Received another Costco advertising booklet in the mail today. Stuff for sale and on sale. Costco is fairly internet savvy. Funny they are sending out dead tree media to promote business.
In the 11/1/14 edition of Forbes, page 11, the Chief Product Officer (?!) of that august org give a rundown on online advertising... doesn't look good. I ran the numbers on his percents:
Ad viewability - only 5 in 10, 000 readers click on a display ad, but only 70% of readers see the ad in the first place. Hmm... 10,000 is 70% of 14,286... and 5 into 14,286 is .00035. So ad impressions online is about 35/100th of 1%. Now mail order catalogs, dead tree media, gets sales of 1/10th or 1% of impressions. Online advertising only gets about 1/3rd the views of catalog sales.
It is interesting no one can bring themselves to admit what the sales rate is with online advertising.
Fraudulent Traffic... and even if someone did report a click, who knows if it is accurate? The numbers above include fraudulent traffic meant to make online advertising look good one way or another, some 36% of internet traffic being fake.
This is a problem with building a system on something started by the Hegemon. The internet was invented as a closed system with some rather brutal responses to people messing about. In 1980 that system changed, telecom was deregulated and the first order of business as to create a system that relied on technology and property rights to control fraud and force. Never happened. AOL and Apple gave it a try, Apple largely succeeding, as far as they could influence.
But Microsoft got the government contracts and within the Hegemon productivity does not matter. Spam rules. And with no rational limit on what can be financed by lending credit, we built out a system that is pretty bad as to security, and then charged it to the grandkids. Capitalism is an awful system.
Since online advertising is ineffective and rife with fraud, Forbes Chief Product Officer D'Vorkin notes some online sites are promising 250 hours of in-view time for an ad. Fine, but what about sales for that time at what cost?
I've been offering people who try to sell me on online advertising a bounty of $47.50 per sale, a 50% affiliate fee or anything you want to call it. 15 years in, no takers. I am sure because they know it cannot be done economically.
Google Ads will allow you to track from click to sale so you can associate your ad costs to actual sales, but true to Google form, Google Ads cannot be used by anyone short of computer scientists. I meet countless people who say "yes, tried Google Ads, could never figure it out." That is either on purpose or they have so much false economy ad revenue that why bother with mere viable businesses?
Forbes notes that now more dollars are going into programmatic buying, where computers are matching ad opportunities with big data at lightening speed, no need to humans. Would love to hear if that is effective. Maybe so.
The Chief Product Officer says Forbes was on the cutting edge in 2010 with native advertising, in which "50 marketing partners publish content" on Forbes. Is slapping a by-line on a advertiser's press release all that new?
There is massive malinvestment and misallocation in media. When the bust comes, there will be a shake-out and the false economy rags will fail and an organic set of winners will emerge. Unless president Hillary can get in there fast enough and post gatekeepers on a controlled-by-subsidy media.
Feel free to forward this by email to three of your friends.
In the 11/1/14 edition of Forbes, page 11, the Chief Product Officer (?!) of that august org give a rundown on online advertising... doesn't look good. I ran the numbers on his percents:
Ad viewability - only 5 in 10, 000 readers click on a display ad, but only 70% of readers see the ad in the first place. Hmm... 10,000 is 70% of 14,286... and 5 into 14,286 is .00035. So ad impressions online is about 35/100th of 1%. Now mail order catalogs, dead tree media, gets sales of 1/10th or 1% of impressions. Online advertising only gets about 1/3rd the views of catalog sales.
It is interesting no one can bring themselves to admit what the sales rate is with online advertising.
Fraudulent Traffic... and even if someone did report a click, who knows if it is accurate? The numbers above include fraudulent traffic meant to make online advertising look good one way or another, some 36% of internet traffic being fake.
This is a problem with building a system on something started by the Hegemon. The internet was invented as a closed system with some rather brutal responses to people messing about. In 1980 that system changed, telecom was deregulated and the first order of business as to create a system that relied on technology and property rights to control fraud and force. Never happened. AOL and Apple gave it a try, Apple largely succeeding, as far as they could influence.
But Microsoft got the government contracts and within the Hegemon productivity does not matter. Spam rules. And with no rational limit on what can be financed by lending credit, we built out a system that is pretty bad as to security, and then charged it to the grandkids. Capitalism is an awful system.
Since online advertising is ineffective and rife with fraud, Forbes Chief Product Officer D'Vorkin notes some online sites are promising 250 hours of in-view time for an ad. Fine, but what about sales for that time at what cost?
I've been offering people who try to sell me on online advertising a bounty of $47.50 per sale, a 50% affiliate fee or anything you want to call it. 15 years in, no takers. I am sure because they know it cannot be done economically.
Google Ads will allow you to track from click to sale so you can associate your ad costs to actual sales, but true to Google form, Google Ads cannot be used by anyone short of computer scientists. I meet countless people who say "yes, tried Google Ads, could never figure it out." That is either on purpose or they have so much false economy ad revenue that why bother with mere viable businesses?
Forbes notes that now more dollars are going into programmatic buying, where computers are matching ad opportunities with big data at lightening speed, no need to humans. Would love to hear if that is effective. Maybe so.
The Chief Product Officer says Forbes was on the cutting edge in 2010 with native advertising, in which "50 marketing partners publish content" on Forbes. Is slapping a by-line on a advertiser's press release all that new?
There is massive malinvestment and misallocation in media. When the bust comes, there will be a shake-out and the false economy rags will fail and an organic set of winners will emerge. Unless president Hillary can get in there fast enough and post gatekeepers on a controlled-by-subsidy media.
Feel free to forward this by email to three of your friends.
2 comments:
Really interesting post John. When I think about it, this is crazy. Facebook bought Whats App for $19 billion dollars a while ago pretty much solely based on the fact that Whats App had 400 million users and that equals x amount of ad space that Facebook could sell for big bucks $$.
But as your post shows, the potential "clicks" are really so limited anyways. If I read this right, we can then assume that pretty much the whole social media industry (as a revenue producer) is fake. It is a loser. It would be impossible for all these companies to produce the type of potential income they claim to if they are really only generating such a small percentage of "clicks". Then does this qualify as one of the biggest bubbles of all time?
There is no rational limit to what can be "financed" when one is free to lend credit. What malinvestments and misallocations follow don't really much matter, but at some point, with no rational basis, it will all come crashing down. That a company I bought a shirt form is busy spending more trying to entice me to buy more than they earned on the sale of the shirt will at some point end badly for that company (the could just ask me if I'll buy again, and if not why not.) But no, advertising paid for with credit at near zero interest keeps some people busy.
Post a Comment