- P&G and Unilever, among others, have already voted with their pocketbooks and put digital platforms like Facebook and YouTube on notice, suggesting they'll be back when they're satisfied changes have been made.
- In the meantime, they said, they'll divert their ad spend to strong digital alternatives consumers like and trust. Today that's Amazon and Google Search, among others.
- If Facebook doesn't invest in algorithmic, artificial intelligence-based methods for cleaning up platforms, excluding bad actors from the community, ad dollars will flee to Google Search and Amazon.
Procter & Gamble (PG) made headlines last week when its Chief Brand Officer, Marc Pritchard, confirmed that the world's largest advertiser cut $200 million of digital advertising spend in the last nine months of 2017. That year, P&G's ad spend totaled $7.1 billion.
That wasn't the big news.
The big news was Pritchard's blunt admission that the reduction in spend had no impact on the performance of P&G's business.
In fact, he characterized much of that digital ad spend as "largely wasteful."
He didn't have to.
He, on behalf of P&G, took a very public stance on brand safety last year when the consumer brand giant discovered advertisements for its products on YouTube were placed next to questionable and inappropriate content. Consequently, the company pulled its advertising, spawning a digital media audit that revealed something else: Some digital platforms weren't bringing the right eyeballs to P&G's products.
Or, more precisely, eyeballs, to those ads.
Pritchard said one of the reasons eliminating $200 million in digital ad spend didn't hurt its business was because too many ads were being "seen" by bots that couldn't buy or influence anyone - and not by real consumers who can and do buy products. Transparency with respect to metrics and measurement is essential, he said, before he and his team can determine the value of those platforms in P&G's advertising mix and engage in a meaningful way.
So is platform governance and trust.
The ability for a brand to be placed that can capture and monetize consumer intent, not simply the content the consumer - or a bot pretending to be one - may be looking at, is crucial, which makes platforms that can not only deliver real eyeballs - but convert them into sales - potentially the biggest winners of the P&G's digital ad spend shift.
Think intent, not content.
I wrote at the start of the year that Amazon and Google were among two of the payments and commerce power brokers that could wield their power in 2018 because they monetize the consumer's intent to buy.
In the face of the big brand digital ad spending backlash, it seems now big brands are thinking that way too.
Whose Intent Is It Anyway?
I wrote a piece in April of 2017 that posited that Facebook had a Myspace problem.
"Fake news" on the platform was what made headlines then.
But before there was fake news, there was a steady stream of violent and horrific content - live videos of people being beheaded, killed and killing themselves. Posts perpetuating hate speech and bullying, including ones that led to teen suicides, were rife on Facebook. The platform which said it was founded to do good for the world by connecting people began to show the cracks in its armor: It began seeming like a platform that was more focused on doing good for its investors and its bottom line.
(But once you understand the importance of platform governance, doing good for the community and creating profits go hand in hand. So, in reality, Facebook probably hasn't done the right thing for its investors in the long term.)
Facebook, the social network, is actually Facebook, the massive advertising platform.
It's first, second and third objectives are to monetize the content seen in a user's News Feed through ads, which Facebook's algorithms can target down to a gnat's eyelash level of detail - employed college-educated males living in Cambridge, Massachusetts, who like Kit Kats and have a dog. Its algorithms can stop people from posting pornography - remember the controversy over the Napalm Girl? (Eventually, the photo was ruled not pornographic.)
But its algorithms also couldn't flag - and shut down - violent content or, in the case of the 2016 U.S. presidential election, fake news courtesy of the Russians in an attempt to sway the outcome of the election.
To this day, Facebook has struggled to fully admit its platform's shortcomings in exposing more than a third of all Americans to these fake posts and acknowledging the hit to consumer trust it's taken as a result - even when user traffic on the platform has declined.
YouTube suffers from the same platform conundrum - how to monetize the massive volume of user-generated content put on its platform while, at the same time, assuring brands their reputations won't be sullied by having their ads shown next to questionable or objectionable content.
Sympathizers say the sheer volume of content makes policing that content challenging. It's been reported that users upload nearly 400 hours of content every minute to YouTube. Execs at the company told Wired last year that it knows improvements are needed, but that nothing will ever be "100 percent perfect" under those circumstances.
But critics say if there's one thing Google and Alphabet know, it's how to process, parse, synthesize and act on data appropriately at scale.
There were more than 11 billion searches a day across all of Alphabet's properties in January 2018 - with those requests processed across billions of web pages and relevant results returned in a nanosecond.
Both YouTube and Facebook are in the business of monetizing the content users go to those sites to consume by placing ads in and around that content.
Consumers don't go to YouTube to purchase things, even though there's shoppable content there for them to buy. They visit the site to view videos.
Consumers don't go to Facebook to buy anything either, even though shoppable ads are presented for them to click on if they wanted to. They go to stalk their friends or read the news.
In both cases, content - not commerce - is what motivates those visits.
Why Intent Matters
It's a very different story when consumers take a spin on Amazon or Google via search.
Those are the digital platforms people visit when they're in the mood to buy something or think they might want to buy something. That consumer intent - to buy something - is what Amazon and Google's search business monetizes.
Both do that by making it easy for consumers to access a broad swath of inventory fast.
Both do it by giving brands tools to help them increase the odds of being seen.
Both also do it by giving brands data that can help them understand and then convert a consumer's intent to buy into a sale.
And they do it in a place that's safe for brands to interact with potential buyers and where they think they can close a deal.
Amazon does it today by making it easy for the consumer to close the loop and check out.
Amazon's also built an entire set of advertising services that tell brands how much they have sold for every dollar of media they spend on Amazon. It's something Amazon can do because, as an Amazon ad executive told AdExchanger last year, the company closes the loop between the media spent and the retail channel that gets the sale - because they are the retail channel that gets the sale.
Amazon can track the beginning of a consumer's intent to buy to a sale and then influence repeat purchases. It uses a number of tools to move that process along - everything from making repeat purchases an easy subscription option to suggesting products to buy that might "go with" what's being considered or in the basket to free/same-day shipping with Amazon Prime membership to generous cash back rewards if their co-branded Visa card is used to layering on more products and services that keep consumers loyal to its platform.
And, now, thanks to Alexa, consumers can also order things across a slew of connected devices and mobile apps.
Analysts have estimated the value of Amazon's ad business, in revenue, to be between $5 billion and $18 billion today, while others say it could be worth as much as $50 billion by 2028. Experts may disagree on the numbers, but all of them agree Amazon's ad business is growing annually at a healthy clip - most estimate its growth stands at a 40 to 45 percent clip - faster than either Facebook's or Google's more mature advertising businesses.
That's because brands want to be where consumers go to purchase goods. And where there isn't bad stuff.
Amazon has that problem licked because, aside from reviews, it doesn't feature user-generated content. Brands may have to worry about their ad appearing near a competitor on Amazon but they don't have to worry about it appearing next to a racist rant, online suicide, posting by a Russian troll or videos of teens eating Tide Pods.
Google, of course, is well aware of this growing and dual threat to its business model.
Google used to be the first stop on a consumer's path to purchase, but it isn't anymore. Our own research in 2015 stated that nearly 60 percent of the time shoppers started their product searches on Amazon, not Google.
The big question for me was always this: What fraction of that 60 percent started a search on Google but ended up closing the loop on Amazon?
The answer matters because Google's search business today is about monetizing search - delivering responses to a consumer's stated intent to buy something. It's shifting increasingly to converting those browsers to buyers across a diverse set of retail channels for which it enables access.
The greater the distance between those two points - search and convert - the more likely it is that buyers will divert to a place where the journey is shorter (a.k.a. faster). It's why Google's Shopping carousel has upped its game and why Android Pay is now Google Pay - a simple autopayment option online and in apps that once accepted Android Pay and merchants that enable Chrome payments' credentials form fill.
It's also why Google - and its virtual assistant, Google Home - is extending its reach into the retail channel.
Platform Inflection Point or Brand Win-Win?
For a brand, it's a win-win.
Today's big brands now demand access to data that helps them make sure the 50 percent of their advertising that doesn't work doesn't get spent. Digital platforms already are in the business of monetizing a consumer's buying intent and are in a good position to capture that spend.
Platforms that can't have a tough hill to climb.
User-generated content will continue to flow, and perhaps so will consumer eyeballs. But without advertisers that trust those platforms with their brands, there's no business model to monetize those content assets.
P&G and Unilever (UL), among others, have already voted with their pocketbooks and put digital platforms like Facebook and YouTube on notice, suggesting they'll be back when they're satisfied changes have been made.
In the meantime, they said, they'll divert their ad spend to strong digital alternatives consumers like and trust. Today that's Amazon and Google Search, among others.
Whether they'll return to Facebook and YouTube, or other social media platforms that face the same problems, at the same level they used to remains to be seen.
The big question is whether other brands will follow.
My guess is this: If Facebook and YouTube don't invest in algorithmic, artificial intelligence-based methods for cleaning up their platforms, excluding bad actors from the community, ad dollars will flee to Google Search and Amazon.
And we'll all look back at P&G's $200 million digital ad spending exodus as those digital platforms' advertising inflection point.
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