One of the major ways in which big data is currently used by marketers is to drive the targeting of online advertising to ensure it is delivering relevant messages to the right audiences at the right time. The scale of investment in online advertising is consistently increasing with, for example, ZenithOptimedia forecasting the internet will boost its share of the $532bn global ad market from 20.6% in 2013 to 26.6% in 2016.
However, questions are increasingly being asked about the efficacy of this medium. You don’t have to scratch too far to find evidence to suggest some fundamental challenges to the orthodoxy of online advertising. In a GfK / Guardian study we reported that 68% of UK online consumers find it creepy the way that brands currently use information held on them. And a very tangible manifestation of consumer disquiet is another recent GfK finding that 38% of consumers now use some form of ad blocking, mainly via using a software download but also through changing the settings on their browsing software.
We have also recently found evidence of an ‘uncanny valley’ for brands. The term ‘uncanny valley’ was first used in 1970 by Japanese roboticist Masahiro Mori, who noted that although we tend to warm to robots that have some human features we tend to be disconcerted by them if they start becoming too realistic. Our research has identified a similar phenomenon in relation to online advertising – initially consumers enjoy the personalisation or marketing communications, with steadily improving brand attachment as personalisation increases. However, there appears then to be a line which is crossed where there is too much personalisation for consumers’ comfort and brand attachment rapidly declines, falling into an ‘uncanny valley’. This has to be a serious concern for advertisers who often assume more personalisation can only ever be a good thing. The early signs from our research clearly indicate that this is not necessarily the case.
A recent report on the topic questions the long term sustainability of online advertising. The authors, Tim Hwang and Adi Kamdar identify four key trends to support their argument. First, they cite some recent work which suggests that web advertising is much more effective for older consumers whilst little evidence was found for its impact among a younger demographic. They argue that as demographics shift over time then the overall effectiveness of online advertising will fall.
Second, consistent with our recent findings they suggest that ad blocking is increasingly common. And there is no doubt that the industry is grappling with how to deal with companies such as Adblock Plus whilst other, perhaps more benign, companies are springing up such AdPlus from Mutual Media which filters advertising based on the users’ preferences.
Third, Hwang and Kamdar cite click fraud as a major concern, citing one case in March 2013 where fraudulent click-throughs generated through botnets were estimated to have cost display advertisers $6m per month. This growing fraud clearly has the potential to curb enthusiasm for continued growth of investment.
And finally the report suggests that the growing supply of advertising may work against itself, so as the number of ads increase so the ability to cut through is increasingly problematic. The report goes on to explore the implications of these trends which, given that the fundamental economics of the web rely on advertising, are serious.
Whilst it may be possible to pick apart some of the arguments put forward in the report there is a growing debate about online advertising. The Economist, for example, not known for its hyperbole, recently ran a story highlighting research that questioned the effectiveness of online advertising (albeit this was in the context of search). So a comprehensive study for the IPA by industry luminaries Les Binet and Peter Field on this very topic was much welcomed. The report made recommendations which flew in the face of the increasingly accepted wisdom that one-to-one advertising was the most effective channel for brands. Instead, it suggested that advertisers should target the whole market through traditional channels of TV and print rather than focus solely on social media and one-to-one marketing. This, according to the report, can be three times as effective across key success criteria of increased profit, greater market share or a reduction in price sensitivity.
The certainly runs counter to the received wisdom that we have found among marketers that online represents the future of advertising, a perception that is currently stoking an ‘arms race’ between brands to develop ever more precision tools to identify and target relevant groups of consumers. The IPA report perhaps shows a more nuanced direction for advertising, one where TV and print are focusing on the more strategic needs of the brand and online is delivering the tactical sales focused end of the spectrum. As ever with most major studies that explore the underlying fundamentals of a market place, the finding is not exactly rocket science but the message seems to have got lost in the frenzy associated with online.
Whilst the rumours of online advertising’s death may be overstated there is clearly a need for brands to better understand its place in the mind of consumers. Amid all the talk of programmatic targeting and algorithms perhaps it is too easy to lose sight of the fact that at the receiving end is a human being with very human needs, motivations and attitudes. Not enough work has been done to understand the limitations of personalisation, marking out where the boundaries are before brands risk falling into an uncanny valley. And brands ignore the potential pitfalls of consumer reaction to this application of Big Data at their peril.
Colin Strong heads up technology research at GfK in the UK. He is particularly interested in the way our lives are increasingly mediated by data – between consumers, brands and government. Colin is interested in exploring the opportunities this represents for a better understanding of human behaviour but also to examine the implications for brand strategy and social policy.