Monday, October 19, 2009

Social Media, fuel for Advertising ROI?

The premise underlying advertising has changed. The historical tactic “tell many to influence behavior of the few” is being replaced by “tell few to influence behavior of the many.” Unfortunately, however, neither the historical leaders of traditional media advertising, nor the emerging leaders of New Media advertising, have had much success in applying the latter tactic. The key for both may lie in digital Social Media.

Traditional advertisers know, all too well, that most ad campaigns fail. David Ogilvy is reported to have said “Ninety-nine percent of advertising doesn’t sell much of anything.” In the same vein, John Wanamaker, the department store genius, is quoted as saying “Fifty percent of advertising is wasted …just don't know which 50 percent.”

The same dismal ROI exists in New Media. It is still a game of “search” and not one of “find.”

The similarity between traditional media advertising and new media advertising are hidden by the technologies that fuel both media. Traditional media relies on finding out what I have done like my recent purchase of a car. This fact provides advertisers clues to what other products and services I might be influenced to spend my money on. In new media, the email that I send to my friends on my recent car purchase is read by a computer. The computer then prompts delivery of digital ads of products and services I might be influenced to spend my money on. The economics are different, but the results have the same dismal ROI.

Enter Social Media. Those of us on social media sites are slowing getting comfortable publicly revealing more intimate details about ourselves and others than we have ever done so to the whole world. Personal details we share on our Facebook© (www.facebook.com) wall, the tweet (www.twitter.com) we text and the like-minded we collect and empathize with (e.g. music enthusiasts on www.myspace.com) are providing the ‘local and personal’ knowledge that Morris Hite referred to when he said, “There is no such thing as national advertising. All advertising is local and personal. ”

The Coca Cola© page on Facebook© is one attempt at implementing the latter tactic. It works if I self-qualify myself by showing that I am an avid member of the Coca Cola enthusiasts club that the page represents. But how will Coca Cola get me to buy something and buy more frequently? How do the one-on-one eye-to-eye sales successes of the traditional world manifest in my digital relationship with Coca Cola? Will either the traditional behemoths of Madison Avenue or the recent upstarts of Digital Search figure this out? Or is advertising’s ROI growth dependent on yet another outsider showing everyone the way?