• by Ron Elwell , March 27, 2012

Back in the late 1800s, John Wannamaker uttered the famous words “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”   

Over 100 years later, we have had innovations like the car, radio, television, powered flight, space travel and the Internet, yet this is an axiom that is still true for most marketers. Given all the advances in technology and the tools at our disposal, doesn’t this represent a complete and abject failure of the advertising industry?

One of the amazing trends in our industry is the constant stream of forecasts of tremendous growth. For example, eMarketer says online advertising in the U.S. will grow from $26B in 2011 to $50B in 2015. If you believe all these forecasts, aren’t they really telling us that in five years we will be wasting another $25B of marketers dollars?  

Let’s take a step back, and look at what is happening to ad spend. Over the last five years, from 2006 to 2011, overall global ad spend has been relatively flat, growing from $392B to $411B, a growth rate of less than 1% a year. Yes, we have seen good economic times and bad economic times during those five years, but cycles are typical in any five -to 10-year period. Clearly, the marketers are speaking with their pocketbooks.  

Even with the advent during that time of online video, social media, mobile advertising, iPhones and iPads, and the continued explosive growth of the Internet, they have not been willing to pour more dollars down a black hole of 50% waste.

In fact, all we have seen over the past five years is a shift in spend from print to online, with print decreasing by $39 billion and online increasing by $37 billion.  The shift has simply followed consumer consumption habits; I now read my newspaper and magazine online.  

The online ad display format looks very much the same, and the targeting, be it hyper-local, lifestyle or contextual is also similar to what print has been doing for the past several decades.  

What does it mean if we actually live up to the hype? What happens if, as a marketer, I can be invited into the consumer’s life to help them make an informed decision? What happens if we stop wasting at least a large proportion of that 50%?  

Will that mean we finally achieve that dramatic growth that has been forecast? Here is the dirty little secret, if we can actually accomplish all of this, if we do our job, the overall spend will go down.

When I traded in my gas-guzzling squirrel killer for a nice eco-friendly sedan my gas bill was cut in half. I still go and do everything I want to do. The money I save gets spent on important things, like new running shoes, Cheese Doodles and beer. If we can deliver more effective advertising, what do you think the advertisers will do? Will they continue to spend as much, or will they take those savings and invest them in R&D and productivity tools, or just drop it to the bottom line?  

There is a simple solution that will deliver more effective advertising and help advertisers lower their overall spend: invitation-driven engagement.

The majority of the 3,000+ ads we are exposed to each day are either ignored, forgotten, or at best, the brand hopes to build long-term recognition through sheer receptiveness. Invitation-driven engagement, via an understanding of the context and the content the consumer is engaged with, invites the user to interact with the brand with an implicit promise of value exchange.

The brand is provides relevant information directly related to the content that the consumer is engaged with, which should enhance the user experience. There is no need for the “spray and pray” approach to advertising.

Publishers benefit from because it provides better user experiences for the consumer, and consumers benefit, since they have a choice to interact with the ad.

Invitation-driven engagement will be able to deliver better results, at lower spend, and enable marketers to determine which half of their advertising spend is being wasted. This will ultimately help to play a role in lowering their overall spend and mean that the advertising industry is finally doing its actual job.