Online Advertising: A Critical View

Packshot on 08/08/2011

Opinions remain divided on the effectiveness of online advertising. For all its advocates, who emphasise the value of interactivity, there are consistent voices encouraging caution. One of the most prominent critics is Bob Hoffman, Chief Executive Officer of advertising agency Hoffman/Lewis, and known to many thousands as the excellent Ad Contrarian, who maintains that although online advertising has its merits, it frequently falls far short of replacing print and television advertising, as many people have claimed it would in recent years. In particular, he argues that although search and email campaigns can work well, just as the Yellow Pages and direct mail do, campaigns which involve engagement with consumers – such as social media campaigns – tend to be over-hyped and underwhelming.

Hoffman minces neither his words nor his facts. He refers to the broad statistics: Facebook adverts have “click-through rates of less than five in ten thousand“, and general adverts have “average click-through rates of one in one thousand.” Note that Hoffman isn’t talking about actual sales here. He is only talking about click-throughs – and these statistics take no account of unintentional clicks, of which he believes there are “many”. A study conducted by McPheters & Company, based in New York, discovered that the most valuable form of advertising – in terms of exposure – is television, followed by print advertising (amounting to around four fifths of the value of television), and online advertising (amounting to under two fifths).

Internet advertising attracts increasingly large budgets, despite its often experimental nature. Hoffman recently scrutinised Pepsi’s decision to spend over twenty million dollars on a social media campaign, called Pepsi Refresh, which yielded the following results:

Pepsi and Diet Pepsi each lost about five per cent of their market share.
Pepsi dropped from the second most popular soft drink in the United States to the third. In other words, Pepsi ended up behind both Coca-Cola and Diet Coke.

Hoffman readily notes that the campaign achieved all its aims, with “three and a half million ‘likes’ on its Facebook page and sixty thousand Twitter followers.” But he keeps his focus firmly on the ultimate target of any advertising campaign: “The only thing it failed to do was sell Pepsi.”

It would be misleading to suggest that all online campaigns fail in this way. Clearly, social media campaigns are different from forms of marketing such as email campaigns and search engine optimisation, which, as Hoffman states, genuinely can yield strong results. The point is this: the assumption that engagement with customers is more effective than conventional ‘intrusive’ advertising is being shown to be incorrect. Agencies and companies, it seems, would do well to consider this a little more thoroughly.

The Ad Contrarian

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