Digital Advertising Has At Least One Fundamental Lie

Digital Advertising Sales Agency
Imagine if Facebook had to actually stock all their “inventory”

Social media companies sold a bill of goods about digital products to major advertisers. They told advertisers they could finally see the kind of attribution statistics they craved. The kind of attribution that was never available from radio, television, or outdoor advertising. However it turned out that digital advertising became a breeding ground for fraud, corruption, and misleading business-to-business consumer information.

Think About Outdoor Advertising For A Second

Outdoor Digital Advertising
Digital billboards and video screens blur the line a little bit

When you’re driving down the highway, you’ll notice plenty of billboards on the road. This product is regulated, though. There are certain distance requirements between billboards, so as to ensure they do not overpopulate.

That would create dangerous driving conditions. It would also create a dilution of message. The rarity of a billboard creates the sense of value in that one must buy the right to be there – over competitors – whether those be direct competitors or simply competitors for the right to the same space.

Contracts for billboards are pretty standard, running usually on a minimum of (4) week programs. Typically you’d buy for (3-6) months at least, but others will buy for a year, maybe more. The singular location of one billboard means a limited supply. When you talk to outdoor advertising vendors (the people who actually sell them to agencies or brands) they talk about their “inventory.”

Selling Your Stock vs. Synthesizing Units

Promoting Digital Advertising
How do you set the price of something if its inventory is “infinite?”

When you sell outdoor advertising, you are actually selling a limited supply. In the case of digital advertising, you also have a limited supply, but because it is synthetic, it has the illusion of infinity. That is what I call the “infinity fallacy” of digital advertising.

Why I Love The Great Outdoors

Great Outdoor Advertising
Not every place needs to be a platform for advertising

Think about the city of Philadelphia for a moment. There are about (8-10) different companies who actually distribute outdoor media. Those companies have leases with landowners or property owners for the right to use that space to sell the advertising. Let’s say on average each vendor were to have only (100) units (meaning physical locations where they have a billboard). The real number is much much more, but, this will be for ease of operating and calculating. So for this example, there are only (1,000) units.

Therefore, the game of an outdoor media distributor is to sell out their units which are in their inventory. Just like a shoe salesman knows how many pairs of shoes are in the store, unsold. An outdoor vendor knows how many billboards are available in their market. They know what cost they need to sell them for to make the company money too. Due to the fact that both car and foot traffic patters do not change dramatically year over year, the cost of outdoor advertising remains relatively consistent.

It may fluctuate with a market, or if certain consumer trends direct traffic towards other parts of a city, but generally they remain solid. In fact, as digital advertising has ravaged the print industry over the last 10-15 years, for the most part, out of home has remained consistent. In fact it grows steadily at a very nominal incremental amount almost every year.

Mil Or Click You Can Pick

Digital Advertising CPM Or Click Doors
Nobody tells you it doesn’t matter what door you choose

On the contrary, think about Facebook. While they do have “units,” meaning types of ads they sell, they do not sell by the unit. They sell by CPM or click.

The reality is that in any given day, despite how many users they have, there are a limited number of “clicks” on ads that actually occur. While the company can attempt to increase engagement, they cannot force people to click on ads. They cannot guarantee impressions. However, they do. The explanation you’ll hear from most digital advertising sales people is that there is always enough traffic to deliver quality clicks or impressions.

That, unfortunately, is not true. There are plenty of stories about “bots” or “click farms” which are businesses meant to defraud advertisers into believing they got people engaged. These companies manipulate the data to suggest that people got the “clicks” or “impressions” they bought. In 2019 Proctor & Gamble audited their advertising agency’s use of over $1 Billion in advertising. They found that at the end of the day, they were getting 10 cents for every dollar actually spent on delivering their content to actual people. This was a staggering revelation.

1,000,000,000 Users For 35 Minutes Per Day

Digital Advertising Has Strange Economics
Something doesn’t ad up here (pun intended)

If you were an advertiser, this is the number of people you can talk to and the window of time you have every day to talk to them on Facebook. Mind you, you are also competing for their attention between news clips, friends sharing baby photos, family birthdays, and work event alerts. If the cost per mil were set at even $5 which is pretty cheap; it would cost about $5,000,000 to deliver a single impression to every single user – guaranteed.

Now, it could take 10+ exposures to a message, or impressions of it, to compel a user to click or do anything about it. That means to maximize the likelihood that this entire user base did what an advertiser wanted them to do, they could spend $50,000,000 – in a single day. Nobody spends that kind of money on advertising, let alone on just Facebook. But it should illustrate the point that there is no conceivable way to make that kind of impression on 1,000,000,000 with a single piece of outdoor advertising; for example.

Which Makes A Lasting Impression?

Love Outdoor Advertising Creative
You have to love what you do and it’ll be easy to advertise it

Digital advertising has an inventory problem, in that it produces a single image per impression; in the case of a banner ad for simple example. In contrast to an outdoor ad which creates thousands of impressions from a single image. So, in order to make up for its weak impact per impression a digital ad from a platform like Facebook must barrage you with it more and more and more. That is why pixels are often placed on websites to be able to retarget you on Facebook or Google.

You may hate a billboard you see on your daily commute to or from work. But you can’t stop seeing it. It’s also gone after you drive by it, and you know it’s coming because you know where it is. No other form of advertising follows you to where you are in order to sell you. Also, there is an illusion of an infinite inventory. That’s why digital ad unit sellers will never be satisfied and advertisers will always have to conquer new metrics.

Saturation Can Drown You

Digital Advertising Reaching Market Saturation
The little spark is not worth drowning over

The market is flooded with digital advertising units. People have been conditioned to use the computer and mobile devices more. That has basically become a trope of modern human life. Being able to endlessly create available stock of inventory is also a dangerous economic manipulation. Facebook could actually purchase their own “inventory” to use to advertise themselves. They could purchase billions of their own inventory in order to inflate their stock. Nobody would know because nobody would see invisible impressions that aren’t being consumed.

Whereas a billboard company could not simply invent real estate or construction of a structure to hold billboards. There are only so many buses going around a city to put art on. Only so many pieces of physical advertising media can even be applied in the real world. The digital advertising space on the other hand, is not just like the wild wild west. It is like a magic show where the magician never makes an invisible object reappear.

Do not be swindled by digital advertising snake oil salesman. Don’t get seduced by the allure of more “data.” Get back to basics. Figure out what people actually want and creatively tell them you have it. That’s why we work with clients who do things that really matter. Our job is to bolster their confidence with our passion. Not sell lies masked as progress.

In Closing

Digital Advertising & Outdoor Advertising Combined
You shouldn’t need to understand secret code to advertise well

Facebook advertising can be a viable tool to sell your products or raise brand awareness. I don’t completely invalidate social media as a marketing tool. Our own agency continues to use platforms like Instagram (owned by Facebook), LinkedIn, and Twitter. All of these companies use digital advertising or at least offer those services. Their inventory problem is real. Advertisers need to be careful when thinking about how to allocate their budgets.

Outdoor advertising has stood the test of time, and it has a much more significant value per piece. Digital advertising has the ability to inflate their own statistics without warning, and often without recourse. Therefore, be careful with how much you spend on digital advertising and don’t forget about traditional media – it still works.