Why targeted ads seem to miss the bullseye
John Wanamaker was a marketing pioneer and US Postmaster General. He's the one who's supposed to be responsible for the quote: "Half the money I spend on advertising is wasted; the trouble is I don't know which half."
Ever since Wanamaker's day - the late 19th and early 20th Century - advertisers have hunted for the holy grail of marketing. That's media spend without the waste. And with the arrival of online advertising, it seemed they'd finally found what they were looking for.
Targeting, retargeting, lookalike audiences, accurate reporting on views and click-throughs, attribution modelling and cost-effective real-time bidding all seemed to promise the ability to reach out to the right consumers, without all that wasted money.
But maybe online advertising's scientific accuracy was over-stated.
Last week the biggest ad spender in the world, Procter & Gamble, admitted that targeting consumers on Facebook wasn't all it was cracked up to be. It announced it was moving away from the tactic and reverting to tried and tested TV ad spending. Here's what Marc Pritchard, P&G's chief marketing officer, told the Wall Street Journal.
"We targeted too much, and we went too narrow," he said in an interview. "And now we're looking at what is the best way to get the most reach, but also the right precision."
Rather than see this as a return to form for traditional media spending, perhaps P&G's decision should be seen as a challenge to digital marketers to realise the limitations of what they do - and to start thinking strategically, rather than using digital as a direct marketing tool.
Firstly, perhaps the wastage, as bemoaned by Wanamaker, isn't such a bad thing. Perhaps only now that we can do away with it, are we actually realising that it's key to building a mass-market brand.
Mass media helps deliver mass awareness and this is the stuff that big brands are made of - not cost per click campaigns to a particular demographic subset on a handful of social networks. Going too granular means limiting brand exposure and overlooking unexpected buyers. It also costs more, so there's a question of diminishing returns.
P&G found this themselves. The company reportedly spent heavily to promote Febreze to pet owners on Facebook with specific household incomes. But sales were sluggish until P&G loosened the definition of the consumer they were targeting. Sometimes increasing reach and getting as many consumers as possible to trial products is more effective at driving sales.
And what's the overhead of collating, analysing and keeping all the data that digital marketing demands? Few marketers need (nor could afford) a team of data scientists to keep on top of data that can't be turned into actionable intelligence.
As the self-styled ad contrarian Bob Hoffman put it presciently last year: "What if all the 'precision targeting' we do is mostly unnecessary complexity masquerading as knowledge?"
P&G's decision also highlights the weakness of targeting particular demographics based on personal information. Sure, it's handy to be able to target your audience - but the real question is are you targeting them at the right time?
If my Facebook profile tells the world I like Thai food, chances are I'm partial to pad Thai noodles whenever the mood takes me. If I'm searching for Thai restaurants on Google, chances are the mood has taken me and I'll be buying noodles in the near future.
Facebook sells ads based on information, while Google sells on intent. And intent is almost always more valuable to marketers. You won't be surprised to hear that Facebook has earmarked improving its search function as one of its next big money-spinning opportunities.
There's one other interesting point to note about P&G's decision to scale back targeted Facebook ads. Perhaps it heralds a realisation in the ad industry that online marketing has, to date, been a slave to tactics at the expense of strategy.
The ability to target online audiences has created an approach to online advertising which is more like direct marketing than anything else. Practitioners' heads are all too often turned by the latest platform, tool or technique.
With all these shiny new baubles to play with, many marketers have forgotten that before they dive into Facebook Live, Google AdWords, Snapchat Stories, Tumblr's sponsored full stop (remember that?) Twitter App Install ads or Instagram video ads, they need to understand a brand's consumers and competitors - and to figure out how to carve out a competitive advantage.
I started with a quote from a marketing pioneer, so it seems appropriate to end with a quote from a pioneer in another competitive field: warfare. In The Art of War, Sun Tzu says, "Tactics without strategy is the noise before defeat."
So it must be if tactics continue to trump strategic thinking when it comes to digital marketing: All noise, no orchestration.
Sunday Indo Business