Why Scott Galloway is wrong about digital advertising
- Scott Galloway wrote in a recent blog that digital advertising fraud would kill the business.
- Former Insider Advertising Editor and CEO of Shields Strategic Consulting, Mike Shields, disagrees.
- People are still buying stuff through Facebook and YouTube and ad spending is going up.
I love Scott Galloway. Man is constantly insightful about almost every aspect of technology, big business, government, etc. It made me completely rethink how I view companies like Amazon and Apple.
But has Saint Christ missed the mark on digital advertising.
In his recent blog post – which was also reposted on Insider – Professor G explains how ridiculously serious the fraud problem is in digital advertising. And he’s right.
He says the fraud is so bad that brands will find they spent all their money on a lie and eventually it will bring down the digital advertising industry.
Um no. Nothing like that will happen. Not even close.
Here’s how he put it: “The digital advertising edifice is unstable and susceptible to collapse.
Scott, I’ll bet you all of your Amazon, Facebook, Pinterest, Google, and Twitter actions aren’t accurate.
Admittedly, digital advertising is great, mainly fooling, surprisingly F-ed up. It would be difficult to explain to a normal human just how serious the fraud problem is in programmatic advertising. I am constantly amazed that brands tolerate this system.
But that in itself doesn’t mean that digital advertising isn’t incredibly effective and that the medium won’t be where the bulk of ad spend is likely to be heading for the foreseeable future.
In his article, Scott strangely confuses the ad fraud plaguing the exchanges and networks that fuel open web ads with where the money really is – Google, Facebook and Amazon, and increasingly Snap, Pinterest, TikTok and
There is a huge, huge difference between the way ads are bought and sold on giant digital platforms than on the rest of the web (which accounts for maybe 15% of all spend). Professor G, who is a professor, should surely know that.
“The number that counts is 89%. That’s the percentage of dollars spent on ‘programmatic’ advertising. Ads bought by algorithm,” he writes.
Yes, ads on platforms like Facebook and Google are mostly bought and served through programmatic platforms. But programmatic doesn’t inherently mean “wide open with a zillion middlemen who can and will rip you off.”
Algorithm-bought ads look scary, but that doesn’t mean the ad serving is out of control as long as Facebook’s news feed or much of YouTube’s recommendation engine is. In these cases, it’s true that executives don’t even seem to know what’s going on at their own site.
When it comes to the ads on these platforms, they are mostly delivered with incredible precision.
Weirdly, Scott then goes on to explain how Facebook, YouTube, and Twitter all have issues with bot accounts and bogus views. Again, this is all true. This doesn’t mean that the ads on these platforms don’t reach real people, who click and convert for brands all day.
You can’t have it both ways – complaining that these platforms are incredibly dangerous as they wield their unprecedented influence to fuel QAnon and anti -ax plots and teenage suicides, but somehow, the billions of people who use Facebook, YouTube, Instagram, etc. Do not see advertisements on these sites and digital advertising does not work. How many brands have been launched solely on Instagram? That silly shaving device or random handbag you saw on Instagram didn’t just buy itself.
I’m not saying these platforms don’t have targeting issues. Professor G cites a class action lawsuit against Facebook that “the ‘accuracy’ of its targeting algorithm was between 9% and 41%,” and cites internal emails from Facebook describing the company’s targeting as “from shit “and” abysmal “.
Facebook has 10 million advertisers. 10 millions! Are they all buying total shit targeting or reaching fake people? Come on, Scott.
How do these brands know that ads on social platforms are reaching the right people? Because the stuff they sell is gone – because real people bought it.
There was a reason the big boycotts of Facebook and YouTube came to naught. Besides the fact that a few hundred brands on hiatus are barely registering for these giants, marketers have realized they have no choice but to come back – in the case of YouTube, this is where their audience is, and in the case of Facebook / Instagram, ads really work!
Another big point from Professor G is that advertisers should somehow be held more accountable for funding the bad things that happen on social media. It’s not crazy. But that has nothing to do with fraud.
Professor G’s other main argument for digital advertising to fall off a cliff is that some brands are “cutting digital media” because they know it’s a scam.
“The promise of measurable ad spend was cracked for marketing directors. This algorithm-based media was destroying our community by accelerating the spread of disinformation and the division wasn’t enough to make them think. But now they realize that promise was a lie, some are putting the tip, “he says. Next, he selects several brands that have publicly cut back on digital ads significantly, like P&G and Chase. OK.
Again, these brands make money from the open web, not from the duopoly. Meanwhile, the eBay example he cites is from 2013. It’s hard to see these examples as evidence of a huge wave of brands ditching digital, especially when you see a forecast like Magna Globalis back in June, which predicted in 2021 that digital ad spend would increase by 20% to $ 419 billion, accounting for 64% of total budgets globally.
Still, Professor G seems convinced that digital ads cannot continue as a business with this fraud. We all use email, even though our spam filters are filling up every day.
I’m afraid there’s just a lack of hardware fluency here. For example, Professor G hangs his hat on a report that estimates that “88% of clicks on digital ads are fake. His team even did some cool graphics.
But when you look at this actual report, from the World Federation of Advertisers, there is a link to that 88% statistic. And when you click on that link, this is what you get:
” Whoops ! This page cannot be found. “
This kind of says it all.