First, about the Wanamaker quote. Here is my footnote on the subject, in The Intention Economy:While this line is customarily attributed to John Wanamaker, he was neither the first nor the only source. In The Quote Verifier: Who Said What, Where, and When (New York: St. Martin’s Press, 2006), Ralph Keys writes, “In the United States this business truism is most often attributed to department store magnate John Wanamaker (1838–1922), in England to Lord Leverhulme (William H. Lever, founder of Lever Brothers, 1851–1925). The maxim has also been ascribed to chewing gum magnate William Wrigley, adman George Washington Hill, and adman David Ogilvy. In Confessions of an Advertising Man (1963), Ogilvy himself gave the nod to his fellow Englishman Lord Leverhulme (Lever Brothers was an Ogilvy client), adding that John Wanamaker later made the same observation. Since Wanamaker founded his first department store in 1861, when Lever was ten, this seems unlikely. Fortune magazine thought Wanamaker expressed the famous adage in 1885, but it gave no context. While researching John Wanamaker, King of Merchants (1993), biographer William Allen Zulker found the adage typed on a sheet of paper in Wanamaker’s archives, but without a name or source. Wanamaker usually wrote his own material longhand. Verdict: A maxim of obscure origins, put in famous mouths.”
Second, you are correct that only a small percentage actually works — but that's only if you're doing the form of advertising called direct response. Brand advertising relies on a different metric. Again from The Intention Economy:
The ideal of perfectly personalized advertising is also at
odds with the nature of advertising at its most ideal. This ideal is perhaps
best expressed by the most canonical of all ads for advertising: McGraw-Hill’s
“Man in the Chair.” Of it David Ogilvy (the most respected—and certainly the
most widely quoted—figure in the history of advertising) wrote, “This ad
summarizes the case for corporate advertising.” It features a bald guy in a
suit and bow-tie, sitting in an office chair with his fingers folded, looking
out at the reader. Beside him, in the white space of the ad, runs this copy: “I
don’t know who you are. I
don’t know your company. I
don’t know your company’s products. I
don’t know what your company stands for. I
don’t know your company’s record. I
don’t know your company’s reputation. Now—what
was it you wanted to sell me?” MORAL: Sales start before your salesman calls—with business publication advertising. In economic terms, what the man wants are signals, and those
signals are not just about what’s for sale. In “Advertising as a Signal,”
Richard E. Kihlstrom and Michael H. Riordan explain how advertising signals the
substance of the company placing it: When a firm signals by advertising,
it demonstrates to consumers that its production costs and the demand for its
product are such that advertising costs can be recovered. In order for advertising
to be an effective signal, high-quality firms must be able to recover
advertising costs while low-quality firms cannot.[i] In "The Waste in Advertising is the Part that
Works," Tim Ambler and E. Ann Holliear compare advertising to the male
peacock's tail: a signal of worthiness that a strong company with a quality
product can afford to display, but a weak company cannot.[ii]
Therefore, placing an ad in a McGraw-Hill publication wasn’t
just a branding effort, or an briefing in advance of a sales call. It was a
signal of financial sufficiency.
But that ad ran back when Mad Men ruled the advertising
world, and print publications conveyed the most substance. Today, the
grandchildren of the man in the chair get their news from the Net. Thus Don
Marti suggests one more item for the Olman’s list: “I don't know if your
company is really spending a lot on advertising, or if you're just targeting
me.” He explains, Here's the problem. As
targeting for online advertising gets better and better, the man in the chair
has less and less knowledge of how much the companies whose ads he sees are
spending to reach him. He's losing the signal… On the web, how do you tell a
massive campaign from a well-targeted campaign? And if you can't spot the
"waste," how do you pick out the signal? [iii]Perhaps the financial sufficiency signal doesn’t matter much
in a time when advertising from a zillion unknown sources is the norm and
companies come and go at the speed of fads. But if that’s the case, advertising
itself might not matter much, either. In other words, advertising may now be
giving away some of the soul it has left.
The true lode star of advertising has always been the
customer. This is why the “man in the chair” ad was so important. It was a
signal sent by McGraw Hill to advertisers on behalf of its readers. It spoke of
the company’s relationship with those readers, and said to advertisers that it
stood on the readers’ side. It demanded substance, relevance, and earned
reputation from its advertisers. It said relationships were possible, but only
when customers sat with companies at the same table, at the same level.
[i] Richard E. Kihlstrom and Michael H. Riordan,
“Advertising as a Signal,” Journal of
Political Economy, 1994, vol 92, no. 3, pp. 427-450.
[ii] Tim Ambler and E. Ann Hollier, “The Waste in
Advertising is the Part That Works,” Journal
of Advertising Research, December, 2004, pp. 375-390.
More notes inline below. On Jun 15, 2014, at 3:57 PM, Peter Herring <
">
> wrote: Jonathan et al,
Though it doesn't go nearly far enough (for me), this is a good article, thanks for posting! What I generally tell business people I talk with is that the old saw - 50% of my ad budget is wasted, but I don't know which 50% - has been replaced by 98% of my online ad budget has been wasted, but...I don't know what else to do!
Since I come from a traditional ad background (ran an agency in the 90s) and I'm currently building a "request and connect engine" - trovi.co - I talk a lot with business people about search, SEO, SEM, web advertising in general, and what they get out of it. And I keep trying to find simpler ways to try to explain how the unfortunate decision, way back when, to choose advertising as the fundamental monetization model of the web (especially advertising that follows old demographic and past decision/preference targeting models coupled with essentially broadcast distribution)
A small quibble. The Web is like geology or the ocean. It has no business model, but supports many.
As it happens at this point in the history of the Web, all but one of the most popular websites are partly or entirely funded by advertising. But this condition is no more permanent than a building or a shoreline. has been disastrous to the basic functioning of search, the incessant clutter on the web - not to mention the "surveillance marketing state". That's a lot of woe on one bad choice, but it's warranted.
Long long ago in the bad old days of direct mail advertising, I asked a basic question - when is junk mail not junk mail?
This is a good question, because direct response advertising on the Web is far more directly descended from direct mail than from Madison Avenue. We all know that 99.9% of the crap that showed up in our mailboxes (now our email boxes) - "targeted" though it was - never made it past the trash can on the way back to the house. All the targeting in the universe based on past actions/preferences cannot tell a marketer the one thing they actually need to know: who wants to buy what I sell now? Or what we call intent. But every now and then, by luck, we get in our mailbox a special deal on the very thing we wanted to buy anyway - and that is the moment that junk mail is not junk mail. The web was - and is - the perfect platform to make this happen all the time, but to create that we had to give up a lot of cherished notions - and many of these notions go far beyond the surface ones of whether a particular advertising model "works" or not. (That's actually an existential question whose answer must take in the effects on the planet and society in which advertising takes place.) The most cherished notion is that companies have the right to coerce people into anything - whether they have the right to invade the commons (thought - mind - is a commons) with incessant coercive messaging at all.
Think about this: We should be more able to say no to junk mail, and its descendants, on the Web and the Net, than we ever had in our mailboxes. And, to a limited degree we do, though Adblock Plus and other tools like it. But if you talk to people in the ad-funded world, they almost all say that ad blocking "breaks the Web." But it doesn't. Pure category error. The web could have easily chosen a different model. Search could have been divided into several subsets, one of which would be commerce. (The non-commerce web search model would benefit vastly from the divorce, but that's too long of a topic for right now...) The commerce search model could have been search turned on its head - a customer-power request model, contextualized by customer preferences: e.g. what, where, when, price range, new/used, etc. The search results would be the object, service, event requested - the web is ideally suited to this non-coercive model. And commerce should pay to be found under such exacting criteria. In a single blow, tracking and advertising are wiped out. There is even, as members of this group discuss a lot, a form of "marketing" within this model, but it is permission-based. With trovi, for instance, we will provide member vendors with anonymous "location, time and intent - based active-seeker data" that they can use to send specials to members who have given permission - and even then they cannot send them directly, unless members set up a trusted relationship with a particular vendor. That same anoymous data can tell local vendors what to stock, local services what to provide, and even local entrepreneurs (including makers and crafters) what to produce - all making local biz work better. It's no longer coercion when someone who wants to go bowling on Saturday morning gives permission for a bowling alley to send them a deal.
My thoughts on advertising have obviously changed a great deal since I promulgated it on the world
Mine too. I was in the business from the '70s to the '90s. - I now view it as the "desire-inculcation" department of the treadmill of production (see: treadmill of production theory) that the earth can no longer afford and that turns living human beings into consumers and data. Simply put, we can no longer afford the coercive model. Communities, people, small businesses, societies, and the planet, do better when people can find most of what they need locally. Current search, which has sold to the highest bidders - and which is, therefore, de facto advertising) fails them utterly in this sphere. (If I want new blue suede boots today within ten miles of me for $XX, what can it matter to me that I get a billion search results in a fraction of a second? That's an admission of failure - I just want blue boots.) Advertising is not only not what's needed - it screws up the possibility of good search. What's needed is a model that allows local people (local can be a tourist) to request and connect to what they need nearby. That model is non-coercive. And it has no junk mail. So now, as a business, roughly 100% of your "request fulfillment" budget is good.
Thanks again!
- Peter
Well put. Thanks!
Doc
On Sat, Jun 14, 2014 at 3:06 PM, Jonathan H. King <
">
> wrote:
"A Dangerous Question: Does Internet Advertising Work at All? - Atlantic Mobile"
http://m.theatlantic.com/business/archive/2014/06/a-dangerous-question-does-internet-advertising-work-at-all/372704/
--
peter herring
trovi | growing local wealth globally
503.729.2213
www.trovi.co
You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete. - R. Buckminster Fuller
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