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The Year Some Digital Emperors Lost Their Clothes

Posted by Doug Garnett August - 4 - 2016 - Thursday

It’s been an eventful year in digital – with a string of writers and speakers pointing out where Regal Attire is missing among the Emperors.

Because of this, I thought I’d pull together a brief list of links to some of the most interesting revelations of undress:

Dan Lyons published his book “Disrupted: My Misadventure in the Startup Bubble”. This  book offers an insider’s view of HubSpot – but it takes on a much bigger topic. Essentially, it shows how easily digital ventures (like AdTech and marketing automation) become games dedicated to driving up share price without delivering value to the customer (those companies who use their services). In the next year, we’ll discover this is true of the online video marketing business – but that emperor hasn’t yet been called out. (Check out Dan Lyons’ book here.)

The Digital Fraud Debacle. AdContrarian Bob Hoffman has extensively covered incredible fraud in the digital marketing business. (Sample of Bob’s postings here. You can find another one here.)

Media Fraud in General. A new ANA report reveals how some agencies drive their own profits at the expense of making good choices for their clients. While it’s a good first step, some felt that it was an inadequate report attempting to just “get by”. The AdContrarian has discussed the ANA report. And I’ve written about the conflict agencies find balancing their profits with client success.

Television has been rediscovered. Okay, it never went away. But this year recognition has been clear that smart advertising for mass market leverages TV. A key part of TV’s value is its incredible reach. As Byron Sharp has shown in his books How Brands Grow & How Brands Grow, Part 2, the Law of Double Jeopardy shows the critical need for brands to bring new customers into the fold (engagement is not most critical). Now let’s see how long it takes all those managers who sold their CEO’s on an all digital future to admit reality.

Marketers Begin to Realize Hyper Targeting Isn’t All that’s been Claimed. A key part of the digital mythology has been delivering laser like ability to find and target individual prospects. It’s clear that this hyper-targeting doesn’t have laser like accuracy (I bought my Ford Explorer 9 months ago. Would you PLEASE stop sending me targeted ads!). But there are more fundamental marketing problems with hyper-targeting as explained by Shann Biglione of Publicis China in this post.

Cutting Through the BS About Digital Advertising Options and Streaming TV. Marketing Professor Mark Ritson made a speech about marketing reality, big numbers, and truth. His speech is becoming infamous – primarily from some nasty responses posted by people who are threatened by what he has to say. It’s long, but I highly recommend watching it end to end. While Prof. Ritson may initially sound like a bit of a digital curmudgeon stay tuned – he’s not. He just wants people to say what’s true. Please, watch his video.

We Learned that Digital Display “Impressions” Are A Phantom. Research shows that only 9% of display ads are visible for more than one second to human users. Since there’s an incredible number of “impressions” that are bot generated, the true number far less. Once again I’ll thank the AdContrarian for bringing this to our attention in his recent blog post titled “Display Ad Horseshit 

eCommerce Economics Don’t Add Up. Digital retailing is now known to have bad economics. Steve Dennis has done some excellent writing this year pointing it out like this post about PurePlay eCommerce. And in just the last month we’ve seen some excellent work pop up in Harvard Business Review about the issue. One finding from the HBR article was that “encouraging in-store customers to shop online decreased profits”.

The Biggest Strategic Advantage for Brick & Mortar Stores are their Stores. I’ve tried to add to this year’s revelations with a post suggesting Amazon isn’t nearly the threat to retail that Amazon claims, and suggesting that Amazon’s retail revenue is about half of what they claim. You can read it here at RetailWire.

That’s really an astonishing list. Unfortunately, as Daniel Boorstein pointed out “The Greatest Obstacle to Discovery Is Not Ignorance—It Is the Illusion of Knowledge”. Many marketers and advertisers are suffering under an incredible load of illusory knowledge.

Lest you believe I’m an anti-digital curmudgeon, please remember you’re reading my blog post. My curmudgeon-ly moments come because I believe it is our responsibility in the ad business to do what’s right for clients, and that requires that we get a clear vision for truth. Digital fog and distractingly shiny baubles have been making clear vision a rare find – especially for mass and retail oriented marketing.

Here’s what I think marketers should be doing right now:

  • Follow your strategy and create best communication mix for your needs. Never try to ensure your strategy fits into a digital tactic. Only use digital (or any medium) when it’s the right tactic for your strategy.
  • Agencies have an obligation to understand and support the client’s strategic premise before trying to force specific tactics onto clients. This is especially critical since agencies fight temptations to recommend first that which is most profitable for themselves.
  • Don’t chase not-for-profit digital strategies down a rabbit hole. VC and private equity can’t subsidize these business models forever. If you make a big bet on them, you may be the one left holding the bag. (Remember, not even Salesforce.com has a history of P&L stability.)
  • Many of these venture funded, profitless companies have raised consumer expectations using unprofitable business models (e.g. Amazon at retail). That makes marketing quite a challenge. And competition remains fierce.  Make sure your strategies and budgets are focused on your customer, not the digital du jour marketing strategy.

Publishing a list like this is tricky. Too often, digital enthusiasts respond to critical analysis of digital claims as evidence of an evil (backward?) “anti-digital” tendency. Yet advocating for smart business practices and savvy work among a range of options isn’t “anti-digital”. It’s pro-business.

So let’s do what’s right. Search out what works and do it. But in the meantime, we need to hold some skepticism about the big claims coming from digital enthusiasts.

(Please feel free to add additional debunking of your favorite topics in the comments below.)

Copyright 2016 – Doug Garnett – All Rights Reserved

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Doug Garnett, DRTV and Technology Industry Expert

Doug Garnett is founder and CEO of DRTV agency Atomic Direct and a leading expert on innovative uses of DRTV, infomercials and other in-depth TV and non-TV messages to build brand and drive sales.

Doug has been working in and around the technology field for 27 years. After starting in aerospace, he spent 5 years selling and marketing supercomputers. Since shifting to advertising, his clients have included AT&T, IBM, Apple, Disney Mobile, Ugobe, Presto, and Netpliance.

Doug sits on the editorial board of Response Magazine, is an adjunct professor of general advertising at Portland State University, and is a member of the Jordan-Whitney Greensheet Panel.

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