Tuesday, May 27, 2008 

Web-Advertising is sooooo broken....

Danah Boyd had a great discussion going on her Zephoria Blog in late 2007, called: "Who clicks on ads? And what might this mean?" There's some really worthwhile information there, starting with some quotes from Dave Morgan (AOL Global Advertising Strategy)

"99% of web-users don't click on ads... and only a tiny % of those actually purchase!"

But wait... it gets worse!

"Ninety-nine percent of Web users do not click on ads on a monthly basis. Of the 1% that do, most only click once a month. Less than two tenths of one percent click more often. That tiny percentage makes up the vast majority of banner ad clicks. ~ Who are these "heavy clickers"? They are predominantly female, indexing at a rate almost double the male population. They are older. They are predominantly Midwesterners, with some concentrations in Mid-Atlantic States and in New England. What kinds of content do they like to view when they are on the Web? Not surprisingly, they look at sweepstakes far more than any other kind of content. Yes, these are the same people that tend to open direct mail and love to talk to telemarketers."

That's actually pretty revealing data, especially the rough demographic profile of the clickers themselves. This may go some way to explaining the proliferation of those really annoying gambling pop-up ads and flashing, vibrating banners proclaiming to (what would surely be) a seemingly implausibly gullible web-user who by some incredible stroke of luck, has just won a really neat prize! ~ Regrettably, market forces don't lie... it seems these ads are apparently targeted at the only people who dependably click.

As is often the case, the blog's commentariate kick in with some worthwhile observations:

"There is another aspect to the question of "who is clicking on these ads" that I don't believe has been raised. That is, if the ads are taken as indicative of "level of interest in the population at large", then the people who are clicking on those ads are the ones who are driving marketing decisions for the world at large."

and KEVIN: "...Its the marketer that gets hurt - HE/She advertised to the wrong person. The clicker did not buy anything- (do we know if they convert?) It means that ads in the web world are worth even less than we thought. It means that Google's revenue and business model is a huge scam?"

[my note: even Google’s Adwords average only around a 2% CTR, and Google consultant Professor Hal Varian has stated that less than 2% of ads might get clicks and less than 2% of clicks might convert to sales, meaning that 0.04% of clicks might result in sales... ~ A $40B web-ad market might sound impressive, but according to Sir Martin Sorrell, of WPP, the wider Advertising market is a Trillion $ market; so with such dubious current ROI, that $40B might really currently be largely driven by hype, and the pressure to be 'a player']

But my favorite comment comes from CASEY:

"I actually work for a company that does a lot of online advertising campaigns, so I think I can shed some light this. The honest-to-god truth is that the people in charge of these campaigns have absolutely no idea what they're talking about. They describe their target audiences with phrases like, "Interested Non-Users," or by using terms they've made up, such as the gag-worthy "prosumer."
[SUBSTANTIAL EDIT] "...Of course, the punchline to all of this is the fact that most click-throughs don't translate to actual sales. If an ad campaign is relying on accidental click-throughs, or on attracting the attention of a niche market who can't afford what they're selling, then the joke is on the person footing the bill. The model is clearly broken, and most people in the industry know that, but the people signing the checks aren't in on the joke."

This all indicates a kind of grand-illusion based on volume metrics: i.e. If total number of clicks is counted in millions, even a tiny percentage will bring some users sales. However, It’s the same logic as Spam and ‘Cold-Calling’ i.e. If you call 100 people and only get one buyer, it’s a sale, but you really annoy the other 99.

A post on: mini-news.com, entitled "Bye Bye Ads" quotes Usability expert Jakob Nielsen: "The most prominent result from the new eyetracking studies is not actually new. We simply confirmed for the umpteenth time that banner blindness is real. Users almost never look at anything that looks like an advertisement, whether or not it's actually an ad."

These are Clayton Christensen's 'Non-Consumers'... 'Non-Consumers' of web advertising.