Digital Marketing in 2023: What Should We Expect?
1: In 2019, a group of economists published an article that got people talking — briefly.
In reality, it should have had us all talking for a lot longer.
The authors had all worked on digital advertising systems for the likes of Google, Yahoo!, and eBay.
The crux of their argument was that:
“The benchmarks that advertising companies use — intended to measure the number of clicks, sales and downloads that occur after an ad is viewed — are fundamentally misleading.
None of these benchmarks distinguish between
the selection effect (clicks, purchases and downloads that are happening anyway)
the advertising effect (clicks, purchases and downloads that would not have happened without ads).”
Very few in the industry ever wanted to get to the heart of this matter, for fear of what they might find.
As an ex-eBay economist reflected on one meeting with ad executives:
“I looked around the room, and all I saw were people nodding their heads.”
Let’s think of the implications of this wilful confusion.
The selection effect: A brand places an ad in front of a customer that was going to purchase anyway, then attributes the sale to the ad. The ad didn’t do much, but it takes the credit anyway.
The advertising effect: Advertising shapes a consumer behaviour and influences them to take an action they would not otherwise have taken. This, surely, is what advertising is about.
It is not even that difficult to work this out, if you run some experiments.
It’s what we teach people to do in our MBA course, primarily because we know so few businesses really take the time to get it right. The fact that the digital marketing modules are so popular in MBA courses should be cause for optimism, too.
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