Display: A House Of Cards

Despite its dismal track record, spending on display advertising keeps growing at an astonishing rate. Forrester Research is projecting a 17% compound annual growth over the next 5 years.

As far as I'm concerned, it's a house of cards. And if the house goes down, it will take a lot of advertising-supported online businesses with it.

Here are some reasons I believe display is a house of cards:

• Interactivity has proven to be a joke. Nobody interacts with display advertising. Click through rates are abysmal and keep dropping.

• The promise of precision targeting has also proven to be a farce. Facebook, the poster child for precision targeting, has click rate results so low that they refuse to publish them. If "precision targeting" can't deliver better results, what the hell is the point?

• Ironically, despite its promise of pinpoint targeting, display is looking more and more like it's attracting the scattershot advertiser -- the tonnage direct marketer.

• Even if pinpoint targeting was real, what difference does it make if nobody notices the ads? In most cases, the physical properties of display ads render them essentially invisible. Have you ever heard anyone discuss that awesome display ad they saw?

• The amount of known click fraud is alarming. The amount of unknown click fraud is...unknown.

• The amount of known website visitor fraud is also alarming. The amount of unknown website visitor fraud is...you get the picture.

• After 15 years, can you name a single significant consumer brand that has been built by display advertising? I didn't think so.

There are plenty of smart people in the advertising industry who know display has been a mess, but are keeping their mouths shut because there is too much at stake. Remember, prudent, intelligent people in the ad industry who were skeptical of the magical powers of "interactive" advertising were excoriated for years for being Luddite dinosaurs (who moi?)

There are a few things that could destabilize display's house of cards.

• A high profile fraud scandal

• Widespread recognition of Facebook's display ad dysfunction

• Mobile not living up to expectations

• A major agency or research company throwing open the emperor's closet

I'm not predicting that display's house of cards is going to collapse. It is too well entrenched for that. But if it started to follow the downward track of print advertising, I wouldn't be shocked.

Be sure to see my piece today at Digiday on banner advertising.

How Dumb People Become Successful

After a few years in the business world, something occurred to me. I realized that the majority of the people I met in business were astonishingly stupid.

Years later I was sitting around a bar with a couple of my agency colleagues. We had won a very important piece of business from a world class client. We were working with the very top people at the client and we were  astounded by their shallowness.

A few drinks into the evening one of my colleagues turned to me and said, "I keep thinking that some day we'll meet the smart ones."

At that moment I recalled a conversation I had had years earlier. A friend introduced me to a business concept he called "achieving orbit."

With enough energy, a satellite will escape the gravitational pull of earth and will achieve orbit. Once it achieves orbit, it operates on its own. It will circle under its own power for years. And the only way to knock it down is to get in its way.

Businesses are like this, too, he claimed. After a certain period of success, they can achieve orbit and stay successful without much added energy.

Many companies are powered by products or services initiated years or even decades ago. And barring a horrible accident, they will stay in orbit. They persevere largely on inertia.

That's why all the monkeys running around having meetings and writing memos really aren't doing that much harm. It's why clueless managers really can't do too much damage. It's why all the CEOs and COOs buzzing around in their golf carts usually aren't fatal.

Of course, there are some industries, like technology, that need constant updating. But think about the market leaders in automobiles, food, soda, beer, fast food, dairy, snacks, candy, paper towels, toasters...for the most part, the market leaders today were the market leaders 30 years ago.

From time to time there come along some people who are so stupid that they knock a successful company out of orbit. But mostly, orbiting companies consist of people running around in circles pretending to make contributions. As long as they don't mess with the color of the box, or build a 3-wheeler, or change the flavor to grape, they usually can't screw things up too badly.

Businesses are successful in spite of all these monkeys, not because of them.

Mein Erster Blog Auf Deutsch

Millennials or Gen Y or whatever nitwit cliche you want to use to describe people born between 1980 and 2000 are the current obsession of the marketing industry.

I have a daughter right smack in the middle of this group. She is a lovely, wonderful, intelligent, well-educated, hard-working person. But she is... I guess the polite term would be "economically challenged."

A good deal of what she owns and buys is subsidized by her beloved parents. She is not alone. The economic data for this group is, unfortunately, disheartening.

As an example, people under the age of 34 buy only about 10% of all new cars. And the younger half of this cohort, 18-24, buy only 1% of new cars*. Facts, however, never seem to trump stupidity in the marketing industry.

According to a piece in last Friday's New York Times entitled Trying To Be Hip And Edgy, Ads Become Offensive...

"Some of the biggest names in marketing, including Ford Motor, General Motors, Hyundai Motor, Reebok and PepsiCo, have been forced recently to apologize to consumers who mounted loud public outcries against ads that hinged on subjects like race, rape and suicide."

Why are advertisers getting into deep shit over this stuff?

“It’s the pressure to create ‘viral’ advertising, the urge to get more views online, that leads people to push the envelope,” said Tor Myhren, president and chief creative officer at Grey New York. He added that another contributing factor was the focus on younger consumers. “There’s so much ‘How do we speak to millennials?’ in meetings,” he said.

Here's what I want to know. Why do car makers -- three of the five marketers mentioned above -- even bother with millennials? 90% of the people who will buy new cars are not these people. Yet they remain the obsession of these boneheads -- I mean, marketing leaders.

Let's give this some perspective.

According to Gallup, about 10% of Americans speak German. When was the last time you were watching TV or surfing the web and you saw an ad in German? The logic of American car manufacturers targeting millennials is equivalent to McDonald's running ads in German.

So why are auto marketers obsessed with 10% of their market to the detriment of 90%?

Right. Because they are fucking idiots.


*Several people have asked recently where my automotive data comes from. The answer is RL Polk.