‘There is a clear disconnect between the scale of investment in online media and the value it delivers’. This is one of the key findings from a recent report commissioned by Radiocentre.
The report is basically saying this: marketers are clueless about media effectiveness. They think digital is much better than it is, and traditional media is much worse than it is.
I have a different opinion.
In my version, marketers are not clueless, hapless or stupid non-academics - maybe they are actually pretty smart. Maybe they have each figured out which channels work best for them – and then let their wallets do the talking.
Let the market speak for itself
Why is digital advertising predicted to be worth $247 bn by the end of 2019? Because advertisers can’t resist jumping on the bandwagon? Of course not! It’s because the scope of digital media keeps broadening, because its platforms facilitate measurement and optimization, and because it gets great results.
Advertisers are actors within a free market, making informed decisions based on continuous feedback. The impact of a digital ad campaign is measurable. If a channel doesn’t get the results you want, you know about it. Over time, enough data has been gathered to shape the market, and we’re seeing the outcome of that now.
I really don’t think the media can be blamed - if anything, they’ve been more likely to promote caution and skepticism about digital, rather than stirring up misplaced excitement.
Perhaps the reason that budget is shifting towards digital is just that it works better? Perhaps marketers aren't all idiots? Thank God for the free market.
The report is unreliable and unrepresentative
Strip back the report and the headline reads, "Radio industry pays for report that proves Radio is great". It's absurd and I'd throw it out in the same way I would with a study by Facebook proving the effectiveness of their own ads.
Apart from being funded by a company with clear motivation to promote radio, its evidence base is almost entirely made up of other industry-funded reports!
There are 10 channels assessed in this study: direct mail, magazines, newspapers, online display, online video, out-of-home, radio, social media and TV.
Err hello, Search advertising over here! According to Group M’s 2018 forecast, Paid Search will equate to 31% and £6.2bn of advertising in the UK this year. How can we take the report seriously if Paid Search (52% of digital) is not included in the mix? What is the deal with leaving Paid Search out the conversation?
What about sample size? 68 marketers were interviewed working in companies that spent £2m or more on advertising last year.
Are you freaking kidding me?
(a) My data science team just dropped their quantum computers. That is not a big sample.
(b) My small company manages 100 advertisers spending more than £2m on digital alone and we have <1% market share
Radio is the best channel for targeting…?
Radio came top of the list for targeting. Ahead of programmatic display and video. Ahead of paid social. Ahead of Facebook.
The author of the report says ‘radio is the most flexible medium as it can be used to target audiences by geography, demographics, context, time of day, day of week and, to a more limited extent, addressably for listeners on connected devices’.
That’s really cute, but take any digital media channel and you have about 1000x more targeting power. And then take Facebook, and you can pretty much get your ad in front of any audience. Seriously, the options are endless. Below are just some of the main categories, within which there are hundreds of thousands of segments:
- Gender
- Age
- Location
- Languages
- Ethnicity
- Education
- Sector
- Type of home
- Political orientation
- Life events (like ‘recently moved’ or ‘newly engaged’)
- Interests
- Recent web browsing behaviour
- Recent interactions with your website
And that last one is a big one. First party data from a brand’s website/ digital platforms is easy to integrate with any of the major digital media channels. Level of intent can be used to segment website visitors and adapt targeting, from spend to ad content.
Radio cannot compete with this in its current form. That’s not to say it has no value - I think it’s hugely valuable and an important part of any media plan. Especially when everyone else is running the other way and dropping it - that opens up pockets of great ROI. But please don’t tell me it comes top of the list for targeting capability.
Rebates
Some commentators suggest that digital is pushed to advertisers because it is more profitable for the platforms and agencies that manage the campaigns. There are greater opportunities for non-transparency, therefore greater motivation to promote digital channels.
Yes, programmatic is a bit crap for transparency and rebates. But approximately 86% of digital media goes to Facebook and Google – which are 100% without markups or rebates (in fact it is against ToS to mark up Facebook or AdWords). The same is not true of any of the other media listed above.
Look at AdWords, if you want to see the epitome of media transparency. Look to the past if you want to see the opposite.
That's why budget is shifting away from 'traditional'. There is absolutely, categorically no 'vested' interest from agencies incentivising them to invest more in Paid Search or Paid Social – quite the opposite as they cannot legally mark it up. And yet that's where all the budget is going.
Traditional media needs to adapt
Ad spend tells the story better than any commissioned report ever can. The most recent expenditure report by AA/ Warc shows us two very clear trends: the growth of digital, and the decline of traditional media.
Internet advertising grew by 12.9% between 2015/16, and is estimated to have grown by 11% last year. TV grew by 0.2% and is predicted to be negative for 2016/17. National and regional news are plummeting. Likewise magazines. VOD, on the other hand, is expected to achieve consecutive double digit growth. Between 2016/17, whilst national news advertising shrunk by an estimated -7%, digital news grew by 16.2%.
This doesn’t mean the ‘death of traditional media’, just its transition. TV inventory will one day be entirely programmatic – not just VOD and OTT, but linear as well. Electronic billboards will become the norm. Radio ad inventory, as is already happening, will be available on the open exchange. And news publishers will continue to sell premium inventory next to their content, just in digital form rather than print.
Digital is the future of advertising. And increasingly the present. Clinging on to a past that is nearing obsolescence is not the answer. Traditional media will survive by adapting, as we are already seeing with TV, OOH and Radio.
Marketers, agencies and media owners will either adapt to this fundamental change, or not. The industry will progress either way, driven by market forces beyond the control of any of its commentators. I know which side of history I’d rather be on.
Dan Gilbert is founder and chief executive officer of Brainlabs