How to save $200 million on advertising

Targeting and tracking in digital advertising is a fucking joke.

A study by MIT professor Catherine Tucker found targeting something as basic as gender in digital ads is unsuccessful more than half the time. In other words, targeting is worse than random.

A Nielsen analysis of a household-income-adjusted ad campaign found only 25 percent of its ads were reaching the right households. As much as 65 percent of location-targeted ad spend is wasted.

Plaintiffs in a class-action suit against Facebook allege its targeting algorithm’s accuracy is fraudulent and quoted internal company emails describing its targeting as ‘crap’ and ‘abysmal.’

Facebook and Google dominate this business. As all-encompassing publishers they capture around 75 percent of digital ad dollars. They’re also the leaders in many of the upstream categories in the programmatic ad infrastructure. Google, for example, owns the largest digital ad marketplace, DoubleClick Ad Exchange.

Fraud is rampant in every area of the digital ad business. Influencers can buy fake followers by the truckload - roughly 20 percent of them are fake. Around 25 percent of all app store installs are fake. More than 60 percent of Twitter traffic is bots.

Digital ad fraud could be a $150 billion business by 2025, which would make it the largest criminal enterprise after the drug trade - and it fuels the same digital criminal underground responsible for industrial espionage, ransomware and identity theft.

We desperately need externally imposed and enforced industry standards on transparency in advertising. Expecting these conflicted middlemen to self-regulate is naïve.

What can you do until that happens? Cut your digital advertising spend. Not just trim a few percentage points here and there. Take it round behind the woodshed and slash its throat.

Procter & Gamble cut $200 million off its digital ad budget. JP Morgan Chase cut $200 million. Uber cut $120 million. Ebay cut $100 million. Without seeing any measurable impact on their business.

These firms already have huge brands and global distribution, partnerships, and other means to sustain awareness. Yet it’s possible to build a strong brand without advertising. Tesla is the most recent example, but not every company makes a revolutionary product in a highly visible consumer category.

If you’re a small to medium-size business, you’re going to have to be smarter than that.

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