Who cares wins: The antidote to 'badvertising'
Opinion
Last week’s avalanche of news suggests that advertising still works, so if we improve what we do, we can deliver better results for advertisers and make the world a finer place. But how?
A week is a long time in media (remember Forbesgate?) and sometimes it’s only a day.
Last Wednesday was one such day. We saw the Warc/Advertising Association adspend report for 2023; the IAB study of last year’s spend in online media; the two latest ad effectiveness and pricing studies from Thinkbox and ITV; and a new (but familiar) overview from Bob Hoffman on the iniquities of the online display ad market.
And only a few hours later came the combined results of the holding companies Q1 figures and the same for the big digital giants.
Good news
How might we interpret this avalanche of information?
At first glance, it’s good news for our industry: all advertising pays back positively. Thinkbox reports that every £1 spent in all forms of advertising produces £1.87 of profit in the short term and £4.11 when long-term effects are included. Trebles all round.
The impressive ITV research shows that advertising can and does help brands maintain their prices and therefore improve profit.
Another optimistic headline is that the UK advertising industry is in good health. The total market grew by 6.1% last year and the online ad market by 11%.
Meanwhile, globally, Meta’s ad revenue was 27% up in Q1 and Google 13%. YouTube is making hay as a streaming platform. Google is paying a maiden dividend and is now a $2tn business, thanks to its ad business and AI potential. Business for the big digital players is booming yet again, fuelled by frothy adspend.
So, plenty of reasons for the advertising industry to be cheerful, n’est-ce pas?
Below the headlines
Well, some of it, anyway. The rosy glow should be tempered by a deeper analysis of the numbers below the headlines. As ever, the good news is far from evenly distributed.
Let’s start with Thinkbox. The team there should be ennobled for their heroic efforts on behalf of broadcasters but also for the industry as a whole. Their 2017 Profit Ability study with Ebiquity was outstanding.
Now, they have teamed up with Ebiquity again, with the addition of WPP’s EssenceMediacom, Wavemaker, Mindshare and Gain Theory, to produce another doozy — this time covering a range of categories and brands across all the major media and the most recent data.
While all advertising pays back, the most profitable medium is linear TV. The results for all other media are positive and paid search again shows strongly, but broadcast TV remains the top earner despite some of its loss of absolute reach. Unsurprisingly, broadcaster VOD performs well, too, given its similarity to linear TV.
Cynics may now resume their usual stance on Thinkbox research, but the sheer scale of the data, the involvement of independent partners and the obvious logic of the findings should be enough to convince most impartial observers.
The study shows that, despite all of the changes in the market, consumer reaction to advertising as demonstrated by business results remains steadfastly unmoved. Life doesn’t change as quickly or as much as our industry likes to tell itself.
Parallel world
But, hold on — if the Thinkbox data is accurate, why are Meta, Google, TikTok, Amazon and their ilk harvesting so much ad revenue at the expense of the better-performing channels?
We know one key reason is that they serve different constituencies, ranging from the gigantic Chinese digital commerce players to much smaller businesses. They exist in a different and parallel advertising world.
But they can only produce these kinds of revenue numbers if the branded goods and services players also beat a path to their door, as illustrated by NatWest and TikTok, and no doubt many more chasing “eyeballs” rather than effectiveness.
When Silicon Valley and Wall Street overpowered Madison Avenue, advertising became a function of supposed audience availability rather than a business discipline that requires careful and experienced craft to produce ad content that works.
Inherently inefficient?
The conundrum is that the channels that perform best in business terms according to Thinkbox are not the ones being rewarded for their effectiveness. TV delivers 55% of the full payback from all advertising, but receives 44% of the money.
Could it be that advertisers and their media agencies are not planning and buying media in a way that produces the best business results? Profit Ability 1 in 2017 showed a strikingly similar picture, so there’s been plenty of time to make the necessary changes.
Thinkbox provided plenty of data on how well online advertising performs — and again the online players return profitable results but lag others. Paid social is especially good at delivering long-term effectiveness.
Online display is somewhat less effective and we shouldn’t be surprised by this, as the dynamics of the online ad industry are well-known to be inherently inefficient, as illustrated by Bob Hoffman in Inside the Black Box.
It should be said that Bob’s analysis relates to the open web, not walled gardens. In the latter case, no-one but they know how well they perform, but the money piles in anyway. On the evidence of the Thinkbox data, a lot of it is less effective than alternatives.
Imagine how much more powerful online advertising would be if two-thirds of the money spent in it wasn’t lost in transaction costs and the panoply of ad exposure factors.
Loss of authority
Now, let’s dig into the financial results from the holding companies. Their profits only grew by an aggregate 2.3% in Q1 — a rather anaemic performance compared with Meta, Google et al.
This isn’t new, but it does rather accentuate holding companies’ loss of authority in the world of ‘Advertising 3.0’ and it does help explain their rearguard attempts to sandbag their profits in dubious ways.
Maybe WPP should practise what it preaches and direct more of its client spend to the channels that perform best. Just a thought.
Engage and entertain
So what might we conclude from this puzzling array of clues?
The advertising that works best is — surprise, surprise — the type that both reaches its audience (not a bad start), commands their attention (even better) and that they enjoy (not a bad goal).
At the Thinkbox event, Richard Warren of Nationwide was disarmingly direct about the need to engage and entertain, with the other positive side effect being that Nationwide staff love their ads and they particularly like the TV commercials.
It’s hard to disagree with David Abraham’s view on the “big idea” as discussed at The Future of Brands — even if it sounds a little retro in the age of instant gratification on social media. Content is always king and advertising content is no different.
We should of course be far more focused on business results and so it was good to hear Gary Vaynerchuk, of all people, advocating at the Possible event in Miami for “real ROI on the business results”. Amen to that.
His recommended remedy is to put organic social at the heart of communications strategy, boldly stating: “The first second of a video on social media platforms is warfare… if you don’t get good at this, you will lose market share.”
I look forward to future Thinkbox studies where the pointy-headed marketing mix modelling people have cracked the measurement of the first second of social media ads and its effect on business performance.
Surely even Gary doesn’t believe what he’s saying.
Less ‘badvertising’, please
Good advertising works well, unsurprisingly, and if we produce more of it, we will have done our minimum jobs, contributed to business generally, made more money for advertisers and ourselves, and provided a better industry for our talented but hard-pressed and under-rewarded people.
The trouble is that there is a vast amount of “badvertising” out there (before I get accused of plagiarism, I admit I stole this word from a brilliant book that mainly talks about the effects of today’s carbon-hungry ad industry on the environment).
Studies such as the Thinkbox report encourage us because advertising still works and if we improve what we do, we can deliver better results for advertisers and make the world a finer place.
So let’s aim to reduce “badvertising”, defined at a minimum as advertising that:
- Is measurably ineffective at building business and brands
- Systematically reduces the impact and effectiveness of marketing spend
- Is unaccountable, untrackable and unmeasurable
- Directs adspend towards less effective channels
- Abuses the privacy of the public
- Bombards people and makes them resent advertising
- Is hobbled by excessive transaction charges
- Is unviewable or exposed to artificial “audiences”
- Enriches criminals through multiple types of ad fraud
- Only exists to make money (such as made-for-advertising sites)
- Is designed to prop up agency margins at the expense of advertisers’ interests
- Delivers adtech’s revenue targets without accountability for effectiveness
- Contributes to making advertising a less attractive career option
- Harms the environment
Rocking the boat
We are fortunate that bodies such as the Advertising Association, World Federation of Advertisers, Association of National Advertisers and Isba are aiming to tackle some of these issues and there are other businesses trying to do the right thing. But there are conflicts of interest, sensitivities, commercial interests and a good old-fashioned reluctance to rock the boat.
However, there is no-one trying to tackle these interwoven issues in totality.
What we can be sure of is that they collectively harm advertising as a business discipline. They are also the result of a loss of the craft that has made advertising so successful in prior times.
Skills such as understanding people and the way they react to messaging, the careful generation of creative content that persuades and doesn’t hector, the planning of media that hits the spot, the buying that is designed to multiply effectiveness (not agency income) and the measurement of audiences and effectiveness. You know, craft skills.
So Brian Jacobs and I are aiming to convene a group of like-minded people who care about these matters and would like to do something about them. Brian’s blog last week picks up this theme.
Finding answers
Under the banner of “Who Cares?”, we will hold a half-day seminar in London later this year to talk openly and on the record about how we make advertising great again. At that session, we will agree how to move forward. We all know what the problems are (don’t we?), but answers are in short supply.
The contribution that advertising makes to public opinion, industry, culture, the joy of the nation, employment, career advancement and the world in general is important enough to care about.
Anyone who does care is welcome to join us by contacting us on [email protected] or [email protected].
In a complex world where money talks, “badvertising” is always going to be a problem. But if we can be honest as an industry about the challenges we face, we may just make life better for everyone.
Nick Manning is the co-founder of Manning Gottlieb Media (now MG OMD) and was chief strategy officer at Ebiquity for over a decade. He now owns a mentoring business, Encyclomedia, offering strategic advice to companies in the media and advertising industry, and is non-executive chair of Media Marketing Compliance. He writes for The Media Leader each month.