Does Internet Advertising Work?

August 22, 2014, Medford, Oregon — My friend Dennis sent me news of an article printed in The Atlantic, which raises an interesting question. He said …

Dear Arthur,

If the Atlantic runs this, it should be sound.

“The Internet was supposed to tell us which ads work and which ads don’t. But instead it’s flooded consumers’ brains with reviews, comments, and other digital data that has diluted the power of advertising altogether.” Read more —

Dennis Briskin
The Friendly Ghostwriter (http://catalystcreative.us)
Say it right. Get results.

Flawed Thinking

Does Internet Advertising Work?

Does Internet Advertising Work?

Lots of flaws in the Atlantic article’s logic, but an interesting read. People who have made hundreds of thousands, even millions of dollars, with “direct response” advertising — who measure response to any kind of ad, and tweak it till it works — probably know more about “what works” than this particular journalist, interpreting this particular study. (Much like the diet studies published all the time, contradicting each other, and great grist for an article whenever a controversial finding is suggested, no matter how poor the study.)

Here’s a key point though —

“There’s reason to wonder whether all advertising—online and off—is losing its persuasive punch. Itamar Simonson and Emanuel Rosen, the authors of the new book Absolute Value, have an elegant theory about the weakened state of brands in the information age.” And that means …

Brand Advertising versus Direct-Response Marketing

Here is the essential issue. It’s brand advertising versus direct-response advertising. If you’ve read my Amazon books, you will recognize the discussion. Brand is done by Madison Avenue and copy-cats, is not and cannot be measured as to whether it produced any actual results, contains no call to action, no offer, and is used by corporate entities who have objectives very different from small business.

The article is questioning whether Brand Advertising is creating Direct-Response results. We already know it doesn’t, no matter where the advertising is placed. To see why, we examine objectives ..

Your Goals as a Business Owner

Your small business objective is to get a customer, do a job, get paid, and repeat.

Selling Something Now is The Goal for Small Business

Selling Something Now is The Goal for Small Business

The corporate entity’s objectives are to look good on Wall Street, please Boards of Directors, and they *assume* that if they keep their name in front of consumers, that over time their sales will be good. It seems to work for Ford, and on television for McDonalds, but you’ll notice that McDonalds also sends out direct response coupons about four times a year to (apparently) every household in America. They measure response to these coupons, and wouldn’t repeat if it didn’t pay.

People who do direct response marketing, online or offline, will measure the response, and only continue to invest if it pays. Corporate brand advertising … hard to say, because no results can be measured. It may win awards for cleverness, but does it bring actual increased sales? Nobody knows; but we suspect that it does not.

The “I was goinna buy it anyway” is suspect. Measured fact is that buyers buy after 7-12 “touches,” and each of those ads is a touch. Further, measured fact is that what buyers “say” as often as not has virtually zero correlation with what they actually do. All that matters, for prediction purposes to determine “does it work?”, is measuring what they actually do.

How to Measure, to Get Better Response

Measuring Results by Inspecting Results

Measuring Results by Inspecting Results

For example, I have an online webpage which is advertised only to people in the telephone answering service (tas) industry. I have measurement set up on this page. Although traffic to the page is still low, the results so far are that of a total of 137 visitors, 11 clicked and gave me their name and email so that I can then send them further emails, create more touches, and attract them to become clients. On this page, these people therefore gave me an 8% response rate. This is a far higher response rate than the normal direct-mail piece. (Normally 1%-2% response is considered very successful, and this can happen when the direct-mail piece is good, and sent to a sensibly-chosen audience.)

However, by testing just one element of the page, we discover something interesting. The headline — which is largely an ad to read the rest of the page, and therefore arguably the most important single element on the page — has been tested with three variations. One of the three headlines is randomly chosen and displayed when a visitor arrives. Here are the results so far —

Original version —
“Wanted – Seven TAS Owners who Don’t Want to Retire Broke”
Of 37 visitors, 4 clicked, conversion rate = 11%

Variation #1 —
“How a Lazy Ex-Hippie Developed an Automatic Selling Machine for TAS … by Accident!”
Of 58 visitors, 5 clicked, conversion rate = 9%

Variation #3 —
“At Last! An Automatic Selling System for TAS that Creates an Endless, Predictable Stream of New Clients for Your Answering Service.”
Of 42 visitors, 2 clicked, conversion rate 5%

Notice that the original is giving DOUBLE the results of the last variation.

Although I want to see a larger sample before making firm conclusions, so far it appears that the smart thing to do would be to run ONLY the Original headline, because people respond better, giving me double the results.

What You Measure, You Can Manage

Measuring Advertising Results Can Increase Them

Measuring Advertising Results Can Increase Them

Now, in the Atlantic-reported study … what was measured? Who knows? And therefore, who knows what, if anything, is suggested as a guideline for us mere mortals who are simply selling something, and not trying to please a board of directors or engage in the mystical activity of “building a brand?”

My study is not large enough to have good statistical reliability. I must wait for larger numbers in order to make a reasonable choice with high probability of future predictability. But these questions (of reliability), and the details, are usually omitted in shocking articles about “some study” that was done. For example …

The Objective for a Magazine

What was the size of the Atlantic-reported study? Was it reliable? Or just good fodder for an article? Remember, bloody murders sell more newspapers than a Cleanliness Award at the local Baskin Robbins, but which is more important to your health?

The Atlantic also has to sell their magazines. So articles proven to create, and hold, readership are important to their goals. But is this study and this journalist’s interpretation, important to *your* goals as a business owner? I’m guessing it’s questionable.

Our Valuable Take-Away

  1. What you can measure, you can manage
  2. Measuring advertising response wisely can easily allow you to double the response from your advertising dollars
  3. Both online and offline advertising results can be measured
  4. However, measuring online advertising results can often be done more precisely
  5. None of this matters if you don’t measure
  6. Conclusion — measure and thrive. Ignore measurement and waste money.

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