Today, marketers are grappling with the Wanamaker Paradox: The more we learn which half of advertising is working, the more we realize we're wasting way more than half. Perhaps you're nodding your head about now. Most people you know don't click online ads. At least, not on purpose. But now research is getting closer to quantifying exactly how few people click on Internet ads and exactly how ineffective they are. It's not a pretty picture.
Take search ads, which have helped Google become the richest advertising company in the history of the world.
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Search ads are magic, in a way. Throughout history, most ads have been imprecise branding. But search catches consumers at the moment they're actually looking for something. That's the theory, at least. For example, consider what happens when I look up a brand, like Nike. An ad for Nike.
Campaigns like this have "no measurable short-term benefits," the researchers concluded. They merely give consumers a perfect substitute for the link they would have clicked anyway.
The only way it would add value is if Nike is paying to keep a rival like Adidas out of the top slot But what about more common searches for things like "buy camera" or "best cell phone," where many different companies are bidding to answer our queries? A well-placed search ad ought to grab curious consumers at the peak of their interest. But in a study of search ads bought by eBay, the most frequent Internet users—who see the vast majority of ads; and spend the most money online—weren't any more likely to buy stuff from eBay after seeing search ads.
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The study concluded that paid-search spending was ironically concentrated on the very people who were going to buy stuff on eBay, anyway. I'm not fully convinced that search ads are as ineffective as this paper suggested. To their credit, the authors admit that other studies about Google have found search to have higher ROI. But the big idea behind their research is powerful.
Academics call it endogeneity. Some ads persuade us to buy.
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Some ads tell us to buy something we were already going to buy, anyway. It's awfully hard to figure out which is which. Enter Facebook, the second-biggest digital ad company in the U. Just as Google is synonymous with search, Facebook is ubiquitous with social.
The News Feed is the most sophisticated content algorithm ever.
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The company represents the spine of so many apps and sites that it can marshal an astonishing and growing amount of data about us. While Google can convert consumers at the bottom of the purchase funnel, Facebook is more like TV, a diffuse broadcast of stories where some companies hope to interrupt our lazy attention with branding messages.
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