Why online ads don’t work as well as you hoped they would

Sometimes it’s because the data is muddy. Sometimes it’s because of something much worse.

On January 3, marketing and tech Twitter lost their collective minds over this Twitter thread from Nandini Jammi. Nandini is the co-founder of Sleeping Giants — a grassroots activism group that works to persuade companies from removing their online ads from alt-right websites (something that can inadvertently happen when you buy online ads that are distributed through an ad network). You can read the thread if you like, and I’ll try to summarize here.

Basically, it says that in 2017, Kevin Frisch, Head of Acquisition for ride-sharing company Uber, was spending $150 million in online ads. Sleeping Giants got in touch to encourage Frisch to remove Uber ads from the Breitbart News website. When Frisch investigated Uber’s online ad spend, ad placement, and performance, he was surprised to find that the math wasn’t adding up. The online ad platforms were telling him that Uber’s ads were converting, and people were clicking the ads and going to the Uber app. Problem is, that didn’t match up at all to what Frisch knew about the actual Uber users.

Frisch wondered how much of Uber’s online ads weren’t actually doing anything, so he turned off $100 million worth of ads. He says that there was no significant change to Uber’s acquisition numbers.

He found that $100 million worth of online ads was doing absolutely nothing. He investigated Uber’s online ad performance and acquisition results further, and was able to knock an additional $20 million off. Turns out Frisch could meet all of his (quite ambitious) user acquisition goals with just $30 million in online ads, plus all of Uber’s other marketing tactics (such as word of mouth, referrals, and other promotions).

Think about that for a minute. $120 million of a $150 million ad budget. Doing nothing. It’s mind blowing isn’t it? It begs the question: HOW DID YOU NOT KNOW?!?

Any of you who have experimented with online ads might know the answer. It’s really freakin’ hard to determine what is and isn’t working with online advertising. And if you’ve ever spent the time and painstaking effort it takes to compare the performance reports coming from online ad vendors with internal sales or signup reports, you’ll often find discrepancies. Sometimes it’s because the data is hard to isolate and analyze. Sometimes it’s because the data is muddy. And sometimes it’s because of something much more nefarious.

Nandini’s Twitter thread comes to the conclusion that Uber was being grifted by online ad vendors, who were reporting incorrect, artificially inflated performance metrics. Adtech fraud has been around for years. Uber’s experience was in 2017. In 2018, Proctor and Gamble cut $200 million from their online ad spend because of it. And this recent piece in Forbes summarizes the largest adtech frauds in 2020, proving that this is still very much an issue in the digital marketing world.

What does all this mean for you, the small business owner or marketer? It means you need to pay very close attention to your online ads, if you’re going to buy them at all. The “spray and pray” method of just throwing money at the computer and hoping your ads do well isn’t gonna cut it. You need to watch your metrics very closely, constantly analyzing performance and checking the reports you’re receiving from online ad vendors against your internal reports. If the numbers don’t add up, something is off. Go find it. Otherwise you are just burning money, which is something none of us can afford to do right now.

My consulting clients know that, other than a very few particular situations, I don’t like online ads much. I think they’re a crutch. Too often I see marketers and business owners pouring money into online ads because they want fast growth. They’re tempted by rumours they’ve heard of the potentially high ROAS (return on ad spend) available, without learning what it takes to achieve it. I’m not saying it’s impossible, but I am saying that it’s hard.

Truly successful marketing is about making a connection and building a relationship with your customer or client. It takes time to do it properly, but if you do it right, it will pay off much more than scammy ads ever will. Invest your time and money on the digital properties that you can control, such as your website, your SEO, and your content marketing. Not-so-coincidentally, that’s what I’m teaching in my Digital Marketing Essentials masterclass, which kicks off January 18. I hope you’ll join me.

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