Category 1 storm clouds are gathering over what has traditionally been one of the most lucrative, and perhaps only profitable, sectors to come out of Silicon Valley in decades: online advertising.
Two months ago, it was P&G which fired the first shot across the “adtech” bow when not long after it announced it was slashing its digital ad spending because it thought it was not getting the kind of return on investment it desired, it made a striking discovery: ‘We didn’t see a reduction in the growth rate.’ CFO Jon Moeller said ‘What that tells me is that that spending that we cut was largely ineffective.’
Speaking to the WSJ, P&G CEO David Taylor echoed Moeller when he explained that cuts on digital ads are part of a larger strategy to more quickly halt spending on things – from ad campaigns to product development programs – that aren’t working: ‘we got some data that said either it was in a bad place or it was not effective,’ Taylor said of the digital cuts. ‘And we shut it down and said, ‘We’re not going to follow a formula of how much you spend or share of voice. We want every dollar to add value for the consumer or add value for our stakeholders.’
Previously P&G’s CFO had said that ‘the reduction in marketing that occurred was almost all in the digital space. And what it reflected was a choice to cut spending from a digital standpoint where it was ineffective: where either we were serving bots as opposed to human beings, or where the placement of ads was not facilitating the equity of our brands.”
Moeller also touched on the two most common complaints about digital advertising scams: advertisers are paying for ads that are viewed and clicked on by bots, not humans; and ads are placed by thousands of automated ‘ad exchanges’ that are out of control of the advertiser on sites and pages that don’t match the advertiser’s products.
This post was published at Zero Hedge on Sep 11, 2017.
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