So advertising does not become more efficient with more data


The Facebook Fallacy, is an essay by Michael Wolff in MIT technology review and the quote that is getting some focus is….“At the heart of the Internet business is one of the great business fallacies of our time: that the Web, with all its targeting abilities, can be a more efficient, and hence more profitable, advertising medium than traditional media.

Now this is not a new revelation. Here are some articles one from each year as the point could be rather laboured.

2008 Business Week; 2009 TechCrunch; 2010 IAB/ PWC study; 2011 TheStar; 2012 DocSearls

When I was writing My Digital Footprint back in 2008/2009 I wrote in Chapter 6 “the two sided business model” about the collision of two words, the old traditional one and the new bright shinny full of promise digital one.  The linkage and the clash would happen as both worlds fight over advertising dollars.  In the diagram below AAS (advertising as a service)

The diagram I used was this horrible complex one….


The point here I believe is that the efficiency of advertising is not the right question, nor is the targeting, not segmentation, nor value for money, nor ROI.  Advertising cannot simply be boiled down to such a one dimensional ratio as there is more than one reason that Brands do something.

The observation is that “Web advertising” [what ever that is] can be both more effective and less efficient at the same time, this does not make it a winner or a loser!  

The key is that digital services bring what other non-digital services cannot bring…Digital delivers a closed loop feedback system and that is where the value is!