Half of our advertising money is still wasted

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The most vaunted saying in all of marketing was made over a century ago by John Wanamaker: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

About a decade ago I was making a presentation at a marketing conference where I brought the quote up. I said that even though Wanamaker said this more than 100 years ago, it is as true today as it was then. Which means that over all that time, marketers and researchers haven’t had any true breakthroughs in understanding how advertising works, or at the least, our knowledge hasn’t kept pace with the changes in the advertising and media world. If it did, whenever I bring the Wanamaker quote up in a meeting, I wouldn’t see so many heads nod.

After my presentation a number of testy researchers confronted me. “You can’t say things like that,” they implored, “it is too damaging to our field.” I asked them why they thought so many ineffective campaigns are launched. Their response was that it had to do more with agencies having too much clout and protecting their creatives at all costs. But, none of them challenged me on the point that at least half of advertising dollars are still wasted. They just didn’t want researchers to take responsibility.

If the research community truly had a handle on what makes advertising work, we’d see more effective ads. I don’t think this is the researcher’s fault necessarily – advertising is just very challenging to understand. When we survey consumers they tell us it doesn’t affect them. But, when we spend money on ads, sales go up.

A rapidly changing media environment adds another layer of complexity. Researchers had become reasonably adept at predicting how well ads would work in traditional media, at least for products with a clear frame of reference for the consumer. But today, there is so much noise resulting from a proliferation of media, determining the ROI of a campaign is not easy.

Advertising research is a large field, with a rich background of competing theories and black boxes. To me, this implies that communications research cannot be a one-size fits all approach. Each situation needs to be looked at specifically. With the amount of money being spent on advertising (~$500 Billion annually), the potential for waste is very large. We think it is important for researchers to admit that we own part of this problem. Our clients should be able to count on a better than 50/50 chance that their ads will work.

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