ADVERTISING THE FUTURE? IT’S A BOX NO ONE CAN SEE INTO, SAYS JOSEF HAVELKA

When we think of the advertising of the future, we might think of the famous scene from the movie Minority Report, where John Anderton, played by Tom Cruise, walks through a department store trapped in a tangle of marketing messages that, after scanning his retina, offer him tailored advertising.

The short story of the same name by Philip K. Dick, which was the basis for the Steven Spielberg-directed sci-fi classic, may be set in 2054, but in many ways the author's technological fantasies have already become our everyday reality.

We may not yet be greeted by holographic faces in the shopping mall advertising Guinness, as in Spielberg's film, but personal data collection, personalised advertising and remarketing are commonplace. Advertisements are fighting a fierce battle for our attention and finding new ways to engage our overloaded minds.

Just click once on a shoe ad and then, as a "punishment", one will be bombarded with a particular pair of shoes on all platforms until they are convinced that they simply must have them. At least that's the goal of algorithms fed millions of data about your behaviour, not just online. And children can't escape it either.

What's in store for us over the next few decades? Should we have restless sleep for fear that advertising will be projected into our dreams, or is this just a dystopian sci-fi scenario? How is banner blindness changing the advertising world? And are companies' investments in new advertising technologies paying off?

We ask Josef Havelka - a pioneer of advertising in the Czech Republic. He managed the Czech offices of global giants such as Leo Burnett in Prague and Central Europe, headed strategic planning for Ogilvy in the same region, co-founded Zoot and headed the Czech branch of Sanoma Magazines, publishing for example Květy or Vlasta.

As a lifelong marketer, he has insight into the advertising underworld like few in this country. Today, however, he is rather terrified of advertising. As he says, digital marketing is absorbing us more and more, and at the same time we understand it less and less. And yet, it's the source of hundreds of billions of dollars and countless amounts of people's personal data that we don't know where it goes.

Is Minority Report still science fiction, or is it reality?

The technology is out there for the taking. We all know it - when you're at home talking about socks at night, you see them on Facebook the next day. It may not look like a Spielberg movie yet, but the principle is the same.

A 2017 study from the United States by ad-tech firm SuperAwesome reports that by the time a child turns thirteen, ad platforms have twenty-seven million pieces of data on them.

What kind of data is it?

It's a whole range of data. Of course, there's personal information like name, date of birth, email, phone number, place of residence, and sometimes even school or class. Then all the photos, videos and comments that kids post. What kids watch, like or share and who they interact with or what online games they play. And last but not least, shopping behaviour, reactions to ads, mouse movements, clicks and other online interactions...

Does this hit any ethical edges, let alone with children?

Collecting this much data is definitely ethically on the edge and it's a huge topic that needs to be addressed as soon as possible. We're missing the train on this. I think we need strong regulation at a global level.

Meanwhile, digital advertising budgets continue to grow...

That's right. A decade or so ago, some two hundred and two billion dollars was spent globally in television advertising. By contrast, Meta had about seven billion. Today, Zuckerberg has a hundred and fifty-five billion and TV has about a hundred and sixty. That means that the entire Meta box globally is outpacing television. But the problem is that we can't see inside the box.

You started out in, say, the analogue era...

Yes, I'm a boomer, so of course I don't understand anything digital (laughs). When I started thirty years ago, it was actually very simple. The client went to an advertising agency and then it was hand-picked where to place the ad - whether it was billboards, television or a magazine. In an analogue world, you knew exactly where the path from the advertiser to the customer was. It was transparent.

In the digital world, it's not transparent?

In digital, this doesn't work because you simply wouldn't be able to manage it. Today, everything runs on the principle of programmatic advertising - it's a machine that the advertiser, through the agency, puts money into for marketing. Then a huge and opaque group of technology companies select, place and optimise the ad. Everything runs automatically, so no human hand touches it.

Is that necessarily a bad thing?

Technological advances in themselves are certainly not wrong. But the problem is that it's perhaps one of the biggest scams in the world - it's called online ad fraud.

What is the alleged fraud?

Based on numerous studies, digital ad fraud is estimated to account for twenty percent of all digital media spending. It is believed to be the second largest revenue stream after the drug trade. Moreover, this money is falling into the hands of organised groups that we know nothing about. And we're talking tens of billions of dollars.

Can you explain more?

Ad fraud occurs when ads are not shown to consumers, but are instead shown to invalid traffic. They are bots that mimic human online activity on fraudulent sites, and the hefty ad payments go into the pockets of criminals.

These criminals make their living by scamming inefficient, non-transparent systems with multiple touch points from multiple vendors. Simply chaos.
Is anyone in high places fighting this?

Back in 2017, Marc Pritchard, Procter & Gamble's global chief marketing officer, said publicly that we're showing ads to consumers through an opaque media supply chain with a lack of adherence to normal standards, unreliable measurement and hidden bot and methbot fraud.

Former Unilever marketing chief Keith Weed, Association of National Advertisers (ANA) chief Bob Liodice and Martin Sorre, founder and former CEO of WPP and now CEO of S4 Capital, have also spoken out. These people highlight the need for changes in digital advertising to ensure greater transparency, reduce fraud and also provide a better return on investment for advertisers.

Digital marketing is said to be more effective...

About a decade ago, digital advertising came with the promise that everything would be more efficient, targeting the end customer would be more accurate and the whole thing would be easier to measure. The mantra was constantly repeated: digital first. But I think it's a lie.

So it's not working?

No, it's one of the biggest lies that's just now coming to the surface. It's a system where twenty percent of marketers' budgets disappear untraceably somewhere in this mysterious process. That's a total of sixty to eighty billion dollars. And that's a lot of money. And what's being funded with that - if it's terrorists, for example - we don't know.

There's also talk of banner blindness.

When was the last time you clicked on a banner? Today, the average click-through rate on banners is within a tenth of a percent. In addition, the number of people describing advertising as an annoying element has even doubled in the last twenty years. The promise of digital advertising that will only show people things that interest them has not been fulfilled. People hate advertising more and more. And marketers are spending more and more money on it.

It doesn't make sense...

It doesn't. Efficiency is another huge issue - all advertisers naturally want to be as efficient as possible. But advertising effectiveness is linked to human attention. There are several kinds of attention. You mentioned the scene from Minority Report, there's Tom Cruise seeing the ad for two seconds, but that's not the effective amount of attention.

What's an effective amount of attention?

There's a direct proportion between how long we look at an ad and how likely the ad is to somehow get into our heads. It's just that in the digital world and general information overload, it's an uphill battle for marketers to get attention. In fact, people's attention spans are dropping dramatically. In the last twenty years, it has dropped from something like two and a half minutes to forty-five seconds.

That's a tough battle for attention...

Ninety-five percent of people aren't even in the buying process. They're just walking down the street or they're at home with their family and they have other things to worry about. So the advertising is always most relevant to the five per cent of people who are actively thinking about what they're going to buy and are already making their choice.
And if the ad is "good", the others will also take it in and it will penetrate their minds. But it doesn't have an immediate impact. It usually doesn't show up until later, maybe after a year or two, when they start thinking about new running shoes.

What do people use to decide what to buy?

We're animals who primarily behave according to habit. Nowadays we know that advertising is a weak force that can't convince anyone. Advertising can nudge you, but not persuade you to buy a particular pair of shoes.

So what will persuade us to buy those shoes?

Most purchases are conditioned by habit. And if I can't find the brand A yoghurt I normally buy on the shelf, I just reach for brand B, which I also have in my internal portfolio.

But that's what marketers are trying to change...

To get someone to suddenly choose a brand C yoghurt that they don't have in their portfolio yet is a long and difficult job. Imagine you're that marketing manager, you have a budget of a few tens of millions of crowns, you buy billboards and you think you're going to change the world with that. But after a month you find out that the expected quick result in sales hasn't happened.

And what is digital marketing good for?

For fast conversion. When it all works, the results come really fast. The problem, however, is that when you turn off this process of chasing people online, most sales go back to pre-campaign levels. And having the digital advertising tap permanently turned on is not sustainable given the costs.

What is the ideal situation?

As a marketer, you want your brand to be permanently established in the minds of your potential customers so that when they start thinking about making a purchase, it's yours that comes to mind. Ideally as their first choice. That's not what digital marketing can provide. And I'm not sucking on this, it's backed up by data.

What data are you basing this on?

There's a great institute in Australia, The Ehrenberg-Bass Institute for Marketing Science, where under the leadership of Professor Byron Sharp, they collect not survey data, but live behavioural data on how people buy. This has completely changed the thinking about how advertising works or doesn't work.

In what ways do you think current advertising is ineffective?

Twenty years ago, when we saw the first banner ad, about twenty percent of people clicked on it. In the last ten years, the likelihood of clicking on a banner has decreased by about a thousand percent.

And those click-through numbers come from where?

Ironically, we've now reached the stage where advertising is being invented by artificial intelligence, which is also clicking on it. There are huge farms in China with tens of thousands of phones being clicked on by machines. And then you get a report here in Prague about how many clicks your banner had, but you don't know who actually clicked on it. And this creates an illusion of the functioning of the digital marketing system, which is actually a mysterious box that nobody can see into, as I mentioned earlier.

We are extremely overwhelmed with information and we don't even pay attention to the things that we ourselves are interested in. And I should still be receiving information about some shoes? Plus, in the digital world there is a huge amount of choice. That's what psychologist Daniel Kahneman said: the amount of choice leads to the impossibility of choice.

So what will the advertising of the future look like?

Of course, those who are fed by technology will go on selling ever more interesting and innovative advertising space. But the future brings with it issues that neither technology companies nor marketers are addressing, and people don't care.

But what we need to do as a society is care about what data they collect about us, what they know about us, and how they use it.

So who benefits from that if not the vendors?

If you look at global spending in digital advertising, two companies are cashing in - Google and Meta. And they each have their own data and ad targeting methodologies that no one can see into, not even the marketers. And you have no way of comparing what actually works best and how.

What risks do you see in the future?

We live in an algorithm-driven world. Their creation is not exactly tightly controlled. And the results can often be devastating. Facebook itself says from its study that sixty percent of people who joined extreme groups on Facebook were driven there by their algorithm. So those algorithms are dividing society and they're having more and more political influence. That's what I'm worried about.

Where is the advertising world heading?

Marketers will of course continue to look for ways to make ad spend more efficient, that's their job. How far this will be achieved through new technologies I am unable to predict. But in the context of the fact that in the digital world there are actually only two players who swallow ninety-eight per cent of all the money, the future rather scares me...

What about it?

The pressure has to come from the flow of money - what is being invested in and why. Of course, it would help to cut the giants to pieces so that there would be more natural competition and people could come up with new ideas that might even benefit the world. But these guys won't do it because they're in the stock market and stocks have no conscience.

What gives you hope?

I think the hope is in the awakening of conscience on a societal level, achieved just by spreading the word about how it all works. And the transformation starts with the younger generation. Fortunately, I see a lot more hope in them than in us boomers. And after all, the stock market data confirms it. Responsible companies are seeing their share values rise faster than the general index of the stock market.

Source: forbes.cz