Another Opinion on Financial Services Advertising

AdAge has a roundup of what various marketing professionals think will happen to advertising spend in 2008. Of the ten people they quote, only one is a relatively impartial observer: TNS' Jon Swallen. What does he say?

"The lesson to be learned from the past few recessions is that it obviously impacts different categories differently. Automotive ... is already pretty grim, and budgets have already been pruned across the board. Retail is traditionally the most economically sensitive category when you have a downturn in GDP. We're already seeing a flattening in spending by department stores, restaurants and a host of categories related to housing (including hardware, home furnishing and appliances). ... What's kind of interesting is that financial services -- which is sort of in the center of the storm -- has actually been quite robust. In the short term, at least, these guys are battling for a share of a shrinking pie."

The last two sentences sound familiar.

But I have to admit that I'm surprised by his take on automotive advertising. His opinion does not seem supported by the data. I tend to side with the--admittedly impartial--CMO of Harley, who says "Our belief is that spending through a market downturn creates competitive advantage for the market upturn."

The New Universal Identifier

Josh commented on my last post that privacy requires control over both (a) personal data and (b) the platform on which the data is used. My gut instinct is that our expectation of privacy is only the former.

Privacy is a moral issue but, as with most moral issues, the ideal compromises with practicality in our reasonable expectations. We can reasonably expect that personal data under our control will be kept private. We can reasonably expect that if we give personal data to someone else and they promise to keep it private, that it will be kept private. But I don't think we can reasonably expect that if we give personal data to someone else and all they promise is that they will make it kind of hard to get to that it will be private.

We've discovered this over and over: with real estate records, campaign donations, Google Street View. The probabilistic idea of public actions being effectively private by being lost in a sea of noise, being alone in the crowd, has been confronted with technological reality (although, as with most erosions of privacy, we have been slow to notice or meager in protest.)

I don't think this is a good thing, I just think that the expectation of this sort of privacy is so unrealistic that it's not worth complaining about. There are ways to use technology to counteract the loss of privacy from technology, and that's what we should be asking for. In this case--where our email addresses are used as universal identifiers, the new social security number--we should complain about any service allowing someone to see our email address at all. Given the way things are going, it won't be many years before you can register for a driver's license with just your email address as ID. Email addresses have become our new true names, and we shouldn't let anyone but our trusted friends have them.

Drawing the Privacy Line

Greg is bothered by Plaxo scraping your friends' email addresses from Facebook. But I think he's less bothered about the automated downloading of them from Gmail and other services. Paul Buchheit points out that the latter is just as much a violation of Gmail's TOS as the former is of Facebook's.

Why is doing it the hard way more of a violation of privacy than doing it the easy way? Just because Gmail has an API for it and Facebook tries to hoard the data for itself, is there a difference?

The way I see it, if your friends are making their email addresses available to you through Facebook, then trying to put those email addresses into a place where they are easier to use isn't a violation of privacy. It would be a violation of privacy if Plaxo made your friends' email addresses available to anyone else, of course.

Am I missing something?

Where to Spend Your Time

If you're building an online advertising business or one supported by advertising, the numbers released by eMarketer today--their forecast of online advertising spend over the next few years--might be of some help in deciding what kind of advertising spend to target.

Here are the subcategories and the compound annual growth rate of each category from 2006 through 2011, sorted by CAGR:

 Rich media/video  35.6%
Lead generation   22.9%
Paid search       19.5%
Classified        17.8%
Display ads       17.3%
E-Mail            13.3%
Sponsorships       0.6%

   All            20.0%

Rich media/video advertising is pretty competitive, but there's not nearly as much energy being spent making lead gen a better business.

Bad News is Bad News and Good News is Bad News Too

I wasn't really planning on talking about the impact of the credit crisis on online advertising anymore, but I just read Blodget's take on the news that online financial advertising was up 10% in the third quarter (compared to the third quarter of last year) while online advertising in general was only up 1.3%.

The beauty of blogging versus other forms of writing is that I can flog my personal beliefs no matter what the evidence. So can Henry. Personally, I try to let my beliefs change when confronted with evidence to the contrary. Henry prefers "anecdotes" that support his conclusions.

Things can always change, but it remains my contention that advertisers will respond to difficulty in finding new customers by increasing ad spend in accountable media. Like online.

The mortgage crisis is the result of mortgage lenders seeking customers who were bad risks. Fees for servicing these subprime mortgages are high and the borrowers are eager to borrow so easy to find. The non-risk-adjusted ROI on subprime borrowers is astronomical. Risk-adjusted: not so good.

The appropriate response by mortgage lenders is to tighten credit standards and give money to a smaller segment of borrowers, those more likely to pay. To find these borrowers, the lenders still have to advertise to the same pool of people because the amount of money spent targeting potential subprime borrowers specifically was a small piece of the ad pie. The ROI may decline, but the dollar spending doesn't.

Some financial firms will stop advertising, sure, because the impact of their prior mismanagement will leave them unable to invest in the future. The ones who do this should be put high up on the list of likely bankruptcies.

Every Hundred Years Media Changes...

...And it did, some six or seven years ago.

Read Dare Obasanjo commenting on Danny Sullivan's article in Advertising Age on what is evolution and what is revolution in online advertising.

The bottom line: the revolution is helping the consumer find what they want, not in finding better ways to get the consumer to buy what you're selling.

Facebook Got Gamed

As Homer Simpson says: "I'm no super-genius... or are I?"

About thirty seconds after reading the news about Facebook's new advertising initiatives I blasted them as "overreaching." I think that was obvious to anyone who's involved in advertising and seen the various privacy debates and debacles over the years.

So why did smart marketers like Coke lend their name to the initiative if they knew it was going to fail?

Probably because they didn't know it was going to fail. They probably suspected it was going to fail, but they couldn't be sure. If I was the evil genius running marketing at Coke (no offense, Joe, Carol) my thinking would be:

1. If Facebook succeeds, Coke gets a premier spot at the table and a brand boost for being savvy about the intertubes thing;
2. If they fail, we back away slowly and say they misrepresented what they were doing and we would never be involved in anything so disrespectful of our customers, never.

And, even if Facebook gets beaten up for their overreaching, next time around the public is more used to the idea that their privacy is an illusion. The erosion of our expectations of privacy has taken place slowly over the past hundred years, two steps forward, one step back.

In other words, Facebook was cannon fodder.

The Facebook partnership with Coke was no partnership, it was a free option for Coke and the other "landmark partners." Coke almost certainly knew how this was going to play out before they agreed to participate. They didn't throw Facebook under the bus after things went sour, that was the plan all along.