Industry commentators don’t always get it right, but UK-based Rory Sutherland usually nails it.

He recently wrote:

“Like a peacock’s tail, advertising is not really about efficiency…A large part of advertising’s power comes from the fact that it is perceived to be expensive, and is broadcast at a wide audience in mass media, thus conveying a seller’s confidence in the widespread popularity of what is being sold”.

This is not entirely true, as ‘narrowcasting’ is a valid way to advertise, too, but many mass market brands still require the galvanising power of mainstream media to both sustain brand equity and drive short-term results. Broadcast media also multiply the effect of more targeted channels.

However, mass market advertising is often seen as wasteful. Programmatic media promised to answer the hoary old question about knowing which 50 percent of advertising is wasted; but no-one ever proved that 50 percent was wasted. To use the peacock’s tail analogy, which part of the tail should be cut off for efficiency?

Despite all the promise, programmatic has not yet lived up to its hype. Targeting is still highly imperfect, even at a basic male/female level, and Ebiquity’s analysis of return-on-investment across hundreds of models rarely shows online advertising delivering a positive return for the money it costs. So it’s not surprising that many commentators are starting to question their investments in hyper-targetted advertising.

Audience targeting is usually worth pursuing but can be detrimental to a brand if it loses the halo effect of mass audience exposure. This can hit hard, both short- and long-term.

One of the most powerful effects of mass media advertising is to create differentiation and brand preference, so it is no surprise that the big e-commerce players often turn to mainstream media when the competition hots up. A good example is the price comparison website market in the UK, where comparethemarket.com, moneysupermarket.com and confused.com spend heavily in TV (a combined total of £68.5m in the year to October 2016 – sourced from Ebiquity Portfolio UK) in a race to be first choice for web users.

We’re starting to see the same happening with food delivery players and taxi firms, as more enter the market and consumer preference matters. Yes, a brand can be built online, through customer experience and social, but competing brands still sometimes need a little help.

More traditional brands especially need broadcast communication to sustain preference and top-of-mind awareness in the crowded and chaotic supermarket aisles, and to build brand equity for the future.

So, like the peacock’s tail, advertising attracts attention. This doesn’t mean that there aren’t other seduction tactics to ‘close the deal’, but awareness and favourability are still essential for most brands. We can expect to see more brands questioning their multi-channel mix and, just maybe, reinvesting in mainstream media.

It’s worth concluding with a final comment from Rory Sutherland:

“New ideas seem to make perfect sense until you think long and hard about what the hidden virtues of the previous irrational arrangement may be…From my perspective, this has resulted in technology companies partly wrecking the advertising industry-and journalism along with it-under the guise of efficiency”.

A rethink of today’s advertising industry will be a prominent feature in 2017.

FINDOUTMORE