Unless you’ve been living under a rock, I’m sure you’ve heard about how many advertisers stopped advertising on Facebook and other social platforms in protest on civil rights issues.
The boycott, called #StopHateForProfit by the civil rights groups that organized it, urged companies to stop paying for ads on Facebook in July to protest the platform’s handling of hate speech and misinformation. More than 1,000 advertisers publicly joined, out of a total pool of more than 9 million, while others quietly scaled back their spending. The names were huge: Adidas, Agile, Ben and Jerry’s, Best Buy, Ford, Eddie Bauer, Colgate, and some 400 large and international brands.
Today, the New York Times ran a story that pointed out what we knew back in June – it just didn’t matter.
This is not a post about politics, it’s a post about advertising. Because what this event should have showed everyone was how Google, Facebook, Twitter, Insta, etc., etc., etc., make their money.
They prey on the stupid, on the small budgeted, and on the people who literally have no place else to advertise. There are millions of those businesses, which is how these companies became so huge. Even though these companies may spend less than 12 thousand dollars a year (the average) in advertising, because there are millions of them throwing their money down the hole, it just doesn’t matter if a company like Adidas or Ford pull their ad spends. For them, that spend is trivial – even at several million dollars. For the millions of small businesses advertising in these channels, they have no where else to go.
That is what I want to talk about with you.
The dirty little secret – Google, Facebook, etc., couldn’t care less
I have been personally responsible for what is probably about 3 million dollars worth of advertising spend in the 10 years I’ve done Google, Facebook, etc., advertising. I’ve been certified in both platforms (I’m not presently at the moment for reasons I’ll explain below). My agencies have been responsible for probably about 20 million in ad spend over the past 10 years. I’ve twice been a “Google All Star” and gone to Google’s headquarter’s on Google’s dime (something that only 1% of all agencies ever do – I did it twice).
Despite all that, the question that comes up with every client advertising in these platforms is this – “Why should I hire you? Google makes it so easy (or Facebook or whatever).”
And it’s a legitimate question isn’t it? I mean Google makes it simple. Facebook makes it simple. Slaps stuff up there. Boost a post. Whammo – huge profits right?
The simple answer I give to this question is – because I cared if you had an ROI, they don’t.
The marketing platforms really don’t care if you get an ROI. Two reasons, one – there’s a sucker born every minute, and two – you really don’t have a choice.
When you spend money in a “real” channel – programmatic, broadcast, print, etc., you have strong leverage over the media company. A ton of money is at stake. In the case of television ads – it’s really tough to do a TV campaign for less than six figures (which is cable TV) and network TV is millions. In those cases, there’s a fair amount of leverage that the customer has over the media company, and so as a consequence, it’s a “fair fight” between the customer and the channel.
In Google, Facebook, whatever, there is no fight. They say, “We have billions of eyeballs and you suck. Pay us or get lost.”
So you pony up your $500 bucks or whatever, and you roll the dice. For many of you it might as well be a casino.
For many of you – the outcome is more or less as predictable as a casino.
But Facebook and Google really couldn’t care less if you make money or not. Because for Google, when you tap out your $1000 and fail – there are literally hundreds of thousands of fish waiting to be filleted. Yeah it would be great if you stay and keep going, but if you don’t, Google could truly care less. Same with Facebook.
But what about a “Coca-Cola” or a “Pepsi” or a “NFL” or an “Adidas” or a “Nike,” you say?
They pretty much don’t care about those guys either. Yes, they spend millions of dollars in the channel, but Google and Facebook both know that they are not their dominant form of advertising because they know they can’t deliver the reach that those brands require.
To you, the no-name company who doesn’t know what they’re doing, Facebook and Google are huge markets. To a guy who can get love on his own, with millions of dollars in TV, Facebook has to measure up to real reach and penetration on a level that very few advertisers understand and realize.
That is why these big brands have clashed over the years with Facebook and Zuckerberg’s management team. Zuck doesn’t care if they walk (it’s painful but realize they have nearly 100% of the sucker market) and while he wants those brands, he doesn’t want them in his face to the point it makes life difficult.
Why Social Doesn’t Matter for Big Brands
Which brings me to my next point that you should understand. Social media doesn’t matter for real brands.
Ford, GM, and others, have pulled their ads from social media at various times for various reasons – usually to make a political statement. The first time it happened, one of the auto manufacturers (I think it was Chrysler) pulled roughly $40 million a year from Facebook.
I realize that sounds like a ton of money to companies that are struggling to put 20-30K in the media channel.
To an auto manufacturer, that’s not even the amount of money it would spend on TV during one flight of the NFL playoffs.
These companies have real reach and real ad spend, 200-300-400 million, or more, in TV. Same levels in print. Same levels in “event marketing” media (banners, sponsorship, etc.).
If Facebook really mattered, companies like Unilever, P&G, Verizon, T-Mobile, they would be “all in” on digital ads in those channels.
Billions of dollars would pour into Facebook and Google. TV would implode as a channel.
It hasn’t. Why? Because digital media (and social media in particular) doesn’t play a determinant role in the advertising results for international and national-level brands.
Where do the “Big Boys” put their money?
When I make presentations, I tell prospective clients that about 380 billion dollars a year is spent in digital. That’s roughly half of the entirety of all ad budgets that are measured.
Since it’s not going into Google, Facebook, etc., where does it all go?
One word, just… one…word… plast-
Why? Because it’s truly the best way to put your message in front of the right person at the right time.
That’s why roughly $320 billion dollars is put into programmatic advertising.
But here’s the rub – you can’t do programmatic for a $500 ad spend.
Programmatic ad platforms typically don’t make sense for super small advertising buys. For example, the platform we use for clients, the minimum commitment is $20K. We spend roughly $6K in procuring the licensing of the tools necessary to execute the spend.
But, we can deliver for that spend a 5-7X ROAS and a 30% ROI (on average) and you would be hard pressed to get the same lift from Facebook or Google.
That’s why the big boys play in this field. It’s scalable, it works, and it’s quite effective.
The local plumber won’t spend $20K a year in advertising, and if he does (and back in the days when I used to handle a few that did), they want to do Google Ads, because that’s what they know and quite frankly it’s effective “enough.”
But when you have a complex sales channel. When you have a brand to build. When you have a complex and highly considered purchase… like most of you in aviation have, then something like programmatic is the only way to go. It’s the only way to do all the things you need to do in order to have results that are positive.
So in the end, Google is largely the sucker bet
For the Mom and Pop, for the solopreneur, for the small business – there would be absolutely no way to get your message seen anywhere for a few hundred bucks. Even radio spots typically go for $30/throw and you still have to produce the actual ad (which would typically be a thousand dollars if done on the cheap).
So it doesn’t matter if Coca-Cola or Home Depot quits Facebook. Yes, they spend a ton of money, but compared to the roughly 3-4 million people spending 500 or a $1,000 – it’s not enough to move the needle.
And for those people, spending a few thousand a year, or even 10-15-20K, most of them don’t have the courage or the sophistication to understand they might have other options. So they place their ads in Facebook, and Google, and the like.
It’s largely the sucker bet. Sometimes it pays off, most times not. And that’s why I almost routinely hear, “I tried Google, it didn’t work. I tried Facebook, it didn’t work.”
Right. Because their business isn’t actually lead generation, their business is extracting you from your ad spend and providing mediocre results.
It’s also why boycotts don’t work and Facebook doesn’t care less
The Mom and Pop or the plumber running his business advertising on Facebook, he doesn’t care about Black Lives Matter or civil justice. This isn’t to say those people are racist, but instead, they have a payroll they’re trying to meet. They have bills they’re trying to pay. For 99% of them, Facebook and Google and the like are their only lifeline to get revenue. So for them, boycotting the medium is the equivalent of shutting down their revenue stream.
They won’t do it.
And Google and Facebook know this. They know the vast majority of their advertisers are in small increments. Their entire system is designed to satisfy the “small buy” needs. If you had the experience we have, in programmatic, you’d realize that the tools are absolutely rudimentary and silly. We wouldn’t trust spending large sums of money with such rudimentary controls. We wouldn’t even agree to run tests using many of those systems because we won’t get enough data to make it make sense.
But those platforms are totally geared to the people who just don’t know any better. That’s why Facebook couldn’t care less about some big brand being upset at them.
They can always find thousands more who are willing to throw 500, a thousand, or more, in a campaign. Their entire lead system, advertising, and tools, are designed to find those people, bring them into their platform, and deliver mediocre results.
That’s why the real money goes to programmatic. That’s why the boycott largely failed.
If you want to talk programmatic – we should
Our agency is the only agency in this niche that uses programmatic for its clients. We know it can seem daunting and complex, but it doesn’t need to be.
Programmatic can be done with modest budgets ($20-25K). It doesn’t require massive budgets and massive investments of the client’s time. Many of you are already spending that type of money in various channels that are not effective at the moment (trade show, print, direct mail, etc.) Thus, trying programmatic might be the solution to generating leads (and revenue) by using the power of the right message at the right time online.
Programmatic can really do some amazing things. It really can deliver great targeting. It can influence sales. It can build brand.
Now I realize this may all seem self serving. Perhaps it is – but the real money in digital is spent in programmatic.
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