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| LinkedIn
All of the items below&are from recent headlines or research reports and they depict the turmoil and turbulence in today’s advertising world caused when advertisers attempt to deal with a new technology-driven media environment.
Item: 56% of digital ads are not seen, according to Google/Double Click study () and display ads purchased through programmatic channels were 55% more likely to be loaded by bots than non-programmatic ads ().
Item: Television audience ratings have declined 50% since 2002, according to Morgan Stanley analysis. ()
Item: In 2015, $6.3 billion of digital ads will be based on fraudulent activity (), while .
Item: For those who plan on buying a car or truck, 27% say TV influences their auto purchases. However, leading U.S. automakers spent nearly $6.5 billion &(76% of measured media) on TV ads in 2013.
Apparently marketers aren’t winning this new war as the headlines indicate. Each year, hundreds of millions, maybe even billions, of ad dollars may be wasted due to outdated communication models.
In an old Seinfeld episode, George Costanza tells Jerry that . He surmises the remedy would be to do the opposite of what he has always done. He begins by ordering a chicken salad sandwich instead of a tuna salad sandwich. Voila! It works! An attractive lady at the counter takes note and George gets a date instead of the usual strike out. Like George, it’s time for advertisers to recognize the decisions that they are making based upon the old communication model are many times wrong and potentially wasting millions of ad dollars. Perhaps it’s time to try something different, something that may even be the opposite of what they are doing.
Old ad models were based on theories developed before scientists could utilize fMRI technology to better understand and observe how the brain works and how messages are processed. They assumed people could be trained to purchase similar to the way Pavlov trained dogs via stimulus (awareness from ad messages and response—purchasing). Therefore the number of times a person saw a message the more quickly they would respond. More messages theoretically equaled more response.
In the 2009 book , Drs. Don Schultz and Martin Block of the Medill School at Northwestern pointed out that this theory worked to the advantage of media. It is easy to see why ad budgets exploded in the 70’s, 80’s and 90’s. They also point out that the old media message distribution model is no longer viable and clearly outdated. They make the case for a consumer-centric model for media to improve ROI.
To demonstrate the new consumer-centric model of media influence, Schultz and Block posited that for any consumer target, the influence to purchase by various media forms is much more important than whether somebody simply liked a media form or not.
To prove their point they analyzed the target market of people who plan on buying a car or truck. They determined the influence to purchase a car for various media forms for the target market based on what consumers said. Lastly they estimated the influence per dollar for each media category and weighted each category by relative usage. The result demonstrated the disconnect between what leading automakers were spending on various media forms versus the media potential car buyers said influences their decision to buy. Using the latest data from Prosper’s MediaPlanIQ, the result is the same with automakers overspending on TV.
The following chart shows the new optimal allocation of media by influence compared to actual spending. Over investment or under investment is apparent in the last column which shows “how much” over or under:
It’s the “how much” that shows the levels of hypothetical ad waste that is built into old models based upon a theory for a different time and world.
More recently the has taken consumer-centric modeling to new heights. Under the direction of Dr. Hans C. Breiter of the Feinberg School, the group is busy developing revolutionary neuromarketing concepts built upon the fMRI work Breiter began conducting while he was at Massachusetts General Hospital.
The work of this group goes beyond theory and brings in the new perspective of the unconscious mind, which they now have the fMRI technology required to measure. Their latest work titled “” was just published in the February 2015 Frontiers in Neuroscience journal. Breiter says persuasion occurs
however, many behaviors originate in the subconscious mind and understanding how influence works on the subconscious mind is key for changing behaviors. The group can map internal preferences (likes or dislikes) of the brain between individuals or groups in order to influence behavior change. Now that’s about as opposite of the old message distribution model as possible—mapping unconscious likes and dislikes of individuals versus sending out messages to Pavlov’s dogs/consumers. And as Breiter points out, “The brain does not lie: it does what it does.”
Maybe the opposite is what needs to be considered when it comes to corporate ad budgets. New scientific work in the area of Neuromarketing and the Science of Integrated Influence is helping to begin the discussion for how to eliminate ad waste and improve ad productivity.
The failure to address the ad waste issue by large companies could have serious negative consequences for profitability performance. Eliminating ad waste may be a lot better in the long run than shuttering a lot of stores, thousands of workers being laid off, closing a division, etc. Additionally, if management doesn’t address the issue, activist investors may recognize the problem as a long-term solution for increasing corporate profits.
The current hyper-competitive, slow growing market makes this the perfect time for leading marketers to step forward and take on the challenge of identifying and eliminating potential ad waste, the silent killer of corporate profits. Now who will lead and step forward first?
Originally posted
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Gary Drenik is CEO of Prosper Insights & Analytics, a company that prides itself on turning data into evidence-based solutions for the C-Suite.
Disclosure/disclaimer: Prosper grants data access on consumer behavior and media influence to over 14 of the U.S.’s leading universities, including The Medill School of Intergrated Marketing at Northwestern. Prosper makes no warranties, either expressed or implied, concerning: data gathered or obta the present or future methodology employed in producing PI&A or the PI&A data and estimates represent only the opinion of Prosper and reliance thereon and use thereof shall be at the user’s own risk.Looking for more of the latest headlines on LinkedIn?