What Happened To The Web’s Promised Land of Targeted Advertising?

In my introductory ad classes, students review two ad articles each quarter. And from the very first class I taught in January of 2001, an overwhelming number of reviews have extolled the glory of highly targeted advertising on the web.

These articles described a virtual eden – where advertising’s power is increased because ad dollars are spent only on communication with those who care. Just imagine, they say, targeting by interest, by their browsing history, by online purchase history, by selection of keywords in the past 10 years, and perhaps even by the genetic make-up of the consumer’s children

Ten years later, how is Eden?

The answer is decidedly “mixed”. First, response rates to web advertising are horrible. I was reading a book bemoaning how studies show that “only” 16% of TV viewers get the branding from a typical spot (although good creative makes it much higher).

Hmmm. So 1 out of every 6 people watching TV at that time both see the spot and remember the brand. That’s actually quite astonishing when compared with clickthrough rates. See, in CTR’s it’s considered good if you get one click for every 500 times the ad is presented (That’s a .2% rate).

Yikes. My agency creates TV campaigns that have gotten one out of every 200 viewers to PURCHASE from our direct response television ads! But it’s not just TV. Even today, direct mail typically gets one response for every 100 presentations (note that a response is much more significant than a throw-away click).

But a click is a throw-away thing – cheap and easy for a browsing consumer to give. Marketing fundamentals would suggest that if web advertising carried any value to consumers, response rates would be much, much higher – probably 10% or 15% instead of .2%. Clearly, something is broken.

And so, Adam and Eve fall prey to the serpent of “discounting”. Before anyone complains, I’m quite aware that the end cost is quite important and web clicks are very cheap so maybe it all evens out. (Maybe.)

Problem is that a strong industry typically doesn’t work this way. The more highly targeted the media, the more you should be able to charge for the media access. With the web, it’s almost the opposite.

And it all gets worse in social media. (I wrote recently about how average Facebook advertising CTR is 1 click for every 2000 presentations.)

So what? Clearly, the web’s targeted perfection doesn’t correspond with better effectiveness. But I don’t have the full answers for what this means – and nobody else does either. Let’s just walk through what we know about this issue:

– Once more, the hype used to foist the web onto advertisers isn’t supported by reality.
– Not only does it not jive with reality, but it falls very far short of what we should have expected.
– Web media outlets have dropped prices into the bargain basement and they can afford to because their sub-structure is pretty cheap.

This leads me to two important questions for future consideration. First, can web’s micro-audiences really be used to substitute for mass advertising? And secondly, why isn’t anyone talking about this as a problem?

Copyright 2011 – Doug Garnett – All rights Reserved

About Doug Garnett
Growing retail based businesses through television, DRTV, and all forms of video. Doug is a strategist, executive producer, director, author, & teacher.

4 Responses to What Happened To The Web’s Promised Land of Targeted Advertising?

  1. Ben Waugh says:

    I’ve been reading along for a while now. I just wanted to drop you a comment to say keep up the good work.

  2. I certainly take your point, Mr. Garnett, and agree that targeting advertising only goes so far. However, I do not agree with your statistics. If you’re only getting .05% click-throughs, you’re doing it wrong. I have a campaign running right now that has an 18% click-through and is generating $132 for every $1 we spend on advertising. (Hotel in Florida.) To your point, the same ads are far less effective on Facebook, but that’s because people aren’t searching for our services there, they are merely EXPOSED to them, which still has value. We can also re-advertise to people that have searched for something and not yet made a purchase, which has delivered extraordinary results for some of my clients.

    We might not ever find “Eden” when it comes to advertising, but the the fact is, we do have the ability to reach people searching for exactly what we have to sell, hit them and only them in real time, and quantify the results with almost literally any budget, and that makes the modern art of marketing a little more interesting, in my opinion, than the golden days of yore.

    • Doug Garnett says:

      Pinky –

      Thanks for the thoughtful reply. I commend your response rates. What I noted in my post are average response rates knowing that great advertising can far outperform the average.

      But when you compare the CTR average with, for example, the direct mail average, CTR is .3% while direct mail comes in at a 1% to 3% average. Why?

      I am also interested that your work sounds primarily focused on snagging the searchers – people looking for the thing you have to offer. That is a SUPERB use of the web.

      My work is primarily “reach out” advertising – introducing consumers to products they’d never known about before. In this case, it’s my experience the web is a very poor tool despite it’s targeting claims.

      A solid plan will leverge a smart combination of media tht fit the situation and should include web. But the web could become infinitely more powerful if the web elite would consider contradictions like the wide gap between their claims of targeting and the lack of CTR rates that should follow that targeting.

      Regards,

      …Doug Garnett

  3. Pingback: What Happened To The Web’s Promised Land of Targeted CPG Advertising? | Consumer Packaged Goods CPG Brokers

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