A visit to the advertising echo chamber

Two days ago, eMarketer Digital Intelligence ran a post titled Age, Gender Affect Whether Consumers Will ‘Like’ an Ad. Here are the first few paragraphs:

Older consumers are more likely to click on a Facebook ad, while younger consumers, who are more comfortable with interacting with brands on Facebook, are more likely to click “like.” This information can help marketers target specific audiences with their Facebook ads, a tactic that can be leveraged by using Facebook’s self-serve ad platform.

Over the 10 months leading up to August 2011, Facebook agencySocialCode analyzed Facebook ads for 50 clients and focused on those that included an image, text and a “like” button. The study analyzed how many consumers clicked on the ads, and from there, how many went on to “like” the company’s page.

Women are more likely to click on an ad on Facebook, though both men and women are about equally likely to then click “like” once they’ve done so, the study found. The average clickthrough rate for women of all ages was 0.029%, compared to 0.026% for men of all ages. The “like” rate among those who clicked an ad was 39% for women and 38% for men.

Clickthrough and "Like" Rate* of Facebook Display Ads Among US Internet Users, by Age and Gender, 2011

Older consumers are more likely to click on a Facebook ad, as clickthrough rates increased from 0.026% for the 18-to-29 age range, up to 0.033% for the over-50 group.

However, consumers under the age of 50 were more likely to then “like” a brand, with 18- to 29-year-olds and 40- to 49-year-olds doing so 40% of the time. Those ages 30 to 39 had a 38% “like” rate, while only 36% of those over 50 hit the “like” button.

Clickthrough and "Like" Rate of Facebook Display Ads Among US Internet Users, by Age, 2011

This data supports the fact that younger consumers, having been on Facebook longer, are more familiar with showing support for a brand through a “like” and do so more often. Meanwhile, older consumers click through on an ad to learn more and investigate a brand.

Note the use of “more likely,” several times in those paragraphs. The difference is between fine degrees of “very, very, very, very few.” That’s because highest click-through rate for any demographic is about one third of one percent. Most click-through rates are about one quarter of one percent. That up to 40% of those clicking will also click “like” is interesting only to marketers who ignore the 99.76% to 99.66% who don’t click through at all, and who might regard the ads as noise or worse. Since Facebook allows users to express only one sentiment, it’s impossible to tell what other feelings an ad elicits, if any at all.

Here’s what I tweeted about the piece yesterday…

Doc Searls dsearls Which matters more in this data: bit.ly/putQMr — that only 0.025% click on an ad, or that X% of clickers “like” the ad? #VRM 11 hours ago

… and here’s Bitly’s list of all tweets with links to the piece, which they call —

Conversations

RTs are not conversations. They are echos.

Here are more, from “Related Articles” that a service called Zemanta shows me, in one of my WordPress panels:

Some of these are “promoted.” Note that Zemanta assumes that everything related will be in the same echo chamber.

Here is my favorite view of that echo chamber, as it now stands:

It’s from , by , CEO of the investment bank . He has many other similar (and equally fascinating) graphics at Slideshare.

The least colorful part of the graphic is the word AUDIENCE, over on the right. That’s you, me, and the other 99.xx% out there who don’t click on an ad, as well as the 00.xx% who do.

What we see here is how supply tries to drive demand — and fails most of the time.

The much bigger market opportunity is in demand driving supply. That’s what we’ve been working on with , at Harvard’s , for (as of this month) the last five years.

In that time the list of VRM development projects has grown from none to dozens. They are in Santiago, Johannesburg, Vienna, New York, London, Boston, D.C., Dubuque, Santa Barbara, Salt Lake City, Montreal, San Francisco and elsewhere. In their own ways they all help Demand signal Supply, rather than the reverse. They serve the actual intentions of individual buyers, rather than the machinations of advertisers and their legion of assistants, all scheming to grab the attention of an “audience” — a delusional term that suggests a patient group, all facing a stage, ready to applaud a performance.

It’s early in the new game here. That game is Customer Intentions vs. Advertiser Guesswork. As I said in The Data Bubble, back when The Wall Street Journal launched their terrific What They Know series (about tracking users without consent),

Here’s what’s delusional about all this: There is no demand for tracking by individual customers. All the demand comes from advertisers — or from companies selling to advertisers. For now.

Here is the difference between an advertiser and an ordinary company just trying to sell stuff to customers: nothing. If a better way to sell stuff comes along — especially if customers like it better than this crap the Journal is reporting on — advertising is in trouble.

Here is the difference between an active customer who wants to buy stuff and a consumer targeted by secretive tracking bullshit: everything.

Two things are going to happen here. One is that we’ll stop putting up with it. The other is that we’ll find better ways for demand and supply to meet — ways that don’t involve tracking or the guesswork called advertising.

Improving a pain in the ass doesn’t make it a kiss. The frontier here is on the demand side, not the supply side.

Advertising may pay for lots of great stuff (such as search) that we take for granted, but advertising even at its best is guesswork. It flourishes in the absence of more efficient and direct demand-supply interactions.

The idea of making advertising perfectly personal has been a holy grail of the business since Day Alpha. Now that Day Omega is approaching, thanks to creepy shit like this, the advertsing business is going to crash up against a harsh fact: “consumers” are real people, and most real people are creeped out by this stuff.

Rough impersonal guesswork is tolerable. Totally personalized guesswork is not.

While the advertising mills keep talking to themselves, VRM development continues. As it starts to go mainstream, we’ll need a new organization, primarily for customers, rather than just for developers. We’re working on that, and expect to have it going in the next six months. So stay tuned. Meanwhile, join me in thanking the Berkman Center for giving us the runway we needed to get VRM development off the ground.

4 Comments

  1. Excellent, Doc. Madison Avenue behaves as though there isn’t a revolution taking place around them. Their “machine” is badly broken, but they are unable to bring themselves to get a new one. Meanwhile, the actual advertisers themselves are discovering that Madison Avenue has less and less to do with generating business and are beginning to put their money elsewhere. VRM will explode one day, and to the advertising “industry,” it will seem like it came upon them suddenly. Rock on, VRM!

  2. Their “machine” is badly broken, but they are unable to bring themselves to get a new one.

  3. very aggressive blog :)

  4. Fantastic post. The web has so many opportunities, but so many smart people spend way too much time on adapting marginal, or broken, business models to the web.

    To be honest, I play that game too, but I’m looking for(ward to) something better.

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