Personalized Advertising is an Oxymoron

or: How We Forgot That Minority Report Was A Dystopian Vision

This post was selected by the editors of Context as one of the best posts about the marketing and advertising published on Medium in 2016.


“How should marketing adapt to the era of personalization?”

In 1999 Stephen Spielberg was in pre-production for the film Minority Report, an adaption of Philip K Dick’s short story. He invited a group of prominent thinkers, writers and scientists to spend two days brainstorming what that future would look like. They were tasked with questions such as

“What about advertising? What about transportation? What about newspapers?”

Together, they created a vision of the future, one so well thought out and rendered in the film, that we have been trapped in it ever since, having unfortunately forgotten it was supposed to be terrifying.

In the key advertising section we see Tom Cruise as John Anderton walking down a corridor, being scanned by retinal cameras, assaulted from all sides by aggressive holographic billboards for Lexus and Guinness, all calling out his name in a cacophony of commercial exhortations.

Watching the scene, the tension, the unpleasantness of the assault, is palpable. Sensors identify you by the unique patterns of blood vessels in your retina, analyze your emotional state based on other biometric data, tailoring the ads with your name and a highly intrusive, personalized pitch.

“Lexus. The road you’re on, John Anderton, is the one less traveled.”
“John Anderton! You could use a Guinness right now.”

Billboards themselves have a troubled, unique status among advertising media. They are the only medium you cannot turn off. David Ogilvy hated them because they interrupt without consent, without any value transferred to the individual. “Man is at his vilest when he erects a billboard”, he said, in Ogilvy on Advertising. He went on to say:

“When I retire from Madison Avenue, I am going to start a secret society of masked vigilantes who will travel around the world on silent motor bicycles, chopping down posters at the dark of the moon. How many juries will convict us when we are caught in these acts of beneficent citizenship?”

Howard Gossage felt the same way. “What is the difference” he wrote, “between seeing an ad on a billboard and seeing an ad in a magazine? The answer, in a word, is permission — or, in three words, freedom of choice.

“When entertainment frames the future, it becomes a bit of a self-fulfilling prophecy.”

We can see the impact that the movie has had on the collective imagination of the industry by a casual scan of the innumerable articles that reference it:

[Source: http://recode.net/2014/04/28/twelve-years-later-minority-report-advertising-is-here/] [Source: http://www.theregister.co.uk/2015/11/09/facebook_minority_report_ads/] [Source: http://www.entrepreneur.com/article/251627]
“Spielberg’s “Minority Report” is a favorite in the online advertising world. The 2002 movie…is cited at industry conferences the world over as an example of what’s now possible thanks to the collision of tech and media.”

The development being discussed in all of these pieces is the dynamic personalization of advertising, the topic under consideration.

Well, almost.

All Advertising is Marketing, but Not All Marketing is Advertising

In order to frame this discussion, we need to separate marketing from one of its Ps: promotion, specifically advertising. The marketing function has been diminished, from establishing the right mix of products, pricing, place and has come to largely oversea the ever increasing complexities of promotion. This has conflated our understanding of marketing. Opt-in personalization of products and services can provide new value opportunities for customers and companies, but ‘personal advertising’ misunderstands how advertising works, and even what it is.

Mass Customization

The Age of Personalization, in the form of the mass customization of products and services, has been in effect since the 1990s and has been highly successful across innumerable categories.

1997 https://hbr.org/1997/01/the-four-faces-of-mass-customization

Jonah Peretti, founder of Buzzfeed, had his first taste of “viral” fame when he published letters from Nike refusing to print the word “sweatshop” on custom order shoes in 2001.

Did you not want any personalization?

Nike went on to launch a bespoke design store concept around NIKEiD.

Levi Strauss pioneered the idea even earlier, back in 1994:

“its Original Spin jeans for women, measured customers in its stores and sent their details electronically to its factory. The customised jeans were then cut electronically and mailed to the customer.”

The great innovation of Dell was to let customers personalize the specifications of their computers; most car brand websites now let you “build your own” car. And so on.

http://www.bmwusa.com/standard/content/byo/default.aspx

As the economy shifts from products to experiences, consumers want personalized ones.

“More than 79 percent of U.S. consumers expect personalized experiences from brands.”

Marketing, in its broadest sense, embraced the age of personalization decades ago.

The difference today is the non-consensual collection of personal data with which to target and personalize advertising, or, “in a word, permission — or, in three words, freedom of choice.”

The Key To Personalization is Personal Data

The online advertising industry is based on a number of interlocking elements, which have conspired to diminish the experience for the user, abusing their privacy, patience and purse, increasing the advertising load per piece of content, whilst offering no additional value in return. This is what has triggered the rise of ad-blocking.

The key elements that make online advertising like the dystopia of Minority Report are the decoupling of media and advertising, through ad serving networks, and the invasive tracking that accompanies this.

The first digital advertising banners were served by media companies themselves, but this changed due to what Cory Doctorow has called the ‘intrinsically toxic relationship between the three parties to the advertising ecosystem: advertisers, publishers and readers’. The lack of trust between publishers and advertisers created a new market segment, ad-tech, which most importantly includes third-party trackers.

The tracker is an independent company that follows you and the ads around the internet.

There is so much tracking code added to webpages that the amount of data downloaded when you pull up a single article from The Atlantic, for example, would take 15 old floppy discs to hold. All of this slows down the mobile web and costs you money in data charges. Our personal data are being bought and sold dozens of times a second on every website we visit, which has broken the traditional value exchange of advertising and pissed everyone off, especially in the age of PRISM, which uses this technology.

According to a technical analysis by Rob Leathern, when you load the mobile version of the New York Post, your full IP address is given out nearly 300 times as dozens of tracking networks exchange information about you. All in the name of personalized advertising, which no one actually wants.

Consent is Crucial and No One Wants Personalized Advertising

The argument used to justify this is relevance. Any sufficiently relevant advertising is indistinguishable from news, as the adage goes. But this evades the issue of consent. When Amazon uses a collaborative filtering algorithm to show me books that people who buy the books I have bought also buy, there is an explicit relationship between me and the advertiser. It uses my personal data to create recommendations, often good ones, because it works inside a category or set of categories I shop, with consensual access to my prior behavior.

There is no such relationship between me and the hundreds of data brokers and ad networks. In Europe, websites are required to inform users that they use cookies, which is at least something, but since few understand what cookies are or how they are being used, it could be compared to obtaining consent from a drunk person.

It’s the “creepy Minority Report” style ads that drive ad blocking: Personalized targeting that is obvious and visible to users, especially retargeting. Retargeting uses your web browsing habits to personalize the ads that you see, and people hate it in principle — and even more so when they understand how it is done.

“66% of adult Americans said they do not want marketers to tailor advertisements to their interests. And when the researchers explained how adtech can target ads to them, the percentage saying they don’t want targeting went up — as high as 80%”

The lack of consent and the incredible increase in advertising load have created a tragedy of the commons: the scarce resource of human attention has been abused and is in danger of collapse.

If you want to take back control, to opt-out of tracking, on Hulu for example, here are the companies you have to visit, individually:

It was not the advent of online advertising the triggered the rise in ad-blocking, but the rise of invasive personalized targeting.

http://www.campaignlive.co.uk/article/1375249/why-blame-ad-blocking-crisis-lies-squarely-adtech-industry
Correlation is not causation, of course, but still…

What’s more, people’s acceptance of the value exchange of advertising, that it pays for or subsidizes content in return for access to your attention, degrades in parallel with how much digital advertising they consume. It starts with ad blocking, but then it seems to make sense to ban all outdoor advertising for the same reason, as has now happened in São Paulo and Chennai, in what has been called a ‘global movement to ban billboards’.

https://www.theguardian.com/cities/2015/aug/11/can-cities-kick-ads-ban-urban-billboards

Complete attention collapse is possible both online and outdoor, which are arguably the last remaining broadcast media.

Cultural Impact

The rejection of personalized digital advertising has made the industry a laughing stock, at a time when we are struggling to win the war for talent against the more culturally salient technology industry.

[Source: http://www.adweek.com/news/television/south-park-hysterically-satirized-ad-blocking-and-sponsored-content-168206

Note: the widget in bottom right is created by a tracking [not ad] blocker called Ghostery — it shows how many companies are tracking my behavior on the AdWeek site. It’s a lot.]

Personalized Advertising Is Strategically Backwards

These arguments could be challenged if personalized advertising was demonstrably more effective, but it’s not. Like too many “rules” in advertising, it’s based on a prevailing set of ‘common sense’ principles, carved in stone, not in data.

It’s like the car marketer who thinks that test drives lead to purchases and so uses much of its communication budget to incentivize or simulate test drives. Test drive incentives have become “a fun way to get a little stay at home mom income” and the sheer volume of virtual test drives created each year is staggering.

[ e.g. Volvo and Google: http://www.fastcocreate.com/3038560/take-a-virtual-test-drive-with-volvo-and-google-cardboard or BMW Virtual Test Drive App http://www.carmagazine.co.uk/car-news/first-official-pictures/bmw/bmw-i3-virtual-test-drive-app-2013-car-review/]

Yet this is backwards. People who are going to buy cars take test drives, but making someone take a test drive will not make them buy a car. It’s a misunderstanding, created by the fiction of the marketing funnel, which suggests the wrong direction of causality.

Equally, pestering people who have previously expressed some kind of interest in a product, whilst seemingly smart, is specious. It understands advertising backwards. We don’t see an ad and then run to buy something, you cannot annoy someone into a purchase, though we may buy a certain something, at some point, when we have a relevant need, because we all saw an ad.

And, often even when we have bought something, we continue to get that thing advertised to us, based again on the seemingly sensible but often incorrect inference that this makes us a more likely purchaser of said product.

The Heavy Buyer Fallacy

“It seems obvious, a brand’s currently heaviest buyers generate more sales and profits (per customer) so they should be the primary target for marketing.”

This is a misconception.

“If our aim is to grow sales then efforts should be directed at those most likely to increase their buying as a result of advertising. It takes only a moment of thought to realise that customers who already buy our brand frequently are going to be difficult to nudge even higher.”

“Mass marketing is actually more effective”.
Byron Sharp, How Brands Grow

Let’s take Coca-Cola as an example. Their average buy rate is 12 per year but most people buy only one or two Coca-Colas per year.

They do have some heavy buyers, people buying three Cokes a day, but very few of them. We can see that the bulk of customers were non or light buyers, getting just a one or two Cokes a year. Though light buyers may be purchasing only one or two Coca-Colas a year, they collectively add up because there are so many of them.

[Source: https://blog.percolate.com/2015/09/why-mass-marketing-wins-over-targeted-efforts/]

Two decades of data from Nielsen and the IPA show similar patterns across a range of household products, consumer financial services, and cars.

How and When To Use Someone’s Name

Your name is the most beautiful sound in the world. You hear it over the conversation at cocktail parties be cause it’s hugely important to you.

[Hi *insert name here*!]

But that doesn’t mean it should appear in ads, because this turns a cultural stimulus into a personal exhortation. That’s what I mean by saying personalized advertising is an oxymoron. Advertising with my name in it is selling, it’s direct marketing, and that’s not what advertising does. Rather it makes things sellable. It’s a confusion of tasks, a problem for communication strategy to untangle by understanding the appropriate roles for different channels.

Seeing this ad on Facebook with my name all over it, for example, pulls me out of a social, cultural space and into a defensive mode of being sold to.

A more successful way of utilizing the power of names is Coca-Cola’s Share a Coke campaign. Beginning in Australia, and now globally, the advertising uses generic first names to speak to personalization, but the service allows you to personalize the products specifically, at a significant increase in cost, that people have been happy to pay.

Wastage is Good

The snake oil sold to the advertising industry by the adtech industry was the idea of targeted scale, in essence the solution to Wannaker’s old shibboleth, that half the money spent on advertising is wasted, but that we didn’t know which half.

But this too is wrong.

As Tim Ambler has pointed out, “advertisers should seek to increase wastage”. It is the cultural visibility and associated expense of advertising that creates a “reliable signal” of quality, not the claims made in them, which are too often exposed to be hollow by huge trust violations such as VW’s.

https://www.researchgate.net/publication/4733724_The_Waste_in_Advertising_Is_the_Part_That_Works

The reliability of the signal is in direct proportion to the perceived wastage, so highly targeted personalized advertising is not fit for the purpose. Personalized ads make it impossible to distinguish between a reliable signal and a cold call trying to sell me something, and no one likes cold calls.

Charles Vallance of VCCP agrees:

Waste is good and precision can be bad. It’s another way of saying that brands can’t be built in a silo.
The power of brands is that they are part of our collective conscience.
Too often we forget the end-user isn’t the only target and we can be seduced into thinking that private conversation between a person and an advertiser is all that’s needed, and in doing that we mistake precision for persuasion.”

Advertising is most effective not when it interrupts the right person at the moment of truth with the right message, but rather as a cultural and social stimulus to create mental availability, which is then (later) accessed by users when they come to buy.

We need to re-focus advertising on what it is best at, building brands and imbuing them with emotion, which create price inelasticity of demand for products and services, allowing strong brands to command significant price premiums over time.

‘Personalized advertising’ is activation

Forward

The infrastructure and assumptions of online, personalized advertising are fundamentally wrong and have brought us to the brink of attention collapse. To solve this, advertising must re-engage at the cultural level, operate with consent, consider how it creates mass visibility and consumer acceptance, through a more balanced value equation. Brands should stop bleeding their budgets to death through endless ad-tech intermediaries in the quest for questionable impressions and concentrate on big, brand building creative ideas that can be deployed across channels, content engines like Red Bull’s Stratos.

As Nils Leonard, former CCO of Grey London wrote:

“The best ads don’t look like ads any more…The ads that don’t look like ads will play out in a two-minute slot on the news for free, not in a 30-second spot on ITV that cost a small fortune, and they’re more likely to be seen in a vertical screen than a landscape one.”

They also won’t play out inside retargeted banners. The mass customization of products and services are, and have been proven to be, the appropriate marketing response to the age of personalization, not personalized targeted advertising.

Minority Report was a paranoiac dystopian vision of a fascist surveillance state, where your every move is tracked and you can be arrested for crimes you have not yet committed, and the advertising it highlights is a reflection of that. So let’s please not keep using it as a roadmap.

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