Amazon, Apple, Google, Facebook (termed by Scott Galloway of the Stern Business School: ‘the Four’) – what do these enormous companies have in common? Significant, if not dominant control over the modern advertising market largely based on social media however defined.
In Australia, at least, we have seen media consolidation with a reduction in print advertising and closures of newspapers and other publications. The sustaining flow of advertising revenue has dried up…..to be replaced it may seem by supposedly targeted advertising on social media.
Social media advertising seems to take a ‘back to the future’ approach to advertising. If an advertiser wishes to have its advertisement, typically lacking the emotional resonance of a well-made television ad, placed first in the queue generated by a search engine as you wait for that tantalising web page to open, it has to pay a price set by a virtual auction process. These prices are significant as the surging valuations of the ‘Four’ attest. The advertiser also has to contend with the typical user’s very short attention span. On top of that, the ‘targeted’ advertisement may already be obsolete and irritating. For example, a potential customer may have not decided to take that trip or make that purchase after all. The result is an ad with much in common with old fashioned advertising, untargeted, potentially costly and largely, if not totally, irrelevant.
From a brand perspective, these issues present real risks for reputation and advertising spend. Even though there may be some payoff for an unappealing and irrelevant advertisement, is it wise to risk it?
What would seem a simple advertisement may just reduce customer attraction, i.e. impose a cost, and undermine brand value, perhaps significantly. There is also a lack of transparency over the effectiveness of marketing campaigns. When presented with risks such as these, there is a real question as to whether or when and how brands should be promoted through social marketing. If this conclusion seems startling, consider that Procter and Gamble is claimed to have reduced its digital marketing spend by US$200 million in 2017. Also consider that trust in traditional advertising, as measured by a recent Australian survey, has recently risen at the expense of social media advertising, the ‘fake news’ thing.
Brand value management is obviously an IP management issue and capturing impairments to brand value caused by sub-optimal advertising strategies is vitally important for larger businesses. Even smaller businesses need to manage a social marketing spend which may reach into hundreds of thousands of dollars. It is therefore well worth considering these costs and managing them through an advertising strategy that optimises the traditional/social media advertising mix and audience happiness with your brands.