2014's Most Popular Post

Continuing our blessed vacation from blogging, today is the last post of 2014. It was the most popular post (by viewership) of the past year. It was a two part post entitled "The Slow Painful Collapse Of The Social Media Fantasy."

Part 1

It was going to change business forever. It was going to make traditional advertising irrelevant. It was going to revolutionize marketing.

It was social media marketing. And it's been the biggest disappointment since the NFL hired referees.

While advocates for social media still cling to the wreckage of "the conversation" and continue to hound us with apocryphal tales of social media magic, dispassionate observers are starting to realize what a delusion the whole theory of social media marketing has been.

The idea that consumers were enthusiastic about having conversations about brands online, and they would activate their network of friends and followers to share their enthusiasms and create a socially transmitted tsunami of sales has proven to be deeply fanciful.

It turns out that the average consumer has a lot more on her mind than conducting online conversations about fabric softener. And the ones that do seem to have no ability to generate enthusiasm in others.

While people with a financial or ideological stake in social media continue to propagate the fantasy, those annoying, troublesome things called facts keep popping up to undermine their careless assertions.

The first crack in the wall came in 2011 when the largest, boldest experiment in social media marketing ever attempted -- the Pepsi Refresh Project -- was exposed as a nasty failure that seems to have cost the brand 5% of its market share, which it has never recovered.

Then in September of 2012, Forrester Research reported that...

"Social tactics are not meaningful sales drivers. While the hype around social networks as a driver of influence in eCommerce continues to capture the attention of online executives, the truth is that social continues to struggle and registers as a barely negligible source of sales..."

A few months later, a story in The Wall Street Journal reported on a study IBM had done on the effect of social media on Black Friday sales. While sales were great, the social media contribution to sales were essentially nonexistent.

IBM reported...

Shoppers referred from Social Networks such as Facebook, Twitter, LinkedIn and YouTube generated .34 percent of all online sales on Black Friday, a decrease of more than 35 percent from 2011.

The Journal commented...

"...there’s one notable under-performer in the online shopping frenzy: social media."

But perhaps the most damning report on the negligible influence that social media marketing has on sales was issued a few days ago by McKinsey & Company.

This sentence from the report says it all:

“Email remains a more effective way to acquire customers than social media - nearly 40 times that of Facebook and Twitter combined."

We're talking about email here, not the Super Bowl. Email 40 times more effective than Facebook and Twitter combined? Now that's frightening.

The social media fantasy is in a death spiral. Social media marketing is no longer taken seriously as a sales builder by anyone with a functioning cortex.

Social media marketing will continue to be strangely popular and sporadically effective in some small niche categories.

But when it comes to serious brands, in the vast majority of cases it is evolving into just another cost of doing business.

Part 2

It seems like only yesterday we couldn’t turn on the TV, open a magazine, or go to a website without someone exhorting us to “join the conversation.”

“The conversation” was the physical manifestation of the marketing industry’s fascination with social media. The idea was that people were highly interested in our brands and would be eager to chat and share their enthusiasms on line with other people.

The philosophical seeds of this conviction were planted in the mid-1990’s when it was postulated that the “interruption model” of advertising had run its course. 

The theory went something like this: consumers were no longer responsive to advertising messages like TV spots, radio spots, and magazine ads which interrupted their activities. Instead, marketing was transitioning into a period in which the “permission model” would dominate.

The “permission model” posited that in order to be effective, marketers had to stop bothering people with advertising, and instead gain their permission to market to them.

The way you got permission was to engage consumers with useful, interesting messages (currently known as “content”) that gave consumers value instead of sales pitches. If you did this, they would trust you, like you better, and permit you to market directly to them. In marketing terminology, they would “opt in” to your marketing programs.

Best of all, they would share their passion for your brand with their network of friends and followers who would, likewise, share with their network. A multiplier effect would be born.

There was only one problem with this wonderful proposition. It misinterpreted consumer behavior by substantially overestimating consumers’ fervor for brands, and concomitantly misjudging consumers’ inclination to share their presumed fervor.

Believers in this ideology assumed that a person's use of a product was a demonstration of enthusiasm for the brand. Sadly, in the vast majority of cases, it is merely an indication of habit, convenience, or mild satisfaction. It is not proof of devotion or enthusiasm.
 

Regardless of the time, energy and money we spend “differentiating” our brands, most people see very little difference between our brand and our closest competitors. While there are some brands that people do have great loyalty to, and some categories that people are truly interested in, these are the rare exceptions. In most cases people will change brands with very little bother if it turns out to be convenient or otherwise beneficial.

Most people will gladly switch from Skippy to Jif if they can save a buck or two. If the ballpark doesn’t serve Coke, most people will happily return to their seats with a Pepsi. 

The idea that social media would become a channel in which consumers would share their strong enthusiasms by having “conversations about brands” has turned out to be largely a delusion.

Most brands are finding that their social media programs are more time-consuming, more expensive, and less capable of driving sales growth than was promised. Consequently, they are abandoning the “permission model” and reverting to the “interruption model” in their online advertising.

You can see this most clearly on Facebook. Facebook calls itself a social medium, but its advertising model is good old-fashioned paid advertising plastered all over the page. Compare the number of paid ads you see on your Facebook page with the number of "conversations about brands." 

YouTube calls itself a social medium but it sticks pre-roll (mostly recycled TV spots) everywhere it can. 

The reason is clear: marketers are finding that they can get more value out of these websites by treating them as avenues for advertising, not conversations.
 
And, just a reminder, Facebook, YouTube, Twitter, etc., don't make money from us having conversations about yogurt. They make money the old-fashioned way -- they sell ad space.

Social media are quickly evolving into just another channel for delivering traditional interruptive advertising.

It is also not surprising that the social media lobby has learned another lesson from traditional paid advertising. When you point out to them that they're not very good at generating sales, they default to the universal excuse for failed advertising -- it's not about sales, it's about branding. Whatever the hell that means. 

Social media is not going to die or go away. It will continue to grow. But the fantasy of consumers having conversations about brands and sharing their passion for brands -- and the claim that this will replace or surpass traditional paid advertising -- is simply collapsing as the evidence rolls in.

The “conversation” was a nice idea. It would be lovely if consumers were as eager to share their enthusiasm for our brands as we are. Sadly, they have other things on their minds.

It turns out that “the conversation” has been mostly a monologue.

Why You Need A Strategy

Here at Ad Contrarian Global Headquarters, we're in our final week of year-end reruns. Today we reach back to September for this oldie about ad strategy. Next week we return, 5 pounds heavier, with new things to whine about.


In the 1950's, the western powers devised a strategy to deal with the threat they perceived from the communist world. The strategy was called "containment."

In dumb-ass blogger terms, containment was essentially this: we'll let the communist block exist but we won't let it grow through military means.

This strategy informed the decisions western powers made and gave them a basis for deciding what to do and what not to do.

The strategy had its tactical successes (Cuban Missile Crisis) and its tactical failures (Vietnam War), but in the end it succeeded in accomplishing its two primary goals: avoiding nuclear war, and staunching the spread of communism.

Today the western powers also perceive a threat. The threat is from jihadist extremists. The difference today is that the west has no strategy. Every challenge is dealt with ad hoc. There is no unifying principle that gives rise to a strategy. The result is that just 8 weeks ago we were contemplating arming the Syrian rebels, and today we are bombing them.

Because we have no strategy, we are not clear on what our objectives are or what we are trying to do; we have not defined who our friends are and who our enemies are, and the result is a confused policy with too many failures and no definition of success.

Don't worry, this post is not about politics. It's about marketing.

An analogy can be drawn to most marketing. One of the disheartening effects of the proliferation of media options has been the ascent of tactics and the decline of strategy.

Far too many brands are buying into the nonsense of "360° marketing" which is code for trying to be everywhere. 360˚ marketing is not a strategy. It is absence of a strategy. As David Ogilvy said, "The essence of strategy is sacrifice."

There are two inevitable consequences of this folly.

First, nobody has enough money to be everywhere. The result of trying to be everywhere is that you spread yourself so thin that you are not very effective anywhere.

Second is that the tactical drives out the strategic. Each media type is assigned its own objective. And as each media type is optimized for that objective, it gets a little farther from what's going on in every other medium. Like our stellar universe, the brand universe keeps expanding. Each initiative moves farther away from every other one.

There is only one way to avoid this. Have a simple strategy, be clear on what it is, and make sure everything you are doing conforms to this strategy.

And remember, it is better to do three things well than thirty things half-assed.

Whatever You Do, Don't Be Yourself

Continuing our delicious vacation from blogging, today we re-print a post from this summer in which we offered essential advice to the up-and-coming ad professional.

If you want to be successful in the ad business, one of the first things you have to learn is to ignore all the baloney about "being yourself."

As a matter of fact, at all costs, do not be yourself.

Being yourself is a one-way ticket to Starbucksville.

I don't know who you are, or what "yourself" is like, but I guarantee you, "yourself" will be a big flop in the agency world.

In the agency world, you are expected to talk like this:

"(White Castle) is a beloved challenger brand... They seek an agency partner to align with their idea-rich, entrepreneurial culture and evolve the brand’s cultural relevance, especially among the millennial target."

See what I mean? That's an actual quote from an agency consultant. I don't care how full of shit yourself is, yourself can't be that full of shit.

Yourself might have said,

"White Castle is a bottom-feeding purveyor of unspeakable crap that just got a new CMO who wants an agency that will kiss his ass."

I'm afraid that just wouldn't sit well with the new masters of marketing.

That's why, to be successful in the agency business, you have to be very careful not to be yourself.

Here are some simple rules to follow to keep from being yourself:

Do not speak in simple declarative sentences

Do not ever express doubts about anything

Do not tell your colleagues what pathetic kiss-asses they are

Do not ever disagree with the highest ranking person in the room

When a client says the stupidest fucking thing you've ever heard, smile and nod

Remember, every sentence you speak or write must contain the word "brand" or "engagement"

I'm afraid that being yourself simply will not align with this idea-rich entrepreneurial culture or evolve your cultural relevance. So take my advice, amigo. Be the other guy.

Okay, now get out there and knock 'em dead.

Why Are Agency Blogs So Unpopular?

It's Christmas week and while I'm terribly busy stuffing myself and drinking immoderately, I am nonetheless aware of the needs of the many ad people who require a daily dose of skepticism. Today, we are re-running a piece from last summer which questions the sincerity of the ad industry's strongly established belief in the power of social media.

Agencies are often asked this question: If advertising is so effective, why don't you advertise?

The answer they usually give is this: Our potential customer group (target market) is so small that mass market advertising is imprudent. Instead we use marketing techniques that are more productive for a company like ours that needs to talk to a very small group of prospects one at a time.

This semi-baloney usually satisfies the questioner.

But this excuse only holds up because of the expense of traditional advertising. The same excuse can't be invoked for their lack of effective use of social media or content marketing. That stuff is "free."

Agencies are constantly haranguing their clients about the need to harness the magic of social media and content marketing -- and the expertise they can deliver if the client will just pay them to do it -- and yet the social media and content marketing efforts of agencies for themselves is somewhere between pathetic and non-existent.

Blogs are a perfect example. I recently checked two websites that measure the popularity of advertising and marketing blogs. (As you would expect with online metrics, the lists are alarmingly inconsistent -- on one list this blog is #21 on another it's #55.)

But here's the amazing thing. Put both lists of top 50 advertising and marketing blogs together and you find exactly one agency blog. One.

Now if I'm not mistaken, agencies are supposed to be the experts at social media and content. I mean, companies pay them handsomely to produce this stuff.

Considering that virtually every agency in the universe has some kind of blog, and considering their unique expertise at producing "compelling content" and their amazing online marketing skills, you'd think agencies would dominate the lists of advertising and marketing blogs.

Why don't they?

There are only two possible explanations. The first is that they are not competent to create anything that anyone wants to read. I doubt that this is the reason.

I think the real reason is the second possibility -- they're full of shit.

They tell their clients to invest in the awesome power of social media and content marketing, but they are unwilling to do it themselves. They won't spend their own time and money on this magic, but they're eager to spend their clients'.

Apparently what's good for the goose is not good for the gander.  After all, the goose lays golden eggs.

Ad Industry Is The Web's Lapdog

We continue our holiday reruns today with a piece from last spring.

One of the important responsibilities of the advertising industry is to be an "honest broker" between our clients and the media.

We have failed miserably.

While we have been aggressive about detailing the woes of traditional media -- the decline of the newspaper business; the problems of radio; the movement away from network television -- we have glossed over or completely ignored the shortcomings of the web as an advertising medium.

We have failed to educate our clients on the serious deficiencies related to web advertising:

• 62% of web traffic is reportedly phony
• 54% of display ads paid for reportedly never ran
• 57% of video ads paid for are apparently never seen
• Fraud and corruption are massive and reportedly in the billions
• Interaction with display advertising is essentially non-existent (1 in a thousand)
• As much as half of all video viewed on line may be porn
• Regardless of what media buyers say, nobody knows where their online ads run

It is clear why the ad industry has been complicit with online media in covering up these issues -- the web has become a gold mine for agencies.

WPP, the world's largest agency network, currently derives about 1/3 of its revenue of $16 billion from digital work and is aiming for 45% to come from the web within a few years.

Not only is income from digital sources rising, smart agencies have discovered how to squeeze more profit from this income than from traditional advertising.

For one thing, online work is never done. A website is never finished, a social media or content program always needs feeding, and display advertising always needs optimizing. If you're charging by the hour -- and your profit is built into your hourly rate -- more work always means more profit.

But when you're doing traditional work and you're on a monthly retainer or fee, more work means less profit.

The ad industry has become the web's lapdog -- exaggerating the effectiveness of social media marketing, ignoring the abominable click-through rates of "interactive" advertising, glossing over the fraud and corruption, and becoming a de facto sales arm for the online ad industry.

Self-interest has come into conflict with responsibility.

Guess what's winning?

End Of Year Reruns

It's the time of year when lazy-ass bums don't feel like working. So, as is customary, I am filling the blog for the rest of the year with stuff from 2014 that I liked. Here's a 2-part series on social media we did in January:

The Slow Painful Collapse Of The Social Media Marketing Fantasy

PART 1

It was going to change business forever. It was going to make traditional advertising irrelevant. It was going to revolutionize marketing.

It was social media marketing. And it's been the biggest disappointment since the NFL hired referees.

While advocates for social media still cling to the wreckage of "the conversation" and continue to hound us with apocryphal tales of social media magic, dispassionate observers are starting to realize what a delusion the whole theory of social media marketing has been.

The idea that consumers were enthusiastic about having conversations about brands online, and they would activate their network of friends and followers to share their enthusiasms and create a socially transmitted tsunami of sales has proven to be deeply fanciful.

It turns out that the average consumer has a lot more on her mind than conducting online conversations about fabric softener. And the ones that do seem to have no ability to generate enthusiasm in others.

While people with a financial or ideological stake in social media continue to propagate the fantasy, those annoying, troublesome things called facts keep popping up to undermine their careless assertions.

The first crack in the wall came in 2011 when the largest, boldest experiment in social media marketing ever attempted -- the Pepsi Refresh Project -- was exposed as a nasty failure that seems to have cost the brand 5% of its market share, which it has never recovered.

Then in September of 2012, Forrester Research reported that...

"Social tactics are not meaningful sales drivers. While the hype around social networks as a driver of influence in eCommerce continues to capture the attention of online executives, the truth is that social continues to struggle and registers as a barely negligible source of sales..."

A few months later, a story in The Wall Street Journal reported on a study IBM had done on the effect of social media on Black Friday sales. While sales were great, the social media contribution to sales were essentially nonexistent.

IBM reported...

Shoppers referred from Social Networks such as Facebook, Twitter, LinkedIn and YouTube generated .34 percent of all online sales on Black Friday, a decrease of more than 35 percent from 2011.

The Journal commented...

"...there’s one notable under-performer in the online shopping frenzy: social media."

But perhaps the most damning report on the negligible influence that social media marketing has on sales was issued a few days ago by McKinsey & Company.

This sentence from the report says it all:

“Email remains a more effective way to acquire customers than social media - nearly 40 times that of Facebook and Twitter combined."

We're talking about email here, not the Super Bowl. Email 40 times more effective than Facebook and Twitter combined? Now that's frightening.

The social media fantasy is in a death spiral. Social media marketing is no longer taken seriously as a sales builder by anyone with a functioning cortex.

Social media marketing will continue to be strangely popular and sporadically effective in some small niche categories.

But when it comes to serious brands, in the vast majority of cases it is evolving into just another cost of doing business.

PART 2

It seems like only yesterday we couldn’t turn on the TV, open a magazine, or go to a website without someone exhorting us to “join the conversation.”

“The conversation” was the physical manifestation of the marketing industry’s fascination with social media. The idea was that people were highly interested in our brands and would be eager to chat and share their enthusiasms on line with other people.

The philosophical seeds of this conviction were planted in the mid-1990’s when it was postulated that the “interruption model” of advertising had run its course. 

The theory went something like this: consumers were no longer responsive to advertising messages like TV spots, radio spots, and magazine ads which interrupted their activities. Instead, marketing was transitioning into a period in which the “permission model” would dominate.

The “permission model” posited that in order to be effective, marketers had to stop bothering people with advertising, and instead gain their permission to market to them.

The way you got permission was to engage consumers with useful, interesting messages (currently known as “content”) that gave consumers value instead of sales pitches. If you did this, they would trust you, like you better, and permit you to market directly to them. In marketing terminology, they would “opt in” to your marketing programs.

Best of all, they would share their passion for your brand with their network of friends and followers who would, likewise, share with their network. A multiplier effect would be born.

There was only one problem with this wonderful proposition. It misinterpreted consumer behavior by substantially overestimating consumers’ fervor for brands, and concomitantly misjudging consumers’ inclination to share their presumed fervor.

Believers in this ideology assumed that a person's use of a product was a demonstration of enthusiasm for the brand. Sadly, in the vast majority of cases, it is merely an indication of habit, convenience, or mild satisfaction. It is not proof of devotion or enthusiasm.
 

Regardless of the time, energy and money we spend “differentiating” our brands, most people see very little difference between our brand and our closest competitors. While there are some brands that people do have great loyalty to, and some categories that people are truly interested in, these are the rare exceptions. In most cases people will change brands with very little bother if it turns out to be convenient or otherwise beneficial.

Most people will gladly switch from Skippy to Jif if they can save a buck or two. If the ballpark doesn’t serve Coke, most people will happily return to their seats with a Pepsi. 

The idea that social media would become a channel in which consumers would share their strong enthusiasms by having “conversations about brands” has turned out to be largely a delusion.

Most brands are finding that their social media programs are more time-consuming, more expensive, and less capable of driving sales growth than was promised. Consequently, they are abandoning the “permission model” and reverting to the “interruption model” in their online advertising.

You can see this most clearly on Facebook. Facebook calls itself a social medium, but its advertising model is good old-fashioned paid advertising plastered all over the page. Compare the number of paid ads you see on your Facebook page with the number of "conversations about brands." 

YouTube calls itself a social medium but it sticks pre-roll (mostly recycled TV spots) everywhere it can. 

The reason is clear: marketers are finding that they can get more value out of these websites by treating them as avenues for advertising, not conversations.
 
And, just a reminder, Facebook, YouTube, Twitter, etc., don't make money from us having conversations about yogurt. They make money the old-fashioned way -- they sell ad space.

Social media are quickly evolving into just another channel for delivering traditional interruptive advertising.

It is also not surprising that the social media lobby has learned another lesson from traditional paid advertising. When you point out to them that they're not very good at generating sales, they default to the universal excuse for failed advertising -- it's not about sales, it's about branding. Whatever the hell that means. 

Social media is not going to die or go away. It will continue to grow. But the fantasy of consumers having conversations about brands and sharing their passion for brands -- and the claim that this will replace or surpass traditional paid advertising -- is simply collapsing as the evidence rolls in.

The “conversation” was a nice idea. It would be lovely if consumers were as eager to share their enthusiasm for our brands as we are. Sadly, they have other things on their minds.

It turns out that “the conversation” has been mostly a monologue.

Advertising's Arrow Of Progress

One of the interesting aspects of advertising that we have explored from time to time is whether we should think of it more as art or science.

With the growth in the use of mathematics, metrics, and data, it certainly appears like certain aspects of advertising are becoming more "scientific."

However, I am not convinced that advertising as a whole is any more scientific than ever.

From a practical standpoint, there is one factor that clearly differentiates art from science. In science, there is an "arrow of progress." By this I mean, science points in a direction and progresses toward that end.

If you have high blood pressure today, you are more likely to be successfully treated for it than you were 50 years ago.

If you buy a new car, it is more likely to last longer, be safer, work more reliably, and be more efficient than it was 50 years ago.

If you have a personal computer, it can do more things, more effectively, more quickly and more reliably than it did 50...wait a minute. We didn't have personal computers 50 years ago.

The point is, science provides us with technological progress by degrees that builds on itself and improves stuff.

Art, on the other hand, does not have an "arrow of progress." It's not supposed to. Art is about human interpretation -- emotions and aesthetics -- not ongoing improvements. You want to improve on the Mona Lisa? Good luck.

There is no way to talk about whether the work of Roy Lichtenstein represents "progress" from DaVinci. You may prefer one to the other, but to speak about progress is meaningless.

Similarly, is there an arrow of progress from Beethoven to Gershwin? Or Shakespeare to Updike? One may certainly have influenced the other, and styles certainly change, but talking about "improvement" is moot.

That doesn't mean art isn't inventive or innovative. Or that older forms don't influence newer forms. It just means that art moves unsystematically and, unlike science, we don't judge new art based on having "improved upon" old art.

So the question of whether advertising should be considered more science than art rests on answering this question: Is there an arrow of progress? In other words, is advertising more effective than it used to be?

If advertising contains a growing body of useful knowledge that has lead it to become more effective, it should be considered a science. If effectiveness has not improved over time, than it is probably more an art than a science.

Exploring the literature of advertising over the past ten years, one would have to conclude that advertising is less effective, not more. The literature is rife with assertions and research that conclude that advertising effectiveness has diminished over time.

There are certain elements of advertising that seem to utilize scientific principles more regularly -- direct response advertising, media planning -- but there isn't much in the way of conclusive evidence that there is an arrow of progress.

In fact, despite all the hoo-hah over the precision targeting of online advertising, behavioral targeting seems to be only marginally more effective than no targeting at all. And it is not at all clear that this marginal effect is even due to targeting. It may well be that the reason precision targeting appears to be more effective is that the people who are being targeted have been so carefully selected that they are the most natural candidates for buying the product, regardless of advertising.

But even if we stipulate that certain aspects of advertising have become more scientific, I would still contend that the overarching goal of advertising -- the creation of successful brands -- is no nearer to a scientific practice than it was when I entered the advertising business 40 years ago.

Some would contend that the emergence of interactive media, i.e., the web, has led us to a new understanding of brand building that requires electronic co-creating and community building with consumers. The problem with this argument is that a stroll through any supermarket in the country fails to uncover any significant brand of anything that has been built through either online advertising or social media.

From what I can see, despite all the technology we have applied and all the words that have been written, we have uncovered no new generally accepted principles about the nature of brand building or consumer behavior.

Most marketers are still thrashing around in the dark trying to either build a brand or maintain one.

Regardless of the growing veneer of scientific processes, there is no arrow of progress that has helped us understand how to create more successful advertising.

Amazon And Hypochondria

I am no economist. Nor am I a stock market guru. But I have a hunch about Amazon.

For 20 years we have been hearing that Amazon isn't profitable because it keeps reinvesting in itself for the long term. It's a lovely story.

Knuckleheads like me have been mentally betting against Amazon for years, and have been consistently wrong. Appetite for shares in Amazon continues to remain high despite its inability to show anything resembling a real profit.

But bad things always happen when you least expect.

The stock market continues to believe that there is a point at which Amazon can seamlessly convert its tremendous sales into profits. I am skeptical. I believe Amazon's strongest market advantage is its willingness to undercut everyone else on price.

I don't think it's as easy to escape from this and get to profitability as it sounds. The minute they decide to change this strategy, two things will happen: First, someone else will come along who will be willing to make no profit in return for high sales. Second, consumers will continue to exercise their love for low online prices.

After 20 years, you'd think Amazon could have found a strategy for investing in their future while still showing a decent profit.

Amazon is a company that has operated on the money of investors rather than profit from operations. The idea that this can go on indefinitely has been questioned for a long time by skeptics like me. And we have been wrong over and over. Nonetheless, I still believe the laws of economics have not been suspended.

I like to think of my skepticism about Amazon as a kind of hypochondria. You're going to be wrong for a long, long time. But in the end, every hypochondriac turns out to be right.

Charts, Graphs, Facts, and Fiction

Well, the eagerly awaited death of tv and radio is just gonna have to wait another quarter.

Last week, Nielsen released its "Total Audience Report" -- which used to be called the "Cross Platform Report" and before that was called the "Three-Screen Report" (I sure hope they're better at counting than they are at naming.)

The results are surprising, even to an old cynical bastard like me. You'd have thought that with all the new apps, websites, streaming options, and set-top boxes for watching video, the people who have been yapping about the death of TV for ten years would have a lot more to point to.

But time spent with TV just keeps chugging along. And to a surprising degree, so does radio.

There are a few interesting developments. People (adults 18+) spent about 12 fewer minutes (3%) a week watching TV than they did last year at this time. There's no doubt that all the new options are causing some erosion in live TV watching, but it is much smaller than I would have guessed, and not even close to anything like the hysterical death cries we've been hearing from the same people who've been dead wrong for ten years.

To get some perspective, we're still sitting in front of the box over 5 hours a day.

Here are some charts I made to simplify things. This first chart shows overall media consumption. As you can see, we still spend far more time with TV and radio than other media. We spend over 4 times as much time watching live TV as we do on the web with a computer.

Time spent on a smart phone now exceeds time spent online on a computer.

 Correction: The above chart should be Minutes Per Day, not Minutes Per Week

(It should be pointed out that a significant amount of time spent online particularly by young people is spent doing things that are not usually considered media activities -- checking email, talking, texting, watching porn, etc.)

The next chart shows the relative amount of time spent by adults consuming video on different devices.

Despite the very impressive growth of smart phone usage (up 25% compared to last year) watching video on a smartphone is not very popular, with only one half of 1 percent of video watching done on a smartphone. As mentioned above, I suspect a large amount of online smart phone time is spent doing "non-media" activities.

The next chart shows the relative amount of time spent watching video on a TV (traditional + DVR) versus a web-connected device (computer + smart phone.)

The next chart shows that people spend more time listening to the radio than they do with their cell phone and connected computer combined.

One of the questions I'm frequently asked is whether Nielsen's numbers are reliable? Not being a researcher, I have no idea. But I posed this question to a stock analyst who covers media and who used to be the head media research honcho for one of the world's largest media companies. His answer: No, but they're less unreliable than anyone else.

In other media news, last week Google came out with an astonishing admission -- that 56% of display ads paid for by advertisers are never seen by a live human being. We have been reporting on this for almost two years now, but to have Google cop to it is truly astounding.

And yesterday, the Financial Times reported on a study done by the Association of National Advertisers which determined that online display advertisers would lose 6 billion dollars to criminal fraudsters next year. Although this number is astounding, it is actually low compared to other estimates I've seen.

Of course, none of this will have any effect on marketers. You could tell them that display advertising causes their dicks to fall off and they'd still keep buying the stuff.

It's an amazing world.

5 Reasons Why Your Display Advertising Is Not Working

Are you one of those advertiser, who is struggling to understand why your Display Advertising is not providing the desired results?  If answer is yes, then this post is for you. Below are 4 most common reasons why your display advertising might not be working.

1. Ad Views: According to a study by Sticky,  77% of ads are never seen by people. Even when the ad is considered viewable, meaning it is within viewing area, only 55% ads are actually viewable. Which results in a very lower click through rate, the average banner CTR is about 0 .1% and declining.
2. Spider and Bot Ad Clicks:  Spider and bots, instead of humans, make up a significant amount of clicks on the ads. All these spiders do is click on an ad, land on your site and then leave causing millions of dollars in fraudulent clicks.  As a result you will either see a very high bounce rate on your pages and/or mismatch in the clicks reported by ad network and visits reported by your Web Analytics solution.  In 2012, a start-up reported that about 80% of their clicks from Facebook ads were by spiders. Another study found that 20% -90% of clicks on some sites were via spiders. I also showed an example of a bot in my post, 4 Reason Why Your Bounce Rate Might Be Wrong
3. Fat Finger: Over 35% of the ad clicks on Mobile are by accident, again causing high Bounce Rate.
4. Mismatched Landing Experience:  Make it a seamless and consistent experience from your banner to conversion. Users don’t have time so make it right the moment they land on your site. For example, If a banner ad promotes “Free Trial” then make sure landing page make it easy for user to sign up for the free trial. Don’t expect the users to click through to your site to find where the “Free Trail” page is.  Mismatched landing page and ad experience leads to High Bounce Rate and Low Conversion Rate.
5. Site Speed: Slow site speed breaks visitors flow from a display ad to your site. If it takes too long for the page to load then the visitor will be gone before she sees the full page.  In this case you will see a clicks but not visits and/or high bounce rate.

21 Metrics for Measuring Online Display Advertising

In this post I am listing the 21 metrics to measure the success of your display advertising.  Most of these are also applicable, with some variation, to other forms of advertising such as Paid Search, Social Media Ads, Print and email. I will cover these other channels and mediums in the future posts.

1. Impressions – It is the number of times your ad is displayed. The number by itself does not hold much value but it is a metric used to calculate other metrics and KPIs. Keep in mind that an impression does not mean that someone actually saw the ad, it just that the ad was shown on a web page/app.
2. Reach –This is the number of unique people (generally identified by cookies) that were reached by your ad. This number is always lower than the impressions because your ad is generally shown to same person (cookie) multiple times.
3. Cost – The total cost of running the ad campaigns.  This is calculated differently by different tools and organizations. Some use actual media cost while other use a fully load number that includes the agency cost, creative cost etc. Whichever number you use, be consistent in your approach. If you are going to do comparisons with CPC models such as Paid Search then I suggest using the actual media cost. Most of the publicly available benchmarks are based on actual media cost and are expressed in CPM (explained later in this list).
4. Engagement Rate or Interaction Rate– This applies to the Rich Media Ads, where a user can interact with the ad without leaving the Ad unit/widget.  Engagement Rate is the percentage of interactions per impression of the ad unit and is calculated as (Number of Interactions/Total Impressions)*100%.
5. CPM – This is the cost for 1000 Impressions of the ad unit. Display advertising is generally sold on CPM basis. (For more information on CPM, see  Cost of Advertising: CPM, CPC and eCPM Demystified).
6. Clicks – Number of clicks on an ad unit that lead to a person leaving the ad unit.  Keep in mind that a click does not mean that a person landed on the intended destination of the banner ad click. There are multiple factors that could lead to a click but not a visit to the destination (I won’t cover those here but am happy to discuss over email or a call).
7. CTR (Click though rate) – It is the number of Clicks generated per impression of a banner ad. This number is expressed as a percentage. CTR = (click/impressions)*100%
8. CPC – Cost per Clicks is the cost that you pay for each click.  Generally, display advertising is sold by CMP (see above), you can easily convert the cost in to Cost Per Click to compare it against other channels such as paid search. Cost per click is the effective amount you paid to get a click.  It is calculated by dividing the cost with number of clicks.  CPC = Cost/Clicks. Sometime this number is also referred as eCPC (effective Cost per Click).
9. Visits – As stated above in the definition of clicks, not every click turns into a person landing on your destination (generally your website). Visits measures the clicks that did end up on your site.  (For more definition of visits, please see Page Views, Visitors, Visits and Hits Demystified)
10. Visitors – Visitors metric goes one step ahead of the visits and calculates the number of people (as identified by cookies) who ended up on your site as a results of the clicks on the banner ads.
11. Bounce Rate – Is the percentage of visits that left without taking any actions on your site. It is calculated as Number of Visits with one page view /Total number of visits resulting from the display ads. (Bounce Rate Demystified for further explanation).
12. Engaged Visit Rate – Generally this is opposite of bounce rate (though you can have your own definitions of engagement).  It measure the quality of the visits arriving from your display advertising. You can calculate Engaged Visits as  (100 – Bounce Rate expressed as percentage).
13. Cost/Engaged Visit – This is effective cost of each engaged visits. It is calculated as total Cost divided by number of engaged visits.
14. Page Views/Visit – Page views the number of pages on your site viewed by each visit. With a lot interactions happening on one single page, this metrics is losing its value. However, for now, it is still a valuable metric for ad supported sites.
15. Cost/Page View – As above, this is valuable metrics for ad supported site to figure out the cost of generating on extra page view.
16. Conversions – Conversion is defined as the count of action that you want the visitors to take when they arrive from you display ads. Some examples of conversions are – purchase, signup for newsletter, download a whitepaper, sign up for an event, Lead from completions etc.
17. Conversion Rate  – This is the percentage of visits that resulted in the desired conversion actions.  Conversion Rate = Total conversions/visits*100. If you have more than one conversion actions then you should do this calculation for each one of the action as well for all the actions combined.  In case of Leads, you can take it one step further and calculate not only the “Leads Generation Rate” (Online Conversion Rate) but also Lead Conversion Rate, which is, Leads that convert to a customer divided by total leads generated.
18. Cost per Conversion – This is the Total Cost divided by the number of conversions achieved from visits coming via display ads.
19. Revenue – This is total revenue that is directly attributed to the visits coming from display advertising. It is pretty straightforward to calculate in eCommerce but gets a little tricky when you have offline conversions.
20. Revenue per Visit   – Shows the direct revenue achieved per visit originating from the display advertising. It is calculated as Revenue Generated from Display Ads divided by the total Visits.
21. Revenue per Page – This is useful for ad supported business models. This is sometimes expressed as RPM (Revenue per thousand impressions of ads) = (Total Ad Revenue/Number of page views) * 1000

Note: In addition to Clicks, you can also looks at View Through and calculate your other related metrics by view through.  View Through is sum of all the cookies that visited a page that showed your ad on it, and then landed on your site. The assumption, in this calculation, is that you landed on the brands site because of that ad exposure.
 Where can you get these metrics from?

• Impressions, Reach, Cost, Engagement Rate, Clicks, CTR and CPC data is available from your agency or ad server tool.
• Visits, Visitors, Page Views, Bounce Rate, Engaged Visit Rate, Conversion, and Conversion Rate are available in your Web Analytics tool.
• Revenue is available in either your Web Analytics tool or other offline sales database.
• Cost/Conversion, Cost/Engaged Visits, Cost/Page view and Revenue/page are calculated using data from multiple tools.

Questions/Comments?

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4 Reason Why Your Bounce Rate Might Be Wrong

Bounce Rate is generally defined as single page visits. These are the visits that leave the site without going any further than the landing page.  A very common approach to landing page analysis is to start with Bounce Rate and see if it is a problem before diving deeper into the page/site. However, the number that your tool is providing you might be wrong. Relying blindly on the number provide by your Web Analytics tool might lead you into the wrong direction. Below are 4 reasons why your Bounce Rate might be wrong

1. In Page Actions – If you have certain actions, such as video plays or windows that popup with JavaScript then the chances are that you are not tracking them as valid site interactions. In this case, even though the visitors will take one of the desired actions i.e. watch the video or click on a link to launch the popup window to fill a form etc., your Web Analytics tool will count these visits as single page visit, thus inflating your Bounce Rate.
2. External Links – If you have a lot of external links on you landing page e.g. “Like Us On Facebook”, “Buy this book on Amazon” etc. then you are purposely taking visitors out of your landing page but you might not be counting these clicks as valid site interactions thus inflating your Bounce Rate, as explained above.
3. Profile Configuration:  If you build a tracking profile of only select few pages on your site then any views of pages outside those select few are counted as “external links” (see above). For example, if you have 3 pages on your site, home.html, products.html, services.html but your profile only tracks home.html and products.html, then a click to services.html from any of these pages will be counted as an external link and hence counted as bounce if those were the only two page views that happened in the visit.
4. Spiders and Bots – For a long time Spiders and Bots were not a big issue for JavaScript based Web Analytics solutions, as very few spiders/bots executed JavaScript tags but now more and more of spiders/bots execute JavaScript thus inflating your visits counts. Many of these spiders only execute one page on the site, thus inflating your Bounce Rate as well.  Spiders and Bot seems to be an even bigger problem when major source of your traffic is Banner Advertising (Display Advertising) or Paid Search Ads.  See below for an example of a bot that might be messing up your Bounce Rate.

Now that you know that your Bounce Rate might be wrong, do your own calculations and come up with the right number before you start redesigning your Landing Page.  Recently, I came across a situation where all of the above applied. The Web Analytics tool reported that the landing page had over 90% bounce rate, after adjusting for above factors, we ended up in 50%+ range, which is still a little higher than industry average but not as bad as it initially looked (see average bounce rate).  A Bounce Rate of 50% calls for different analysis and actions than a Bounce Rate of 90%.

Read More Bounce Rate Posts

3 Tips for Expanding Tweet Reach and Engagement

Twitter feeds keep flowing with over 9000 tweets every second (Source: http://www.statisticbrain.com/twitter-statistics/). Unless your followers are constantly watching their twitter stream the chances are that your tweets will not be seen by a lot of them.  Below, I have listed three tips that will ensure that your tweets/content gets noticed and reaches most of your followers.

1. Tweet Same Content Multiple Times in a Day  – There are a lot of people like me who log into twitter few times a day (or after a gap of few days) and then and do a quick scan of timeline (or search).  They go back few hours in their twitter timeline and if your tweet did not happen to be in the timeline or searches at that time then they never see it.  Keeping this in mind, you need to tweet same content multiple times in a day to make sure your tweets are in the timelines of most of your followers when they login to twitter. In my post “Best Time to Tweet”, I suggested following timeline to tweet (this is just a suggestion and you should figure out your own timeline based on your followers and goals)
   1. Tweet at 9:00 AM PST (If all of your follower are in one time zone then tweet at 9:00 AM in your time zone).
   2. Tweet again the same message at 1:00 PST (4:00 EST) – (you might skip this if your followers are local.
   3. Tweet again the same message at 4:00 PST( If all of your follower are in one time zone then tweet at 4:00 PM in your time zone).
   In addition, I suggest adding another one later in the evening.
2. Tweet Same Content on Different Days – If you have content that is evergreen then it make sense to tweet it again. Just like above, it might take few tweets over few days/months to get your tweets noticed by your followers. Additionally, tweeting your content again after few days/months will put your content in front of your new followers and those who might have missed it previously.  However, going overboard with such strategy can potentially cause issues with some of you long time and ardent followers as they will see the same message over and over again. I use this strategy to tweet my old blog posts, which results in new retweets and followers. (I do it automatically- more on this in future).
3. Add Images to your Tweets – Late last year, Twitter started showing full images (instead of a link) in the timeline, just like Facebook does. A study (http://blog.bufferapp.com/the-power-of-twitters-new-expanded-images-and-how-to-make-the-most-of-it) showed that tweets with images got 150% more rewteets than tweets without images.  I suggest, you start including images in your tweets, when it make sense, and do your own tests to see how images affect the engagement with your tweets.

Follow me on twitter at @anilbatra