Are marketers spending too much in digital? The simple answer is yes. In the U.S. $6 of every $10 of media spending is already allocated to digital. Within digital, almost 90% of the display ad spending is done through programmatic channels, according to 2021 figures (see eMarketer charts below). It should be obvious that this is an unhealthy concentration of ad spending. But let’s unpack this a bit and see how we got here and what marketers should do about this, to make it better.
“Digital” is theoretically the right ad to the right person at the right time
Yes, the promise of digital advertising is awesome. Compared to one-way channels like TV, print, and radio, digital is a two-way channel where you get “feedback loops” to see what users liked and did after seeing your ad. There is also seemingly far more data to use for targeting your ads too, in theory making them more relevant for your target audience.
But the reality of digital marketing today is that most marketers have no idea where their ads ran; but on occasion they discover their ads ran on porn sites, hate speech sites, coronavirus disinformation, and fake news sites. On occasion they also discover that large-scale fraud operations ate up their ad impressions and budgets using vast botnets. Interestingly, none of those reports of ad fraud included the advertiser getting their money back, despite all of them using fraud detection tech vendors. And on occasion they find that their digital spending did not drive any business outcomes, like the P&G, Chase, eBay, and Uber examples.
Marketers are “screaming into the void”
Many of the biggest spenders in digital — like CPG, financial, automotive, entertainment, and telecommunications — are approaching it as if it were a reach and frequency medium like TV. They want to show their ad to as many people as possible, as often as possible. And digital seemingly gives them unlimited ad impressions to buy. And the prices appear to be very attractive too. But much of the large quantity of ad impressions and low CPM prices come from fake or fraudulent websites and mobile apps that are simply feasting on the ad dollars using fake ad impressions and fake traffic (bots). The millions of sites and mobile apps that no one has ever heard of can manufacture hundreds of billions of ad impressions out of thin air for big advertisers to buy. Buying more and more ad impressions, no matter how low cost they are, is not going to drive more sales, especially if those ads are shown on fake sites and apps, and shown to fake people, bots. This is literally “screaming into the void.”
Even the few ads that do land on websites with real humans are ignored or actively blocked by said humans. The sheer volume of ads is terribly annoying to most humans. You can’t get them to buy more by screaming at them louder and more often. In fact you’ll make them mad and drive them away. Note the rise in ad blocking usage, as the number of programmatic ads got completely out of hand. And consider this, bots don’t block ads; humans do. So the 90% of display ads bought through programmatic channels are disproportionately shown to bots, instead of to humans.
If that doesn’t convince you to reduce spending in digital, maybe this will. Less than 50 cents of every dollar you spend goes towards showing ads. In the programmatic supply chain about half your dollar goes to the ad tech companies that are intermediaries in the process of buying and placing ads. Some of them will try to convince you that they “add value” – for example by selling you data used for ad targeting. But no matter how targeted you think your ads are, the consumers don’t think they are relevant. That’s because the data used for targeting ads is extremely poor to begin with; and the vast look-alike audiences you think you’re buying may be infested by bots pretending to be whatever audience segment you desire.
So what if you reduced ad spending in digital and shifted those dollars back to traditional channels like TV, print, radio, outdoor billboards, etc. If you need branding and awareness, those channels perform very well in getting your ad in front of humans, compared to “screaming into the void” showing ads on millions of sites with millions of bots.
What if you shifted some of your digital budgets from programmatic display and video to search advertising and content creation? Bombarding your target customers with more ads is not helping you drive more sales; but improving your “harvesting of demand” may do so. More specifically when humans come online to search for more information, will they find you and will they decide to buy your product instead of your competitors’ products? If you have better search ads and content, you increase your chances of harvesting that demand.
Finally, what if you thought of “targeting” as the avoidance of waste, rather than hyper targeting. Instead of paying more for dozens of targeting parameters, use just a few parameters to broadly avoid ads shown to the wrong groups of people who won’t buy your product anyway. By saving money on targeting parameters, you can spend a bit more on the ads themselves and get your ads on sites that real humans visit. The single most impactful parameter to any digital campaign is showing your ads to humans in the first place.
What will you change in 2021 to do better digital marketing and drive more business outcomes?