
P&G and WPP: How shit hit the fan in digital marketing - tambourine_man
https://mumbrella.com.au/pg-wpp-shit-hit-fan-digital-marketing-502769
======
pmcgrathm
As someone who has been responsible for a bit north of $1B in profitable,
attributable digital ad spend in my career, I can say with conviction that the
problem comes down to analytics and misalignment of incentives, NOT the
performance of digital media channels.

1)Agencies charge on a % of total media spend, and are thus incentivized to
spend more.

2)Advertisers net benefit from expected lifetime value and revenue generation,
but are often reticent to share this type of information to an agency.

Agencies are commonly unable to get access to business-level health metrics
such as churn, RPU, LTV, and thus optimize to top of the funnel metrics that
often do not correlate with attributable lift but do correlate with showing
the value of increased levels of spend. Such metrics include click-through
rate, viewability, brand awareness and safety, fraud mitigation, etc.

This, combined with the improved ease of use for major digital platforms (I
know quite a few startup CEOs who manage all of their PPC/Facebook ad spend),
is why the agency model has started to fail. And that is a good thing.

The less intermediaries that touch an advertising campaign, the less likely it
is that we as consumers will see an irrelevant ad.

~~~
baybal2
It is, better to say, a sunset for the industry as such.

Digital ads had the most wow effect at the time of google's text ads and
Internet yet not being a general demographics' thing.

Back then, they were able to show numbers, but not now.

First generation internet users were mostly highly technically literate, high
income professionals. Now, the user ratio has reversed.

You can argue that putting efforts to find a needle in a haystack was still
paying off when the majority of needles were of incomparably higher marginal
value than they are now: consumer goods clicks, say, are lower value than
commercial equipment sales clicks, yet you still have to put an equivalent or
greater effort to datamine somebody to make them buy an accursed face lotion
even if the number of face lotion buyers is 1000 times bigger.

This is a tragedy of the Internet ad industry. There is a finite amount of
eyeballs, and the amount of companies with a substantial money wanting to sell
you a face lotion will always eclipse the amount of companies who market
unique, relevant, specialty products one may actually be actively looking to
buy.

~~~
soared
I don't understand your critique:

>unique, relevant, specialty products one may actually be actively looking to
buy

This is because the number of people who buy normal lotion is 1000x the number
of people who buy unique specialty lotion. Why would the advertising be
different than the market?

>First generation internet users were mostly highly technically literate, high
income professionals. Now, the user ratio has reversed.

The internet reached the masses - how is that a negative for advertisers? They
have more people to advertise to.

>yet you still have to put an equivalent or greater effort to datamine

This isn't true. For lotion you buy lotion related keywords, for commercial
equipment you need in-depth research about those products, use cases, industry
terms, and the queries people use.

~~~
baybal2
>This is because the number of people who buy normal lotion is 1000x the
number of people who buy unique specialty lotion. Why would the advertising be
different than the market?

No, I can't imagine anybody randomly buying a random face lotion online, and I
say that as somebody who did a stint in adtech for a few years with access to
"crown jewels" of a major advertising brokerage conglomerate. People barely
click on FMGC ads even if being force fed, I would've shown you the digits if
not for NDA. Their purpose is impressions, even if they are not explicitly
billed on PPM basis.

The lion share of ad inventory of any tier 1 ad vendor are for "stuff people
buy in Walmarts," and yes the total revenue from FMCG ads is mind boggling and
defies any attempt at rational understanding.

Even if the sole point of an ad is to keep the product on top of somebody's
mind, it will be of very very little payoff to an advertiser. Though, one can
reason that a gigantic big fat FMCG co. bathing in cash can still easily
afford doing so even if is patently stupid. This is because even if their bang
for buck is approaching zero, it is still better than none for them.

>This isn't true. For lotion you buy lotion related keywords, for commercial
equipment you need in-depth research about those products, use cases, industry
terms, and the queries people use.

I counter your argument. In both cases, the adtech efforts needed to sustain a
barely functioning campaign eclipse all other hurdles. Extreme targeting is
the key - even if it sucks, it sucks less than investment in almost anything
else including £1k per hour big name marketing consultants.

How it looks on technical side: huge effort at industrial scale purchasing of
"cubes" \- huge databases of cookies with their statistical and fuzzy logic
data from _thousands_ of companies, including the black hat scene. Other than
cookies, analogous data come from email list vendors, IMEI/phone number db
vendors, vendors of stolen contact lists, search histories, GPS data and etc.
All of this is barely enough to for a sustained campaign for F500 FMCG.

------
gk1
This is true for startups, too. If your marketing team (or agency) is running
ad campaigns, _demand evidence of its contribution to the bottom line_.

Also, ensure your marketers’ self-worth is not tied to the outcome of the
campaigns they’re running; or else they will hide bad outcomes.

I regularly shut off campaigns if there’s no evident benefit of keeping them
on, regardless of what the industry says. For instance, a lot of people talk
about retargeting, but _I have not seen any success with retargeting_ after
trying with 5-10 clients.

I also discovered that Twitter charges you for accidental clicks on your ads
even if they _know_ they’re accidental. Also, these accidental clicks made up
>90% of clicks on one campaign I ran.

It’s reassuring to see the big players come to the same realization.

~~~
libertine
> demand evidence of its contribution to the bottom line

If agencies have no access to business metrics, isn't this burden upon the
advertiser to evaluate the campaigns in terms of business metrics?

Media agencies have their own kpis of success - a campaign can have a good
performance media wise, but have little to no impact on the business.

You can say: "well... blame the creative agency for their poor campaign
concept!" ... you can say that... except they work with what they have: a
specific brand and a product/service.

No agency controls distribution, pricing, placement, quality, customer
service, and many other variables that dictate the success of a campaign.

It's easy to blame agencies because they are outside organizations. You are a
pitch of way of cleaning your bad decisions as a brand or marketing manager.

The client is always right, even when the client is wrong.

~~~
gk1
You're right, my comment applies more to in-house marketing teams or whoever
is managing the agency, and not the agencies themselves.

------
tialaramex
So far as I can tell a large fraction of adverts "targeting" me don't
understand time's arrow.

I bought some very expensive high heels as a treat for myself. They don't make
them in my size, I bought them because they're beautiful and put them on
display.

In the following weeks I received lots of advertising for those exact shoes.
Not for high heels generally, not for nice frocks, and certainly not for glass
display shelves, just endless adverts for the same exact pair of shoes.

Somewhere a "digital advertising executive" is telling their client that these
adverts were very highly correlated with sales of the shoes. Of course,
they'll disclaim, correlation isn't causation. But it is - that's their dirty
secret, just the reverse of the causation pretended to. Advertise to people
who are already buying the product, then say "See advertising works".

The shoes are the most blatant example because they're so noticeable (I did
not spend that much on shoes which are merely a pretty red colour or covered
in sparkles) but I even saw this for mundane things like a Seagate hard disk.
I purchased the disk a week ago, immediately I began to receive adverts for
it, and they tailed off after a few days. Every single penny spent on that
advertising was wasted, I already _bought_ the hard disk. The online grocery
store I sometimes use actually builds custom adverts with my exact list of
groceries in it, then advertises them to me the day after I order them for
delivery, again a human looking at this can see instantly that it's insane,
but so long as you don't understand time's arrow (and an advertising algorithm
has no a priori reason to do that) then the correlation looks really good...

~~~
irremediable
You make an interesting point about something I _thought_ I understood, but
actually didn't.

I always assumed the point of this advertising approach was that it's messy,
but it works. Someone who just bought shoes probably won't be buying a new
pair ASAP, but there might be better odds than for any random person. Maybe
they like shoes, maybe they'll return them, maybe that's their go-to gift for
friends.

I genuinely hadn't thought it might just be an exercise in fudging correlation
numbers to make ads look more successful than they are.

------
nl
It's a pity there is _so_ much misunderstanding about what this spend is.

Most people seem to have a reasonable understanding of the "sales" side of the
advertising business, where you are trying to get someone to buy your
products. That's _not what this is_. This is the _marketing_ spend, where you
are trying to get people to know about your product.

This _isn 't_ your typical search engine, facebook or retargetting spend. A
very large amount of this is video and/or display advertising, and the
intention isn't to drive click-though. Instead it is to drive "brand
awareness".

The theory here in the FMCG (fast moving consumer goods - think toothpaste or
shampoo) segment where P&G plays is that a consumer needs to be familiar with
a brand before they make a choice to buy it - especially if it is more
expensive.

So the sequence goes:

Make people aware of brand (brand advertising: TV ads, Video ads, Stunts etc)

Get people to try brand (special offers, discounts, co-selling)

Let retailers fight for the sales between themselves (display setups in shops,
retailer discounts, recommendation engines in online shopping, maybe click-
through advertising)

This "brand awareness" is something which is much harder to measure (I think
survey panels is the state-of-the-art still). The digital advertising industry
still hasn't solved multi-touch attribution in the _sales_ side of the
business, and this is way earlier in the buying cycle.

------
elorant
This looks like the perfect storm for online advertising. For one, ad blocking
is on a steady rise and it seems that it got the networks worried to the point
that Google tries to circumvent the whole trend by supporting better
practices. Then we have the upcoming GDPR ruling in EU which could wreck havoc
to advertising networks. On top of that we have ad fraud which has gone to new
levels especially after the story about Methbot broke out last year. And now
we see major consumer brands pulling out of online advertising.

I have to admit, I love this whole situation. Online advertising has long
stopped being useful and it's becoming malignant hurting the medium in so many
ways. It seems that ad networks don't bother at all to fix any of the problems
from privacy to malware and whatnot. So fuck them. Let them wither and die for
all I care.

~~~
igorkraw
And let the micropayment dream rise in it's wake!

With classical stuff like Liberapay, patreon and buy me a coffee and more
fancy stuff like Cryptocurrencies, we should finally be able to fund our stuff
differently.

------
matte_black
> Also, I am told by industry insiders, a “blockbuster” study on media
> performance in the UK is coming in the next few days. It will make the
> digital ad industry apoplectic and have them screaming.

Can't wait to see this one on hackernews in a few days. Is 2018 going to be
the worst year yet for digital ads?

~~~
zombieprocesses
> Also, I am told by industry insiders, a “blockbuster” study on media
> performance in the UK is coming in the next few days. It will make the
> digital ad industry apoplectic and have them screaming.

Hard to take someone seriously when they talk like that. Also it's hard to
take the publication seriously when they write nonsense like that. It sounds
like local car company or mattress company advertising. "These prices are so
low that it will have you screaming!".

> Is 2018 going to be the worst year yet for digital ads?

Worst year yet? Digital advertising has been growing by at least double digits
for the last 10 years.

It surpassed TV ad spending last year.

[https://www.recode.net/2017/12/4/16733460/2017-digital-ad-
sp...](https://www.recode.net/2017/12/4/16733460/2017-digital-ad-spend-
advertising-beat-tv)

Digital ad spending is going to increase. It's where the young people are.

It might dip as the corporate elite try to control social media, but for it to
have the "worst year yet", digital ad spending would have to drop by 99.99% of
last year's spending to get to 2000s level spending. We already surpassed that
the first week of january.

~~~
nikanj
I don't think that's a fair way to measure "worst year yet". If your agency's
sales drop by 20%, it doesn't console you to know that the industry overall is
much bigger than it was in 2000.

~~~
zombieprocesses
> I don't think that's a fair way to measure "worst year yet".

Then what is? What were you referring to when you wrote "worst year yet"?

> If your agency's sales drop by 20%, it doesn't console you to know that the
> industry overall is much bigger than it was in 2000.

You didn't mention a particular agency. You mentioned digital ads in 2018. So
that's what I responded to. Of course there are going to be winners and losers
within any industry.

------
yourdonut
What I find odd is that digital ads gives you much more clarity of impact than
tv/radio/print ads. It also gives you more detailed cohort data so that you
can learn from experiments and adjust your buys based on where the impact is.
It's as if the P&Gs of the world woke up recently and realized they need to
understand impact of their media buys in general.

~~~
mirimir
Ads offend me. They're an imposition, distracting, mind pollution. So I block
them. And even when I see them, using a browser in a LiveCD etc, I pointedly
ignore them.

Now maybe I'm unusual. Long ago, I did get used to an Internet without ads.
And was sad when malware and ads started showing up. But given the increasing
prevalence of ad blockers, I'm not _that_ unusual.

So anyway, average view time of 1.5 sec for ads seems about right. Especially
if that average includes lots of zeros.

~~~
carlivar
Do you subscribe to any digital media as an alternative (or I suppose, as an
alternative to the ad blocking alternative)?

~~~
mirimir
I subscribe to some sites as my meatspace persona. But nothing so far as
Mirimir, because there are no ways to pay anonymously.

------
mathattack
It amazes me that P and G pays outside agencies huge heaps of money to
agencies that sit between them and the advertisers. Seems like a slam dunk to
move in House given the incentive issues.

~~~
nopriorarrests
in some cases agencies really add value and have competencies which are not
that easy to insource back.

some examples:

for smallish advertisers (this is not P&G, I understand) agencies can
negotiate much better terms, because agencies are buying in bulk.

and if you are interested in performance marketing with clearly measurable
results, building a good internal team could be a challenge as well.

so, it's not a slam dunk.

~~~
notyourday
Except that agencies do not pass those "much better terms" to the clients.

~~~
karljtaylor
WPP != agencies

plenty of model innovations are out there, but P&G ain't that kind of brand.

------
Intermernet
I recently came across a digital marketing trade publication which was
advertising a conference in Australia (Melbourne I think, I may be wrong).

The key subject of the conference was to be the loss of trust from consumers
due to the indiscriminate collection of personal data by advertising companies
/ channels.

The discussion wasn't around whether or not the advertising industry should
curtail this data collection, or perhaps be more responsible with it's use.
The discussion was about how to change the customer's perception that this
data collection was a bad thing at all. I then realised how out of touch this
industry was with reality. As the article stated "Reality was always there for
anyone who wanted to see it. An idiot blogger I know has been writing about it
for almost 10 years."

I'm admittedly anti-advertising (especially the current approaches to
"digital" marketing) but I do see it's worth when done in a responsible,
balanced way. This insight into the way the industry reacts to the concerns of
the customers has only confirmed my previous negative opinion.

I'm not sure if cutting out these "holding companies" from the equation will
result in any change from the customer's point of view. It will probably just
end up with P&G hiring a bunch of WPP staffers to run their in-house
operation. This may kill off a few industry middle-men, but it will probably
just result in higher profits for P&G with no benefits to the consumer at all.

------
joncrane
>According to MarketingWeek, Mark Pritchard of P&G had this to say on
Thursday: “If entrepreneurs can buy digital media, why can’t the brand team on
Tide, Dawn and Crest be entrepreneurs and do the same? They can, and they
will.”

The big question here is, were the famous Super Bowl "Tide Ads" created by the
Tide brand team, or an external consultant!?!?

Maybe P&G are emboldened to publicly speak out due to the success of that
campaign?

------
debacle
The bottom was starting to fall out ~8 years ago when I was doing analytics
for a series of P&G content funnels.

That was when I first understood how valueless online ad sells are. In the
sophisticated model we had (which filtered out bots, spam, paid for clicks,
etc), P&G was in some instances paying at least (I only had our costs) $1000
CPM for views. Of course, in the data they saw, the numbers were far far
lower.

------
cronjobma
I feel there's so much to gain in the advertising space. Companies want to
advertise, publishers want to make money and consumers want to learn about
stuff they love. I wonder if there are startups tackling this problem. If you
can create something that all 3 stakeholders love, you can change the
landscape.

~~~
biznickman
Not to be self-promotional but the company I work at is tackling the problem
in a way that at least helps 2 of those parties if not all 3 (unified.com).
Albeit my commentary below is my own personal take.

Providing transparency to the marketers enables them to provide better
targeting, more efficient spend, and in turn provide a better experience for
their customers.

One other note pertaining to agencies. They'll continue to exist but the world
where they can just blindly spend money is coming to an end. Previously they'd
have a random ad buyer in the agency just go and spend the money. Those days
are coming to an end and the free margin is going to instead go to reward
those agencies that more effectively manage spend.

More transparency --> More insights --> More efficient spend --> Better
overall experience.

------
kevinbowman
I love the irony of there being several ads on that page.

~~~
rblatz
I read the whole article, and don't use an ad blocker. I don't recall seeing
any ads on that page. I find that pretty humorous.

------
einrealist
If that becomes a trend, wouldn‘t that increase the amount of poor quality,
even malicious ads as ad companies have to lower prices and be less selective
about their customers?

