Kamis, 08 April 2010

Debunking The Ad Contrarian

Update (April 12' 2010): Welcome, readers of TAC's fatherly rebuttal and MadMen fans! Did you know that Sterling Cooper didn't have a "television department" until Crane's "appointment" in 1960


Like many of you, I enjoy reading The Ad Contrarian blog, ran by an agency CEO Bob Hoffman.  In a sense, TAC is the ad industry's Perez Hilton: he draws in crowds by doodling on faces of today's idols; more often than not that's online advertising in general and social media in particular. Some of his posts are right on target, others are wildly off, but all are usually entertaining.

I get unduly excited, though, when in one sentence he insists that his ideological opponents should support their claims with solid data and in the next he makes sweeping generalizations that have little to do with reality.

Take his most recent post, for example, which he opens with: "We're about 15 years into the internet revolution as a mainstream phenomenon and by any measure internet advertising has to be deemed a major failure."

This statement, by any measure,  is inaccurate.

Internet advertising is as effective as TV at driving sales, if you believe the study published last year by ComScore, who had monitored purchasing behavior of 200,000 of its panelists. "Over the course of twelve weeks, online ad campaigns with an average reach of 40 percent of their target segment successfully grew retail sales of the advertised brands by an average of 9 percent." The advertised brands were all consumer packaged goods. (via)

Here's a different study published by Yahoo! Research together with, again, ComScore in 2007: "Consumers exposed to display advertising spent an average of $6 in the store for every $1 they spent online".

(Since TAC insists on quoting the "99% of all video is viewed on traditional TV" stat from Nielsen's "Three Screen Report", I didn't bother googling past the first available ComScore study.)

TAC then writes: "Fifteen years into its mainstream life, television had created scores of powerful consumer-facing brands."

This, too, is hard to believe.

Let's start from the day the very first commercial aired, which was on July 1, 1941 during the launch of NBC, since TAC's 15-year timeline for the mainstream web apparently begins when the first ad banner went live in 1994, with only 2 percent of the US households online.

For thirteen years after 1941, the share of TV remained way below 5 percent of the total ad spend until it surged to about 15 percent in 1954 (via), as a recession ended and the install base of TV sets had finally tipped over the 50-percent mark (via).






TV advertising during this period was dominated by the "single-sponsor" format, where an advertiser would produce and control an entire chunk of schedule with programs such as Kraft Television Theater, Colgate Comedy Hour, and Coke Time. The modern "magazine concept" format, where advertisers would buy one- or two-minute chunks of air time, was not established until the 1960.  "While participation advertising met with some initial resistance on Madison Avenue, many agencies saw that it was the ideal promotional vehicle for packaged-goods companies manufacturing a cornucopia of brand names, such as Procter and Gamble with such disparate products as Tide (laundry detergent), Crest (toothpaste), and Jif (peanut butter)." (source)

Given that there were only four TV networks at the time and a rather limited ad inventory, it is hardly possible that TV was creating "scores of powerful consumer-facing brands" during the single-sponsor era.

Finally, TAC asks, "After 15 years, can anyone name even ten serious non-native [that is, not Google, Amazon, etc] consumer-facing brands that have been created by web advertising?"

To be honest, I can't. But I also can't think of 1) any non-native (not purely web-based) "serious" brand  that tried going the online-only route, and 2) many "serious" brands launched in the past 15 years created by any means.  Based on what TAC wrote later in the comment section, let's consider a brand "serious" if it does better than Zappos, which had $1B in sales and 10 million customers in 2008.

It's an interesting question, though, and if you know the answer, please leave a comment.
Can you name a serious non-native consumer brand created entirely by web advertising?

On the other hand, "great brands have never been created by 'branding'".