I Love Your Advertisement... LOL
Australian businesses spent $8 Billion on digital advertising in 2017, an amount that has doubled since 2014. The lions share of the pie was split between Facebook ($1.6B) and Google ($2.5B). Why are businesses spending so much on digital advertising?
The simplistic answer is that this is where the eyeballs are. The downfall of paper based media, TV, radio, etc etc. Today’s consumers live on Instagram, YouTube and Facebook - to the tune of 17 million pairs of eyeballs each day in Australia alone. It’s natural that digital advertising spend has trended upwards. But why $8 Billion? Is $8 Billion the right amount? Should it be more, and could it be less?
Although advertising spend has shifted to digital channels, the way in which advertisements are placed are still largely based on really coarse parameters of age, gender and location. While there is a lot of fanfare about data privacy and the likes of Facebook and Google owning all our ducks, the act of purchasing advertising is still based on very crude criteria.
My hypothesis is that the reason we spent $8 Billion is because brands are spraying the market with advertising - Facebook and Google supply a large hose, and brands use it spray anyone who breathes with their message. The result of this is a double lose: (1) cost of advertising is larger than it needs to be as messages are unfocussed, and (2) consumers are sprayed with ads, prompting ads being treated as “white noise” and increasingly ignored. That’s all pretty inefficient.
Idea of the day: develop a system for very targeted digital advertising placement/programmatic buying. Look at factors that are way more telling of the desires of potential customers than age, location and demographics. Map these to the characteristics of brands. Remove the inefficiency in the system, make advertising spend more valuable as a result.