Half of Internet advertising is wasted; the trouble is, you don’t know which half

My friend Steve Rubel does some “back of the envelop math” that he believes suggests $1 billion of Internet advertising is wasted.

His post reminded me of some universal advertising truths — and a century-old quote that addresses the dilemma. I wrote the following as a comment on Steve’s post, but thought I’d also mirror it here:

All advertising uses metrics that don’t account for the people who may not flip to the exact page in a publication, or may not be looking at a billboard while driving down the highway or who use commercial time to get up and go to the restroom.

This trainwreck in the making was noted 100 years ago by John Wanamaker, the turn-of-the-century New York department store entrepreneur, who is credited with the famous advertising line: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

Pay per click is an attempt to overcome the “wasted” impressions dilemma, as are TV infomercials that share revenue with broadcasters or direct-marketing ads in publications that do the same type of revenue share.

However, if “branding” is your goal with advertising, “placing” the ad anywhere is not what ensures success. “Impressions” are not results, they are mere audit metrics. Increased revenues (or votes or other actions) are the only metrics that matter in the end.

Great advertising generates reactions and results.

The advertising that does not do that is wasted — and that’s a lot more than 50% of what is produced and placed.