Driving through Berkeley, near where I live, it’s not unusual to see a beat-up, old VW bus with a bumper sticker that reads, “Think Globally, Act Locally.”
Unfortunately, if there’s one thing we humans are not very good at, it’s thinking globally. We have an unfortunate tendency to think very locally. I see it every July in San Francisco—people from New Jersey, dressed in T-shirts and shorts, freezing their asses off because they think summer here is like summer there.
A wonderful example occurred after Richard Nixon won a 49-state landslide victory in 1972. Pauline Kael, then film critic for The New Yorker, famously said, “How can that be? I don’t know a single person who voted for Nixon.” (By the way, that quote has been attributed to about 1,000 other people.)
Alan Wolk calls it “Nascar blindness.”
Which brings me to gravity. Gravity is everywhere. Consequently, we think of gravity as a very powerful force that keeps us glued to the ground and brings huge airplanes crashing down around us. Actually, science tells us that gravity is a very weak force. In fact, it’s the weakest known force in the universe.
To prove this, go to a children’s toy store and buy one of those little 50-cent horseshoe magnets. Then put a paper clip on the ground. Place the magnet above the paper clip. You now have two competing forces—the electro-magnetic force of the little magnet pulling up on the paper clip versus the gravitational force of the entire Earth pulling down on the paper clip. The little magnet wins.
The electro-magnetic force is actually 1,000,000,000,000,000,000,000,000,000,000,000,000 times stronger than gravity. But because gravity is all around us, we mistakenly think of it as uniquely powerful.
The same is true of the Web. Most advertising and marketing people have come to believe that because the Internet is so pervasive in our lives it must be a strong advertising force. So far it has not been. While the Web itself has become massively influential, advertising on the Web has proven to be problematic and, in many cases, dismayingly ineffectual.
Of course, Internet advertising is a lot of different things. It’s display ads, search, e-mail, viral and paid videos, social media, podcasts, blogs, widgets, apps. It’s a grab bag of dissimilar stuff that for the sake of simplicity we have come to refer to as “online advertising.” It’s unfair to say that all of it is ineffectual.
So far, there has been one type of online advertising that has been a clear and unqualified success: search. But search is limited. Mostly, we use search once we have already decided to buy, much like we used the Yellow Pages. Search fulfills demand; it doesn’t create demand.
The ultimate test for the power of an advertising medium is its ability to contribute in a critical way to the building of a brand. In its 13 years or so as a mainstream medium, the Web has not proven to me that it’s capable of building consumer-facing, non-Web-native brands.
Thirteen years into the mainstream life of TV, it had become an enormously powerful advertising medium and had been instrumental in creating scores of robust consumer-facing brands in dozens of categories.
Can anyone name even five serious non-native, consumer-facing brands that have been built primarily by Web advertising? Is there a major brand of coffee, butter, beer, bread, chicken, gasoline, soda, peanut butter, dog food, milk, tires, potato chips, life insurance, lawn mowers, toothbrushes—you get the point—that has been built primarily by Web advertising? I’m a little slow, but frankly, I can’t even think of one.
Yes, the Web has been effective at building Web-native brands like Google, Zappos, Amazon and Facebook. It’s as if the only brands TV was good at creating were CBS, NBC, ABC and Comcast
The facts about online advertising continue to be discouraging:
1. Click-through rates on display ads have dropped abysmally and currently are about one in a thousand.
2. According to Nielsen, 98 percent of all video is still watched on that old dinosaur, the TV.
3. As for advertising on social media, it’s probably unfair to judge the value of Facebook advertising solely on click-through-rates since it’s sold mainly on a cost-per-click basis. Nonetheless, it’s a bit alarming that typical click-through rates on Facebook ads hover at about 2 in 10,000. (This magazine reported the number as 5 in 10,000 last week. My number comes from a Facebook insider.)
Of course, digital advertising zealots are as fervent as ever. The continued growth of online spending indicates that it is still possible to torture the data in such a way as to make a convincing case for online advertising.
But I’m starting to get a sense that the “irrational exuberance” marketers have shown for Web advertising, while still naively out of proportion to its effectiveness, is beginning to show signs of coming into alignment with reality.
A recent study by Strata, though frankly not very comprehensive, indicated that at least some advertisers’ confidence in the effectiveness of online advertising has dropped fairly significantly. According to a source quoted in an article about this study, the reason for the drop was that ad agencies had “expressed disappointment with digital advertising’s efficacy.”
It is quite possible that the marketing and advertising industries are coming to believe what a lot of us have been thinking for a long time. Like gravity, Internet advertising is all around us. And also like gravity, it is a less powerful force than it appears to be.
Bob Hoffman is CEO of Hoffman/Lewis and the author of adcontrarian.blogspot.com. He can be reached at email@example.com.