The Pandemic Helped Entrepreneurs Kick This Outdated Digital Advertising Behavior
It is very encouraging to see marketers taking a closer look at their digital advertising spend and asking more difficult questions. Many of them paused digital marketing in 2020 due to the pandemic and are more thoughtful and cautious about what to turn on again in 2021, especially given the expectation of tighter budgets for the future and closer scrutiny from CEOs, CFOs and more Compliance Officer.
Airbnb cut ad spend by $ 800 million in 2020. Commenting on his latest quarterly earnings call, Brian Chesky, CEO said, “The pandemic has shown that we can take marketing to zero and still have 95% of the same traffic as last year. So we will not forget this lesson. The previous KPI was all about how to buy cheaper media. ” [1]. “In the fourth quarter, more than 90% of our traffic was direct or unpaid. Accordingly, performance marketing spending will be significantly lower in 2021 than in 2019 … and [there will be] a permanent shift to the brand [advertising]” [2]. See: Airbnb cuts in permanent shift from performance marketing to branding
Adidas came to the same conclusion. They were so focused on short-term digital “performance metrics” that they invested too little in long-term branding. “The problem … is not the metrics themselves, but the focus on the wrong metrics. Digital technology offers a wealth of short-term measurements, often in real time, which has resulted in marketing investments being misdirected. brand [and category] drives 65% of our sales in wholesale, retail and e-commerce [at 55% of investment] it has an underinvestment. We [were] We’re too focused on digital attribution and digital distribution, but we’re improving, ”said Simon Peel, global media director for the sports brand [3].
There are some important lessons that are underpinned by the two examples above. It’s not that you should permanently turn off digital advertising spend, but that you can spend it better and get more results than before. The main lesson from Airbnb is that they had previously focused on the wrong KPIs that ultimately led them to buy cheaper and cheaper digital media, ironically disguised as “performance”. The second lesson is performance versus brand. There seems to be a performance in the digital realm – e.g. B. More clicks – but often there are few to no incremental sales or key business results. Part of this is due to clicks coming from bots, not people. Part of this is because marketers lose half their dollars to adtech middlemen before they even run ads. See: How Much of Your Dollar Goes to Digital Working Media?
In recent years, marketers have shifted most of their digital budgets to hyper-targeting and performance media. Agencies and adtech firms led them to believe that this would lead to more effective marketing. As it turns out, paying for more targeting parameters and getting more clicks and traffic had virtually nothing to do with marketers’ bottom line. This only resulted in more revenue and profits for the agencies and adtech firms that sold these services. These digital “performance” tactics led to a large number of activities (clicks and hits on the website) that were easily reported as “success” in the chain. Instead of more business results, however, these tactics exacerbated ad fraud and waste, as bots click ads far better than humans, and advertisers always got more clicks from crappy long-tail websites than mainstream publishers because the former also bought fake bot traffic Clicks for them.
Digital media, especially those sold through programmatic channels, were highly addictive for marketers. After all, there was no other place to get 1) “Scale” – large amounts of ad impressions to buy, 2) “Cost Efficiency” – low CPM prices only possible from fake websites with fake traffic, and 3) . “Performance” – the appearance of better engagement from bots clicking on the ads. In the last 10 years since programmatic started, marketers have soaked themselves with this “triple ball” of digital advertising ice cream. You couldn’t give up this habit. Until now.
The pandemic and the switch-off experiments in 2020 contributed to uncovering the “emperor without clothes” and the harmfulness of this drug. A large yardstick is useless when most of that yardstick comes from fake websites and fake users. Your ads have not been shown to people so you will not be getting business results. “Cost-effectiveness” in the form of low CPM prices didn’t save you any money (because you bought much larger amounts of ad impressions). In addition, you had to pay more for new services like fraud detection, visibility detection, brand security detection, etc. All of this has helped agencies and adtech providers get more profit from you. Less of every dollar you spend goes to “working media” – serving ads. And “performance” doesn’t mean anything to your bottom line, since “many clicks (from bots) don’t lead to many sales (for you).”
Marketers can take a page from the Airbnb and Adidas playbook – try their own turn-off (if you haven’t already), see actual business results, rather than creating and shifting easy-to-measure digital metrics like traffic and clicks and postpone spending targeted digital performance media to old-fashioned branding – ads that are shown to people. If your ads are showing to people even if they don’t click, you will still get better business impact and results. And that also means you don’t need as many of the privacy-invasive tracking cookies that go away anyway. (More on this in my next article).
Addictive substances such as alcohol, cigarettes and drugs.
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