95% of my digital ad budget is wasted; I’m just not sure which 95%* (*adjusted for inflation)

While I’m sure that another article could be written with examples touting the efficiency of digital ads, I believe many of the issues raised in the following piece are quite illuminating for anyone who has ever questioned the numbers game regarding all manner of reported digital behavior...

The fact that large brands are highlighted in this article, along with small companies, is quite instructive. Small firms are tightly focused on ROI, and quick to jettison inefficient practices as a matter of survival.  Larger corporations, however, often have empirical ROI considerations squaring off against individual and departmental agenda’s such as preservation of budgets, headcounts, and overall priority and relevance in day to day operations. The fact that major brands are putting significant research and analysis into this question, and then acting upon and publicizing their findings, is refreshing.

If major brands, along with those that typically emulate their behavior, begin to take a “cord-cutting/cord-reducing” sort of policy with regard to their digital ad spend and focus, it could have significant disruptive effects on large numbers of major players and platforms currently addressing the market. The shift in influencer marketing focus from mega to micro/nano influencers on the part of major brands serves as a useful analogy and validation for the premise of Dr. Fou’s article.

The examination of the numbers game. eg: “Chase did not need to show their ads on 400,000 websites, when showing ads to humans on 5,000 yielded the same outcomes” also hit home personally, based on my main focus on B2B tradeshows, where a sort of "tyranny of large numbers;" in this case, with respect to promoting, producing, and advertising attendee figures, has been prevalent and self-perpetuating for quite some time.  

In fact, I believe a variation the 80/20 rule holds true for physical tradeshows. With respect to the attendees at an average mature B2B “lead-gen show,” (as opposed to actual order-writing shows; eg: apparel, gift, etc.) I would estimate that approximately 20% of the attendees on the expo floor are actually in buying mode; and conducting 80% of the business. The remainder of the attendees at the show, while certainly visiting the expo floor, are at the event for primarily other reasons; which are all well defined in standard tradeshow promotional literature, and clearly understood by most experienced attendees.  

The decades-long failure of virtual B2B tradeshow booths (which operate in an environment bereft of many those other reasons for tradeshow attendance; isolation and examination of individual variables, if you will) to generate any significant commerce, or even virtual booth interaction in many cases ...along with the resulting lack of virtual tradeshow profitability for show organizers... is an excellent illustration of this behavior.

Getting back to the question of numbers, I've often wondered if it was possible for googolplex of supercomputers to measure the number of people for one hour period who are theoretically participating on social media platforms, viewing entertainment content, viewing media sites, visiting shopping sites, conducting searches, etc, etc....and compare that total with the population of the earth with computer access...of course taking the possibility of multiple open tabs into consideration. The results could be surprising. That said, however, I think the continuing public analysis regarding true ROI of digital ads is an excellent first step.

Finally, the article also contains some excellent links, including Harvard Business Review article: Did eBay Just Prove That Paid Search Ads Don’t Work?

About the author

Rob Weissman is president of Alliance Media Strategies which provides bespoke consulting services to the exhibition, conference, and events industries, utilizing the best practices of observational analysis, scientific method, and social, behavioral, and group psychology; combined with more than two decades of hands-on event creation and management.