get when listening to political debates. My eyes glaze over, my jargon detector jumps into the red zone and I get an urge to dive through plate glass.

Pitches for social media marketing almost always start with a recitation of startling facts about social media — how Facebook has more members than there are grains of sand in the universe, how the average American spends over 28 hours per day with social media. You’ve heard the pitch.

What they don’t seem to understand is that there’s a difference between social media and social media marketing. The fact that social media has experienced phenomenal popularity is not prima facie evidence of the magical powers of social media marketing.

The new logic goes like this: “Um . . . people like to interact with each other so, um, ya know, they’ll like to, ya know, interact with us, too.”

From what I can tell, there are two things consumers are enthusiastic about when it comes to online social behavior: Connecting with each other and getting something for nothing from us.

I can’t prove it, but I’ll bet you $10 that the primary reason people become “friends” or “followers” of brands on Facebook and Twitter is not to have a conversation with the marketer, but to get a discount, a special offer, a deal, or some other form of insider information or advantage. It’s the same reason they join a frequent flier plan. They don’t want a relationship with a baggage handler; they want a free flight to Hawaii.

Yes, I know there are examples of brands that have been successful with “conversational” social media strategies. We always hear about them. We never hear about the thousands of failures.

Yes, I also know there are people who are unaccountably fond of a particular brand of mayonnaise and want to have a conversation with the marketer about it. But let’s be honest here. These people are weird. Most days, your sensible consumer doesn’t have the time, patience, or inclination to have a conversation with her husband. Why in the world would she want to have a conversation with us?

Having a social media marketing strategy is a good thing. But if your strategy is contingent on the idea that consumers want to have a conversation with you, create a relationship with your company and engage with your brand, you may be living in a dream world.

If you want to avoid the digital dream world, build your strategy on a foundation of reality. Give people an interesting way to connect with each other, and then give them something for nothing.

It’s not all that complicated. But just like the last time around, the lesson the ad industry is resolutely committed to not learning is that in the digital world people are passionate about interacting with each other. Not ads. Not brands. Not you. Not me.

Bob Hoffman is CEO of Hoffman/Lewis. He can be reached at bobhoffman@hoffmanlewis.com.