Is Digital Advertising A Money Pit?

 

Digital advertising has come a long way in the past decade, but are all of the advancements all they are cracked up to be? Apparently not, if author Tim Hwang is to be believed.

 

Google and Facebook have made big claims about the value of their microtargeted behavioral ads, but according to Hwang in his book Subprime Attention Crisis, they simply don’t work as advertised. He compares today’s digital economy to the pre-2007 housing bubble, predicting that eventually, advertisers’ dependence on ads that don’t return what they promise will cause a financial crisis.

 

Do Microtargeted Ads Even Work?

 

At the heart of the problem is the growing pile of research showing that the ROI on digital advertising is frequently negative. Advertisers pay a premium of as much as 50% to these ad tech middlemen on the premise that their automated behavioral microtargeting is more efficient than other types of digital marketing. The research does not bear this out, however. 

 

In one study, researchers conducted an experiment in which they used six advertising platforms to target men aged 25-44 in Australia. They found that their targeting didn’t work quite as well as random guesses. Often even if the targeting does work as it is supposed to, the ads are never seen due to placement or ad blocking software. This suggests that most of that highly valued surveillance data is probably worthless.

 

There is also the massive problem of digital ad fraud. “Click farms” have paid humans or bots exist entirely to constantly click and refresh ads. “Domain spoofing” is when a fraudulent site presents itself as a legitimate one and participates in ad auctions.

 

Hwang cites a study from 2017 that states “as much as 56 percent of all display ad dollars were lost to fraudulent or unviewable inventory in 2016.”

 

Digital Advertising That Actually Works

 

Nobody likes the idea of spending money on digital with no guarantee of return or full delivery of the ads to your target market. Luckily there are alternatives to jumping into the behavioral money pit.

 

Contextual advertising, for instance, uses the subject of the page you’re looking at, your location based on your IP address, and other metadata such as the browser and OS you’re using to determine which ads to show you. They convert at the same or better rates as behavioral ads, but without the heavy markup.

 

At REAL Moxie, we go the extra mile to ensure that you aren’t overcharged. We know that as a small business, you can’t afford to waste your precious marketing budget on worthless ad campaigns. We keep our management fee low and research results and platforms before engaging in campaigns. We also stay up to date on industry and ad trends and results. 

 

The types of digital marketing that will work best for your business depend on the products or services you offer as well as other factors like customer demographics and current brand recognition. REAL Moxie is here to help you determine how best to highlight your products or services. To learn more about your digital advertising options, call 816-348-3769 or click here to schedule your FREE consultation.