The cure is to measure campaign success via independent means: not the advertising venue, not the advertising creatives, not the ad network.
The Wall Street Journal reports that General Motors is pulling $10 million worth of its Facebook ads. And Morningstar is saying it will be very difficult for Facebook to build an advertising model to justify its lofty offering valuation.
Apparently GM marketers had become unconvinced that their Facebook spend was helping sell cars. Could it be they were deploying the now venerable practice of campaign attribution? In which case the proponents of actionable analytics would claim a victory (or if you are a Facebook shareholder, make that a "victim").
Advertising venues - content creators, aggregators, information sleight-of-hand specialists like Google and Facebook - have long held an almost mesmeric power over the advertiser. Looking for sales, the advertiser casts about for audience, or "reach." Taking Facebook as an example: with near a billion users, that is one heckuva good reach, Zucky.
But audience is not sales delivery. Campaign is not conversion. And the panoply of content creators and ad networks and ad agencies, without conspiring to do so, present an almost united message that prompts us to sharply recall John Wanamaker's antique dilemma: not knowing which ads worked and which did not.
Too Much at the Top
The big advertising message is that it really is about stuffing the funnel and little else. In fact, they love to crow about how unmanageably complex the ad network business is (you've seen the million-box org chart no doubt), and how only mysterious algorithms can deliver your audience to you, and how that alone is so complex and so impenetrable that the notion of trying to simplify it by studying campaign success - basic analytics - is simply not much to discuss. It would be so hard! Unless, of course, you were plugged in to how analytics really works.
In today's digital marketplace, you can now target ads more carefully than when you called the visor-wearing research guy on the 13th floor. You've got exact behavior patterns to study, and customer preferences and surveys and "likes" and referrals and Klout and tweets and mentions. And doesn't it feel grand when it turns out plenty of folks forwarded your content or shared your YouTube video with a friend? Except not so much in the wallet.
Because campaigns are not conversions. Social media connections are not paying customers. And as GM may have lately discovered, hanging out at the Facebook cocktail party does not make you the bartender. You are spending to be there, and you might meet a new prospect. But how much are you willing to pay for a networking event where they don't even give you a ticket for a gin and tonic? Meanwhile, as the clock ticks toward midnight, the bar gets more and more crowded. It's exciting to be part of this! Trouble is, you wake up the next morning in a straw bed full of pumpkins. And not a glass slipper in sight.
The cure is a fair amount of hard work. The cure is to measure campaign success via independent means. Independent means, means: not the advertising venue, not the advertising creatives, not the ad network.
I can't say for certain about what GM did, and I know some will say I oversimplified it (even if for clarity). But if GM, which had a near-death experience not long ago, finds itself remarkably clear-headed now about where its new dollars are going, then that can be no surprise. All it is saying to the likes of Facebook is: "Instead of believing you, we are going to believe our own two eyes."
And yes, it can be that simple - with the right conversion data.
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Andrew V. Edwards is a digital marketing executive with 20 years of experience serving large organizations, and has been an operating executive and digital marketing consultant since the 1980s. Currently he is a partner at Efectyv Digital, a digital analytics consulting firm. Andrew combines extensive technical knowledge with a broad strategic understanding of digital marketing and especially digital measurement, plus hands-on creative in the form of writing and design.
In 2004 Edwards co-founded the Digital Analytics Association and is currently a director emeritus. He has designed analytics training curricula for business teams and has led seminars on digital marketing subjects.
Besides writing a regular column about analytics for ClickZ, Andrew wrote the groundbreaking "Dawn of Convergence Analytics" report, which was featured at the SES show in New York (2013).
His book Digital Is Destroying Everything, published by Rowman & Littlefield, will be released on June 15, 2015.
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12:00pm ET/9:00am PT