frenemies
The Epic Disruption of the Advertising Industry (and
Why This Matters)
KEN AULETTA
P.S: This blog post is a book summary I wrote in 2018 for bookbhook.com. an online reading app
Advertising
means to give attention to. Advertising connects seller
and buyer. Media is dependent on advertising revenue. The same is true of
music and newspapers. But in today’s digital age, its survival is under
threat.
The book gives us a ringside view of how former
friends have become foes. The term frenemies is used to talk of companies that cooperate and compete.
They are present everywhere.
Consumers are true frenemies because while
they hate intrusive ads, they are dependent on them for free media. Advertisers
do not know how to sell products on mobile devices without annoying consumers
or how to reach a younger lot that skips ads. They do not know how to retain consumer
attention. The consumer chooses from a multitude of options. A mass audience is
rare.
Adding to this chaos is the disruption
caused by Facebook and Google. Digital innovations have impacted the media
industry economically. Newspapers, magazines, television and radio have
witnessed a decline in their advertising revenue. This revenue is diverted to digital
entities.
Earlier there were only 6 media channels to
connect with the customer – television, print, radio, newspapers, outdoor
advertising and direct marketing through mailers. Today, there are many
different channels, and billions of smartphones, and personal devices with
apps. These allow advertisers to both talk and anger people. Television viewing
time has decreased because people are glued to their mobiles.
Facebook argues that data gives more
information about each individual. Earlier, the brand would address an audience
with a TV ad. They would not know who had been hit. It was marketing at people. Digital companies help them
target individual consumers. Every digital platform assures the brand of this
innovation. This is marketing for
people.
Data has always been there but the
difference is in the analysis of the data. The difference also lies in the
consumers’ decision to choose what they wish to interact with and when. 2007
was a landmark year for consumer empowerment when Apple launched the iPhone,
the first smart phone. Facebook also re-directed its attention from college
students to everyone. Amazon launched Kindle.
Big data comes from 3 sources. First-party
data comes from companies that interact with customers directly and retain
their credit cards. It also comes from department stores, credit card and car
companies, Amazon, magazines and newspapers and companies depended on
subscriptions. Facebook and Google bank some of the richest first-party data.
Second-party data is anonymous. It has a lot of individual information from
different sources, like clients, and data companies like Nielsen. Third-party
data is got from catalogues and stores. The task is to assemble all this data
to match the products of its clients with targeted consumers.
A smart phone platform and its embedded GPS
enable brands to track and engage with users. There are limitations to the
mobile platform too. Ads on mobiles soak up battery. The small screens are
restrictive. Consumers dislike the ads and install ad blockers to avoid the
interruptions.
Clients want to introduce new products and
build brand identity. But how can they do it when ads on mobile phones are not
as effective? Also, consumers are scattered across several channels and social
networks. How can they reach the mass audience critical to their business?
Another issue is how to target the next generation. The millennials, in the age
group of 21 to 34, are digitally savvy. The Generation Z, born after 1997, hate
being sold to especially when people get an astonishing 5000 marketing messages
every day.
Facebook and Google help advertisers build
the brand business. They compete with each other in consumer data collection. This
data is loaded with targeting information. However, they are adamant about not
sharing the data with anyone. They are the new-age digital frenemies. With the
help of marketing services like DoubleClick (Google) and Atlas (Facebook) they
leverage the data. They are agency and platform rivals. Brands are petrified of
Amazon too because Amazon has even better data. They know when a customer
actually bought something.
If people learn that their privacy is
compromised, they will approach the government and demand protection of their
data, leading to widespread protests against such companies. While data helps
agencies with improved tools to target customers, it also helps clients know
which of their ads sell and which don’t. Today, technology has demonetized
information and given people more alternatives. They can easily skip ads,
express their views, vote, and escape old media platforms.
Frenemies
Facebook’s entire business is advertising.
They claim they are only trying to help boost sales by helping brands think
through real business problems and understand how mobile is impacting
marketing. They will eventually gain because clients will invest more with them
as they have the dominant platform.
Facebook sells under false pretences. They are
not a technology company; they are just a platform, a media platform. It is a
frenemy. It is competing for advertising dollars. It complements television
because with TV viewing down among the millennials, it is great at finding that
audience.
Fear about Facebook’s advertising ambitions
is fueled by its size, and its refusal to share its data. By 2016, it
collected $27 billion from ads and made profits of $10 billion. Of every new
digital ad dollar, 85 cents went to Facebook and Google. Their digital
dominance increasingly mattered. Facebook and Google have two-thirds of mobile
ad revenue. They have first-party data on people. In a mobile world, it is the surest
way to identify people. Its goal is to entice people to spend 100% of their
time on Facebook. They want to become the Internet.
Since Facebook and Google protect their data
from advertisers, clients cannot target consumers on other platforms or in
their future ad campaigns. If the agencies can extract more information from
Facebook about what their users like and do, their ad targeting would be more accurate.
Digital companies know much more about consumers than non-digital platforms. Facebook, Google and Amazon are the 3
digital giants. Advertisers want the data from all three. Facebook’s user data is
based on their social interaction. Google’s data reveals a person’s intent because
it is a search engine. Amazon has actual purchasing data. They all have a
monetary incentive to safeguard their data. They claim that they are protecting
the privacy of their users and assure them not to share names or personal
information.
Facebook depends on selling ad space. It
pitches advertisers. Mobile video is the new frontier of advertising, the
new television. 100 million hours of video were watched daily on Facebook. No
other medium in marketing has ever been as personal as the mobile. We carry it
with us everywhere and all the time. We store personal information, pictures, and apps on it. We don’t loan the phone to others. Since it is so personal, ads
have to be personal too and must not interrupt. It presents opportunities to
communicate to consumers in new ways. Hence, clients divert ad dollars to
Facebook to drive business results. Facebook boasts that it reduces costs and
serves customers by eliminating middlemen.
Consumer
- the Ultimate Frenemy
Consumers are against all advertising. Mobile
technology has brought ads relentlessly into people’s lives. It has also given them
tools to block them. To the consumer, it is a happy solution. Consumers are
annoyed by pre-roll and banner ads. They are angered by lethargic ad page load
speeds and troubled by unsolicited marketing messages draining their batteries.
They are anxious that their privacy was being invaded.
Apple earns barely 1% of its revenues from
advertising. It helps consumers protect their devices from ads. Apple
prioritized the user experience.
But websites, media companies, marketers, and ad-dependent companies like Facebook and Google cry hoarse. They say that
ad blockers adversely affect their ability to inform users and subsidize
content. They allege that Apple and ad blockers are killing the industry. Apple
and ad blocker advocates, on the other hand, say advertisers are committing
suicide with their senseless, pushy ads.
Apple’s move was part of the tussle between
Apple and Google for smartphone supremacy. Apple makes money selling
hardware and software, Google by selling ads. Apple intentionally offered
consumers something Google couldn’t. Apple knows that when an online service is
free, you are not the consumer; you are the product.
Data has gained prominence in targeting consumers. Technological innovations are changing the landscape of consumer engagement.
