Monday, August 22, 2016

College Humor -- "If Internet Ads Were Salesmen "

I keep meaning to do a post about the terrible state of targeted marketing. When I get around to it, remind me to embed this. At least half of the points I want to hit are illustrated here.


After I scheduled this in the form above, Josh Marshall posted a piece on internet advertising and the death of Gawker. It contains an informative primer on how this stuff works.

Many people think that the more popular a publication gets the more ads it will sell. The bigger the audience, the more eyeballs, the more ads wanting contact with those eyeballs. That's not how it works.

There are a million dimensions to the advertising economy, just as many ways of describing it. But you can understand a whole lot about how the whole thing works by thinking in terms of three factors: 1) endemic sales proposition, 2) controversy and 3) influence.

Let's talk first about endemic sales proposition. Because I think it may have played some role in Gawker's demise (on-going legal liability may have played more of a factor or have been the entirety of the issue). A site about clothes has an endemic sales proposition: selling clothes. A site about books: books. You may say well, I only read sites about news and sports but I still buy a lot of clothes so ... Not how it works.

For a variety of reasons, some good and evidence based, others silly, advertisers want to sell you their product when you are thinking about it and in the mindset to buy. This doesn't just mean impulse purchases, but buying in general. In many cases that makes a lot of sense.

For instance, aside from people being really into tech, why do you think there are so many tech sites? Right, because there's a ton of money in video games, devices, computers, everything under the sun. People also tend to buy those things online. Again, we're not just talking about impulse buying. It can be more nuanced and less direct. But if you stand up a site about tech, gaming, computers, etc. and it does well, you have a ready made channel for ad sales. And in the case of tech an extremely lucrative one.

Sometimes it's a little more amorphous but no less ad driven. Why so many 'lifestyle' publications? Well, we all need a lifestyle, of course. And general interest magazines cover many interesting topics. But by and large that's because you're aiming for an audience of people who are affluent and want to read about cool things affluent people do: travel, toys, aspirational personal development. Not that there's anything wrong with that, as they used to say on Seinfeld. But that's what it's about.

Next, controversy. This largely speaks for itself. Advertisers don't want to be around things that upset people or divide people. They want to be everyone's friend. They don't want negative ideas or stories to rub off on them. This isn't an absolute of course. Plenty of sites which court controversy sell tons of ads. Gawker's a prime example. But controversy is always a constraint on ad sales. You just may have other factors that overcome it.

Next, influence. This is an inherently small and nebulous part of the equation. But it's key for many publications. Many ads aren't trying to sell you anything directly. They're trying to tell you stories, shape your thinking, advocate positions. Political ads are like this. But they're mass market since obviously everyone can vote - at least in states without Republican governors and Secretaries of State. But where the money is is with people who are considered influential in various communities, so-called "opinion-leaders".

Here's an example. Go to the subways in New York you'll see ads for storage rentals, lawyers, grocery deliveries, breast augmentations, ESL courses. Go to Washington DC and you'll see ads for ... Kazakhstan or Northrup Grumman or PhRMA or well ... you get the idea. There are lots of people who care a lot about what people in the nation's capital think. And yes, TPM very much plays in that ad space. TPM and similar sites lose big on #1 and #2. But #3 is where there's a business that can drive ad sales.
As a marketing statistician, I'd like to emphasize the point about "reasons, some good and evidence based, others silly." Most of the people buying these ads, including high-level executives at Fortune 500 companies, have a very weak grasp of how targeted advertising works.


  1. The thing about ads in the DC Metro resonated with me. I grew up in DC, and the Metro was installed when I was a kid. I don't remember the Metro having any ads then. Or, if it had ads, it didn't have a lot of ads. But then a few years ago I was in DC for a conference and I rode the Metro, and I noticed all sorts of ads for Grumman etc.

    Something changed and all those lobbyists started advertising on the Metro. I don't know what it was. Maybe they decided that decision makers were no longer reading the Washington Post?

    1. I don't know if this explains your example, but one of the things I learned living in LA (particularly my time in Studio City) was that much if not most advertising in a company town is more directed at the clients than at the target audience.

      On a related point, a lot of supposedly customer-centered advertising is actually directed at the press (call it the Netflix effect). Perhaps lobbyists were trying to build brand with writers at the Washington Post.