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Advertising: Broad Spend vs. Narrow Spend

Advertising is designed to generate interest in a product by producing clever and visually stunning ads and then flooding the market with them. We are all so familiar with this method from iconic brands such as Coke and Apple that it hardly requires analysis. It is no exaggeration to say that most big brands were built using this method on TV and in print. And the practice is effective to this day.

The same advertising agencies that create and manage these offline campaigns tried to follow the same playbook in the digital world. Read any story in Advertising Age about these campaigns, and you’ll find that it hasn’t worked nearly as well online as it worked offline. A big reason is one we’ve mentioned already: Digital users are in control and choose to ignore or subvert digital advertising in large percentages. Traditional advertising requires a captive audience.

Jared Spool, an expert in user experience, simplified the argument of advertising vs. content in a 2013 speech (Confab, Minneapolis, 2013). “Ads don’t work,” he said. “You get a tiny fraction of the clicks on a page to ads. With the advent of smaller screens in mobile devices, almost half of the tiny fraction of clicks you get are mistake clicks—those where a user is trying to click a content link and accidentally clicks an ad.”

In his talk, Spool cited case study after case study showing that the user experience of banner ads in particular is antithetical to usage of the web. Web users are typically trying to get the information they need in the shortest possible time. In this context, banner ads are just in the way, unless they are legitimately calling attention to quality content that people will share themselves once they discover it. If most display ads shared quality content, the use of ad blockers would not be on the rise.

In some cases, the only way to get users to click banner ads is to deceive them into thinking they’re clicking something else. This is a sure way of destroying any trust you might have gained from them. Again, once you destroy user trust, you will rarely get it back.

Not all online advertising is ineffective. Google introduced the pay-per-click model of search advertising in 2000, and this model is the primary reason the company has a $1 trillion market cap. But this kind of advertising is fundamentally different from banners. Users who see search ads have already indicated interest in the topic by entering a search keyword. This kind of advertising works because it fits the general pattern of outside-in marketing.

Still, not all paid search advertising works. Some advertisers have tried to use the same shotgun approach to paid search that they have used in offline advertising, buying hundreds of somewhat relevant keywords pointed to the same landing page, in the hopes of casting a wider net for prospects. Because they are paying by the click, they figure they will get their money’s worth.

But, as we will explain later in the book, this rarely works. The best practice is to buy only the words that are most tightly targeted to a campaign and then to pay careful attention to the experiences users land on when they click the ads. This narrow approach yields better results. We call this narrow-band paid search advertising.

Contextual advertising works much the same as narrow-band paid search advertising. Advertisers buy words that are relevant to their campaigns and specify on which sites they want their ads to appear. Not only are the semantics of the words narrowly relevant to the interests of the audience, but the sites narrow it further. And because you pay only by the click, narrowing the context will lighten your spend and reduce your cost per response.

And because the context is narrow, the spending can be light. You can turn your ad campaigns into surgical strikes, testing multiple variations of ads and landing pages and ultimately using the most effective ones. In short, search advertising has much in common with other forms of outside-in marketing: You use big data (search keywords or words in context) to attract an audience that is likely to buy into your offers. And you optimize the campaign over time to produce a higher yield.

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