Self-Deception: Pretending The Evil Isn’t Right Under Our Noses

This is the second in a series of several articles regarding the state of the online marketing industry. Each article in the series deals with the notion of self-deception, the idea that we're kidding ourselves regarding many of the things we think will lead the online marketing industry to success. It is vital to the success of the industry that we examine these instances of self-deception and address them. Three months ago, my grade school chum Craig and his wife Jen purchased a brand-new Compaq PC with their wedding money. I helped them set it up and Jen later subscribed to Verizon Online DSL. Craig and Jen haven’t really owned a computer before, and they planned to use their new machine to surf the web, get e-mail and maybe let their daughter Kayla play some educational games. Jen also uses the Microsoft Office suite for schoolwork and such.

When the PC was only two months old, Jen gave me a call, sounding somewhat frantic on the phone. “Tommy, can you come over and take a look at the computer?” she asked. “I keep getting kicked off MSN and everything’s taking forever to start up.”

It was a couple weeks before I could get to it, but when I finally did, I was amazed at what I saw. Jen and Craig’s PC was infested with malware to the point at which it was taking over 10 minutes to boot and load Windows. Once it did boot, clicking on almost any application would immediately cause a crash. “Piece of s—t,” Craig muttered under his breath, adding sarcastically “What a great way to use our wedding money.”

Thorough system scans and repairs using both Ad-Aware and Spybot: Search and Destroy managed to take care of most of the damage. But there were still a couple applications that required a manual registry edit to eradicate, and I simply didn’t have time to take care of it, as I had to go home to help my sister out with some work we were doing around the house. I added a 256MB of RAM to the machine, cleaned it as best I could and went back to my place to help my sister.

After helping my sister out, I was once again asked to take a look at a sick computer. This time, it was my mom’s laptop.

Mom’s laptop was my old laptop. I used it at the office for a while, but then I bought a new machine. It spent some time at the office, being used by an intern before being wiped of most of its application data and given to my Mom to use for e-mail and web surfing.

While our office intern was using the computer, she downloaded a free screensaver. Big mistake. The computer was infected with something that constantly spawned pop-up ads. I later found out that this was yet another piece of malware that could not be uninstalled without a registry edit.

Before I go any further, it’s important that I define “malware.” The meanings of the terms “adware,” “spyware” and “malware” are constantly changing, so it’s important that I define the class of applications that are the culprits in these cases.

Malware (noun) – Any application that generates advertising on an affected machine and also meets one or both of the following criteria:

1) Does not seek explicit permission to serve advertising to the end user. 2) Does not allow the end user to easily uninstall the application

It took two hours of searching Internet message boards for an antidote and manually editing the machine’s registry to get this malware application off my mom’s computer, not to mention the time spent installing Ad-Aware and Spybot and deep scanning the machine.

My mom simply stopped using her last computer for a similar reason. Floods of spam invaded her Inbox until all the time she had hoped to save by communicating via e-mail was taken up with managing and deleting spam. Finally, she just shut the machine off and never used it again.

If you’re the alpha geek among your novice friends, you probably have similar horror stories of your own.

The truth here, staring us right in the face, is that a seedy underbelly of the online advertising industry is ruining the consumer experience for many novice computer users. If it continues, we risk turning consumers away from their computers en masse and crippling the uptake of Internet connectivity (particularly via broadband connections) worldwide.

This is obviously not good for the Internet marketing industry. Ironically, it is the demand for Internet advertising that is driving the proliferation of malware and spam. This, of course, begs the question that many of my colleagues have asked in recent months – “Who the hell advertises with these guys?”

The answer to this question is simple. We do.

We’re feeding the malware jerks who infect PCs with non-permission-based applications. Our demand for online advertising causes them to exist, and our revenue keeps them alive. Same goes for spam, albeit to a lesser extent, for reasons I’ll share a bit later.

The culprit here is what media professionals call a “blind buy.” Typically, here’s what happens…

A client calls up their advertising agency and tells them they need 10,000 sales leads in the next month, and that they’re willing to pay $100,000 to acquire those leads. The client wants a media plan right away, and the leads must be guaranteed to come in and the client is willing to pay a maximum of only $10 for each lead.

Since the media plan is due right away, a media planner will call one of several “lead generation” vendors or “performance-based advertising companies” to help fulfill the objective. These vendors have something of a standard deal structure that is referred to as a blind buy. The vendor will generate the number of leads requested, but the media planner is not permitted to know where his ads are running. Ostensibly, the media buyer is not allowed to know this because the vendor must protect his business model of brokering ad inventory. If the media planner knew where his ads were running, he could conceivably approach the publishers brokered by the vendor directly, negotiating more favorable pricing. Since the planner has no time in which to do this, the vendor is typically protected from such side deals.

But the real reason the lead generation vendors don’t want the media planner to know where his ads run is that the media planner would be appalled by the venues the lead generation vendor has chosen. Among these venues are spyware and malware applications. This is how otherwise respectful advertisers end up running with malware vendors and subsidizing their unethical practices.

Some lead generation vendors also use spam to generate leads. In this case, the ruse is a bit easier to spot, since lead generation vendors will ask often ask for text advertising to be used in an e-mail. But often, they don’t do so, allowing spammers they work with to write their own copy for spam solicitations that generate sales leads.

In many cases, the ads simply run, the leads are generated and the media planner (hence, the advertising client) never know that their advertising dollars are underwriting malware and spam. Occasionally, a consumer complaint makes its way back to the advertiser, who demands an answer from the agency. The agency calls the lead generation vendors, demanding an answer. Then, one of two things happens:

1) The lead generation vendor attributes the spam or malware activity to a “rogue affiliate” who has since been dropped from the advertising program, or 2) The lead generation vendor disavows any knowledge of the situation and either blames it on another vendor the media planner uses or on a hacker or script kiddie.

This is usually enough to satisfy a client. The vendor assures the agency that it won’t happen again, the agency assures the client, and the program continues. The client is not incentivized to shut the program down, since the leads are rolling in, and the agency and vendor are able to distance themselves from blame by attributing any problems to rogue affiliates or others unaffiliated with the program.

The media buyer in such cases is either ignorant of the ramifications of a blind buy, or he is kidding himself. Entering into a blind buy is tantamount to allowing any Internet entity to provide sales leads, regardless of the format or the venue. The truth is that we are feeding the evil and contributing to the proliferation of malware and spam, all while asking “Who are these people who advertise in spam and adware?”

As countless computers become overwhelmed with spam and malware, quickly turning into $2,000 doorstops as they become riddled with infections and influxes of bulk e-mail, it’s obvious that malware and spam are killing the goose that lays the golden eggs. We cannot profit from an industry that strangles itself by overriding consumer control to the point at which consumers no longer wish to participate.

So, what do we do about it? I have some suggestions:

• The “blind buy” must be phased out, if not eliminated immediately - While this will cause advertisers much short-term pain as their lead programs take a hit, it simply must be done. Advertisers should know where their ads are running at all times. Clicks, leads or sales that come in from unapproved publishers must be disallowed and advertisers should not pay for them. This will choke off the revenue stream for malware operations and many spammers.
• We need to add language to standard terms and conditions for advertising contracts immediately - The Interactive Advertising Bureau should incorporate the following language (or something similar) into the next version of its standard terms and conditions: “Vendor may not authorize any publisher or ad vendor other than those specified on this insertion order to run client advertising. Neither Client nor Agency are liable for any charges arising from ad activity run with unapproved publishers or vendors.” This will ensure that the agency and client always know where the ads are running, and it keeps vendors from adding random spammers or malware vendors to performance-based buys by removing their revenue stream.
• Ad tracking technology needs to become much better at picking up online ads - Most tools that perform this function are competitive tools that track where advertisers and their competitors are running on the web. But they fail to track much of the activity that runs on smaller sites. If these tools could be adapted to pick up tier three and tier four sites and desktop applications, media planners could spot any unauthorized activity.
• Turnaround times for media plans should be increased - A media planner can turn around a blind buy in less than a day. A CPC or CPL plan negotiated with individual publishers could take several days. When the client calls and needs something yesterday, that request leads buyers to the only source of leads or sales they can turn to in such an abbreviated timeframe – the vendors who provide blind buy opportunities. If agencies had more time to turn around planning requests, it’s a lot less likely they’ll use blind buy tactics.

We’re kidding ourselves by claiming not to know where the revenue comes from that keeps malware vendors and many spammers in business. The evil is right under our noses and unless we wish to continue to fund the onslaught of malevolent applications and bulk e-mail, we should immediately get a handle on where our ad dollars go. If we fail to address this important issue, we run the risk of turning off consumers and slowing or stopping adoption of the Internet channel.

I Got My Baby Back

It's back.

The Corvette is back. Almost a week in the shop to fix all the crap that was wrong with it. GM fixed the steering column lockup problem, which was an electronic defect covered by a recall that no one mailed me about. But then there was the problem of the leaking rear differential. Someone tell me why a car with less than 37,000 miles is having drivetrain problems like this. The mechanic at the dealership told me he had a Corvette in last week with the same problem. Corvettes have rear-mounted transmissions right next to the rear diff, so getting to the leaky seal in the differential, replacing it and putting it all back together racked up 10 hours worth of labor.

Add in replacing the PCV and fuel filter, patching a screw hole in the right rear tire and balancing all four tires and I was looking at about $1,300.

I will ease the pain of this financial setback by flooring it on my way home from work tonight.

Please Provide Feedback

Even if you've never left feedback here before, I'd really appreciate it if you would read the post below this one and give me your honest feedback on it. It's the first article in the "Self-Deception" series that I've been talking about, and I'd love to hear your reactions to the ideas contained in this first piece. Please use the comments field and let me know what you think. I've created a new category for the Self-Deception series, so you can search for the next few articles in the series by category on future visits.

The next article in the series is nearly complete, and it's tentatively titled "Self-Deception: The Evil Isn't Right Under Our Noses." Look for it by the end of the week.

Thanks.

Self-Deception Series: If We Prove It, They Will Come

This is the first in a series of several articles regarding the state of the online marketing industry. Each article in the series deals with the notion of self-deception, the idea that we're kidding ourselves regarding many of the things we think will lead the online marketing industry to success. It is vital to the success of the industry that we examine these instances of self-deception and address them. Online marketing has placed much faith in the idea that if we prove it can contribute to a marketer's overall objectives, that marketer will shift spending into online channels. But when we take stock of the proof we've offered to the marketing community and the percentage of overall marketing spending that most marketers put toward online initiatives, it begs the question, "Does proof really matter?" Online marketing, and online advertising in particular, has always had something to prove. In the rush to the web that occurred in the mid-1990s, many clients treated online advertising as a novelty, but not a necessity. Many advertisers pursued online ad placements as part of their value-added strategy, using credits earned by purchasing print, radio and television ads to secure online ads on websites owned by their traditional media partners. While some advertisers in the early days did pony up with cash, far more advertisers first got their feet wet in online advertising by spending merchandising credits. By and large, online advertising was often thought of as something worth pursuing, but not with an expenditure of media budget dollars.

Of course, the dot com mania of the mid to late 1990s brought about significant expenditures on the part of marketers, but if you recall the insanity of that period, you'll remember what the announcement of an advertising partnership with Yahoo!, AOL, Microsoft, Excite or any significantly-sized portal site would do to a company's stock price. The vast majority of online advertising deals structured during that period were meant to achieve one or both of the following:

1) Produce favorable news that would give a huge boost to a company's stock, or 2) Participate in the "Internet Land Grab" in which companies positioned themselves strategically via online advertising partnerships (often excluding competitors) to compete in the "new economy."

It is important to note that the motivating force behind each of these is fear. We'll get to why that's important in a minute.

Remember that in the mid to late 1990s, companies that were tied closely to the Internet's new economy were the darlings of the stock market. Startups that were short on substance and long on the promise of dominating in the new economy created value and market cap out of thin air. (For instance, Yahoo's market cap in the late 1990s briefly exceeded that of all stocks traded in Singapore.) A simple announcement of an expenditure of just a few hundred thousand dollars on an online advertising or marketing partnership with a portal like Yahoo would send stock prices soaring. Some companies that might not have otherwise participated in this land grab were motivated by a fear that they would miss out on this opportunity. But whether that was brought about by shareholder pressure, market pressures, or the fear that a competitor would better leverage market conditions is immaterial. What matters is that the ultimate motivator was fear.

When the dot com bubble burst, online advertising was saddled not only with the stigma of having its foundations in the dot com marketplace, but also with a long, uphill battle to prove its marketing value. "Online advertising doesn't work" became the mantra of many a marketing manager. The online advertising industry set out to prove otherwise.

After the crash, online advertising had proven its effectiveness as a direct response medium only. It seemed to be best-suited for performance-based advertising deals, where advertisers would pay publishers only when a prospect clicked on an ad, generated a sales lead or made an actual online transaction. During the period following the bursting of the dot com bubble, many publishers kept themselves afloat by running direct response advertisers.

But what the online ad industry hadn’t yet done was to prove that online advertising could brand like more established media like television, radio, print and out-of-home. The most significant study that had been done to date was a 1996 research initiative by Hotwired that attempted to answer the question of whether online advertising could brand. Working with Millward Brown, Hotwired used an adaptation of a method often used in traditional media (test and control) to show that there was value in an online impression. By the time the bubble burst, however, many potential advertisers questioned whether the results of the study were relevant in the post-bubble world. Since the study had been conducted, the web had evolved into an environment that was exceedingly cluttered with elements competing for consumer attention (several ad units per page). Mentioning Hotwired’s study in 2001 was more likely to raise more questions than were answered by the study.

A company called Dynamic Logic emerged in 1999 to provide, among other things, turnkey branding studies that could be executed along with an online advertising campaign that would help prove the branding effectiveness of the campaign in several categories familiar to brand advertisers: awareness, association and favorability. However, it took time for Dynamic Logic to establish itself as a standard in the online ad community. An exclusive deal with 24/7 Media in its first year of existence established Dynamic Logic’s AdIndex product, giving it legitimacy, but it also hampered the company’s ability to emerge as a standard across a majority of publishers within the industry.

By 2001, however, the efforts of Millward Brown and Dynamic Logic were well-known in the online advertising industry. Simply put, the evidence that online advertising could produce measurable and cost-effective lift in common brand metrics was plentiful.

We offered the proof. Did marketers once again flock to the Internet to take advantage of what this emerging medium had to offer? By and large, the answer was no. The period between 2001 and 2003 was the most challenging period in the history of online advertising, in which direct response advertising dominated the Internet and brand advertising campaigns were comparatively few and far between.

For the most part, this was due to the economic climate of the time. An impending recession forced most advertisers to stick to channels that were proven to work. Many advertising budgets were slashed to conserve cash and any unnecessary risks taken with the remaining budgets were, simply put, an excuse for executive management to reevaluate marketing personnel.

Again, the online advertising community believed more proof was needed. Brand managers and other marketing professionals staved off commitments to online advertising by questioning whether or not an online ad campaign would work in that advertiser’s specific product category, or whether online ads could break through in increasingly cluttered online environments. In effect, these were stall tactics. Most advertisers who were actively pursuing online advertising campaigns were doing so because of its prior successes, in most cases in the realm of direct response, in order to maintain the flow of leads, sales and traffic to their websites.

Meanwhile, the online advertising industry was busy producing more proof that online advertising worked. The talk in the marketing industry as a whole was dominated by discussions about the fragmentation of media consumption habits. It was simply becoming harder to achieve significant reach against basic demographic audiences with a mix of what had traditionally worked for most advertisers in the past – print, radio and television. This was due to the fact that the consumption of alternative media, including the Internet, video games and other distractions, was eroding traditional media audiences. During this period, the online advertising industry released several compelling arguments for advertising online, including:

• Compelling arguments from major publishers and the Online Publishers Association that the Internet was one of the only ways to reach working men and women during the workday.
• Media mix studies from the Interactive Advertising Bureau demonstrating that increased spending on online advertising would yield more efficiency in communicating brand messages to key demographic audiences. (Either advertisers could achieve the same goals by spending less, or they could achieve incremental reach by shifting budget dollars from traditional media to online media.)
• Reports showing that media fragmentation was continuing to accelerate and that mass audiences could not be reached in the same manner that advertisers had been accustomed to.

These landmark announcements are just a sampling of the larger body of proof that the industry has offered up. We’ve also seen countless case studies from the IAB, the OPA and major online publishers, studies specific to product categories, online marketing best practices from the likes of DoubleClick, Atlas DMT, and various research companies and more. All along the way, the discussion of the fragmentation of audiences and shifts in consumption habits have continued to make headlines and provide the subject matter for opinion pieces from marketing influentials. The persistent chatter concerning across-the-board decline in television ratings, accompanied by double-digit yearly rate increases, is hotter than ever. Similar declines in audience size have been experienced by old standbys in the media business. Circulation scandals abound in the newspaper business.

While online advertising is experiencing somewhat of a present-day renaissance, it’s not the kind of rebound we might expect given the evidence we’ve put forth concerning online ad effectiveness and changing consumption habits. Many media pundits have noticed that while online spending is increasing steadily, it’s not rebounding in a manner reflective of the magnitude of the sweeping changes in media consumption occurring today. Some have said that this is due to the inertia achieved by traditional media (i.e. – Old habits die hard). Some have said that the adoption of online media will happen “retirement party by retirement party” as the old guard at large traditional advertisers is replaced by one that sees the merits of online advertising. While this may be true, one of the most important things we need to realize is the following:

The case we’ve made for online advertising, in and of itself, is not the driver behind increased spending in online advertising. The real driver is fear.

When I speak of fear, I’m not dismissing the hard work that the online advertising industry has put into making the case for online advertising. (I’d like to think I helped to make the case during my 10 years in the business.) Rather, I’m saying that the proof isn’t the main driver of increased spending. After all, the proof has been there for years and the majority of marketers continue to spend 2 percent or less of their total advertising budgets on online media, if they spend anything at all.

Fear drives increased online spending – fear of losing a critical share point in a highly competitive market, fear of losing ground to competitors, fear of losing relevance to key target audiences, but most of all, fear of losing one’s job. The case we’ve made for online advertising feeds some of these fears, but we can’t definitively say that for most of the leading national advertisers, failure to spend a higher percentage of ad budgets online will cause someone to fear losing their job.

To encourage larger commitments to online advertising, we have to stop kidding ourselves by believing that throwing more proof at the problem is the end solution. Certainly, proof helps, but it won’t solve the problem by itself.

I’m not suggesting that we should go out of our way to strike fear into the hearts of the laggards, either. But we’ve subconsciously taken steps as an industry to insulate the laggards from fear, and those protections should be removed. Here are some things we can do to accelerate commitments from advertisers:

• Put exclusivity back on the table - During the dot com boom, category exclusivity was a component of many large scale media deals. Online publishers are often able to capture audiences that are extremely valuable to advertisers. It’s time to attribute the proper value to those audiences. One way to do that is to offer it exclusively to the forward-thinking advertisers who want to gain access to a specific audience. While many publishers have been hesitant to offer category exclusivity out of fear that they might be closing the door on future revenue opportunities with other advertisers, I’d argue that it’s best to count on the revenue that one can get today while simultaneously creating demand for the inventory in the next cycle. Nothing increases demand like a decrease in supply.
• Put the online upfront back on track - While de facto upfronts have been occurring for the past few years in high-demand categories like automotive, we need a formal structure. The fear that advertisers could be missing out on valuable opportunities to advertise to key audiences will bring them to the table.
• Keep the case studies coming - Well-publicized case studies show the rest of the industry that an advertiser is having success with the online medium. And they generate questions like “How come we aren’t doing this?” among executive managers at major advertisers. The more numbers and the greater the specificity, the better.
• Continue to compare and contrast audience measurement in online with that of other media - If there’s one thing online is good at, it’s specificity with regard to the audience one can reach. Television can’t do it as well. Neither can print or radio. The stories about declining ratings and circ figures will continue. We need to contrast that with continued releases about how shoppers consume information online before visiting retail stores, how the Internet plays an ever-increasing role in helping manage family heath, how working folks can’t be reached with any degree of certainty anywhere but online. If we do this, we will create demand for online media by showing how the medium is unique in its ability to reach key audiences, and thus a fear that the competitor of a major advertiser might move to lock up inventory against said audiences.
• Inform clients more about what competitors are doing online - Use competitive spending tools to let clients know what competitors are spending and where. When exclusive opportunities arise, let clients know the ramifications of passing on the opportunity and the potential for a competitor to benefit from locking your client out. Closely monitor the areas in which your key audiences aggregate, and keep clients apprised of opportunities to reach those audiences in those venues.

I’d like to go on thinking that the merits of our accomplishments in online advertising will lead to increased adoption. After all, it’s easier to have faith in one’s achievements than in the shortcomings of others. But the evidence is staring me right in the face, showing me that fear is the chief motivator. When I took this evidence at face value, I came to the conclusion that continuing to kid ourselves about what motivates advertisers to commit to online media is damaging. It’s damaging in the sense that it distracts us from our business focus – profiting from our ability to guide clients toward online success.

In closing, I’d caution anyone reading this to avoid seeing it as a suggestion that one should generate irrational fears among one’s clients. Quite the contrary. Simply put, we need to do a better job of keeping clients informed about not only the opportunities available to them, but also the strategic ramifications of failing to commit to key online advertising opportunities. They need to know that the online advertising marketplace is becoming more competitive, that demand is slowly accelerating, and that now is a great time to commit to the medium in a significant way. If you’ve done a good job of evangelizing the medium, your clients are aware of the proof that online advertising works. But know that the proof itself is not enough to solidify increased commitments to the medium.