Investors and company executives are cheering of late for the resurgence of Facebook above its IPO price from about a year ago. Mobile growth is the story at Facebook, and many are pleased with the associated revenue progress. I wish everyone well tallying their riches. I am still not sure how much significant value is being created, particularly as it applies to the company’s core advertising business. And hey, I was a very early believer in this business model and all the promise it held as the definitive interactive media platform of a generation — kind of like the first time as I kid when I saw a movie on HBO, a complete movie on television with no commercials, I just knew something good had happened and someone was going to get rich as a result. Uh, that was for taking the ads away.
If you are active on Facebook, particularly mobile, you probably weren’t surprised by the earnings improvement. You’ve seen the ads — oh, have you seen the ads — you can’t miss them, right there in your news feed, as intrusive as the interface mandates. Recently an ad for a salacious French maid’s costume was offered to me with the following copy — pretty much full screen — and I was kindly given the opportunity to Like the page:
“This five-piece At Your Service set from Dreamgirl comes with a sexy babydoll with apron, maid’s hat, ruffle back thong, and feather duster.”
Curiously this clever bit of sponsored media appeared above a friend’s timely post on racism and below a post from a financial journal I follow on how to avoid manipulated options. I suppose under certain circumstances this might be considered targeting, but I can honestly assert I was not in the market for such an outfit, either for myself or as a gift, nor had any click stream I created left a trail for the behavioral targeters. Perhaps they could have offered me a nice bottle of Bordeaux, which would have made sense since I am a wine enthusiast and often post articles about my favorite varietals on Facebook, and I’m guessing their database knows I have a Pinterest board on the subject of value excellence (“Good Wine, Good Price“), but no such luck. I am a middle-aged male, heterosexual, and married, so maybe that’s the profile they sold to the advertiser. I would guess that the CPM (in ad-speak, that’s “cost per thousand” impressions, where the M is the Latin numeral) was very, very low, offset by volume that was very, very high. Again in ad-speak, we sometimes call that “dollar-a-holler.” In these cases, maybe a nickel.
Just so it’s clear that I am not picking on Facebook, my friends at AOL Mail where I have maintained the same email account for about a quarter century, now offer a curious feature: After I send an email, the confirmation screen is filled with singles looking for a date. It’s nice to see that the advertiser is not presumptuous; sometimes they offer me women and sometimes men. The fact that the advertising delivery system is ambivalent toward my preference is unusually progressive. It also is quite genially unconcerned that my wife continues to see my email send pages resolve to these artifacts on our shared monitor.
Note to New Media Companies, with love, from Old Media Companies: Some things have not changed, including that there are still four key constituents in the advertising equation:
1) The manufacturer or seller of products and services.
2) The ad network or agency.
3) The media delivery vehicle or platform.
4) The viewer of the ad.
For full value to be created, all four have to be satisfied by the results of the supply chain. For real ongoing business, it is most essential that #1 and #4 are happy, so that #2 and #3 can speak to a job well done.
Let’s look at all four in the French maid and available-singles ad examples and see who is happy working backward:
4) Me: Not happy, except that it gave me an idea for this story.
3) Facebook and AOL; Happy (except if they read this post); they got paid by #1.
2) Agency or network: Happy; they found plentiful inventory in the form of my news feed and mail page, and they also got paid by #1.
1) Advertisers: Should not be too happy; they paid the bill, and I am making fun of them for it.
So the owner of the bill and the receiver of the message are not happy (#1 and #4), but the middle-folks are just fine with it (#2 and #3). Oh, they’ll tell you they are working on it, improving their targeting technology and all that, but they aren’t losing sleep, because they got paid. They should be losing sleep, lots of it.
There is also an implicit fifth constituent, the expanded community surrounding the nucleus of the supply chain, particularly of significance in our interconnected world of social media. When an offer is useful and enticing, like many of the tested e-coupons on RetailMeNot, pleased customers will gleefully pass them along. That’s free evangelism from existing fans to unlimited prospects, making ad dollars work even harder through leverage. When ads are garbage, they are terminal, mercifully so. In fact, bad-vertising can hurt a brand through negative association — poor word of mouth is difficult if not impossible to combat. Wonder if your would-be customers are laughing at you? You may not know until the community turns on you, then it’s costly to recover, or perhaps too late.
When advertising works — the right, relevant message in front of the right, engaged human being — it can be an excellent experience. Absent concerns about privacy, you might embrace the very respect involved in not having to see ads you don’t care about. But all this posturing about collecting intelligence on customers to deliver better leads — how come I’m still getting ads for reverse mortgages on My Yahoo homepage, which has every financial feed coming through loud and clear to tell them I’m a reasonably well heeled owner? That page is still sold as remnant inventory (in ad-speak, leftovers) at bargain-basement prices, maybe less than the French maid costume or the singles ads. Some money being left on the table there? They’ll probably tell you no. They would be wrong.
As the national dialogue on privacy invasion is reaching fever pitch, even POTUS has been dragged into the ruckus with a defensive “Don’t worry, we respect you while we protect you” mantra. That dialogue is likely to resolve itself in the dialectic, because it is a civil rights discussion grounded in our cherished democracy. I actually think that problem is going to get solved before the ad targeting starts to get it right, because there is too much money at stake for annoying and disrupting us that no one really wants to give back. Like the story goes, always follow the money — the real today-money, not the theoretical long-term-value, someday-we’ll-get-this-right money. Why would you want to do that?
Maybe I’ll just watch HBO. The price has skyrocketed, but the shows are pretty good, and it is still ad free. I am always willing to pay for that.