Email Analysis

How Much Do You Spend On Online Advertising?

It is probable that every email marketing company spends a not so inconsiderable proportion of its marketing budget on online adverts. Everyone else does. Its efficacy is supported by this fact and there’s the feeling that not to follow the crowd without evidence is the way to disaster.

I’m part-way through Subprime Attention Crisis, by Tim Hwang, which is well reviewed on Amazon, although I doubt many have given it five stars for its readability. I found it interesting as well as thought-provoking. It predicts, as many have done before, the collapse of the internet, this time because online advertising, particularly Google-based, will implode, and soon. The support for this is, oddly enough, based in part on history. Hwang classes Google adverts as a bubble, and like all the financial bubbles before it, is likely to go ‘belly up’, taking much of the financial support of free access to the internet with it.

How Much Do You Spend On Online AdvertisingThis might not be of particular interest to those of us in email marketing, but it does bring the need for financial oversight by those who indulge in online advertising. He mentions the Procter & Gamble experience. Around 2016 they cut their advertising budget by a significant amount, and followed this by year-on-year reductions, reducing it by 5% in 2019.

This might have been seen as something of a gamble. However, they thought they had little evidence of its return on investment and to prove their point, they suffered no discernible loss of revenue or decrease in sales following the reduction. QED you might think.

The CEO, David Taylor, justified the action by saying they are targeting their audience more precisely, believing that ‘half your media is wasted and you still don’t know what happened’. In other words, it was an investment based on faith.

Your email marketing list and the data you have on your subscribers, is the most significant asset you have. Taylor said that the marketing strategy had changed because they had built up ‘a large proprietary database’ of more than 1 billion consumer IDs in recent years. 1 billion, eh? 

P&G increasing their ad spend in 2020 showed that perhaps ads weren’t such a waste of money, although they suggested it had increased ‘only slightly as a percent of sales’ and it seems most of this is on brand messaging. It is now at its highest level since 2014. It’s difficult to know what to make of that.

The message, and I think there is one, might be that you should invest your money where it will bring the greatest return and don’t merely follow the herd without good reason. It’s the much repeated mantra in our business; concentrate on increasing your email marketing list.

Hwang’s book wanders a bit, and it is almost as if he is hoping for the collapse of a free-to-everyone internet rather than merely predicting. However, there are a number of issues he raises regarding online advertising. If such ads take up a significant proportion of your advertising budget, it might be worth having a read of it.



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