advertising

John Wannamaker, a very successful nineteenth century department store mogul, famously once said that “I know I’m wasting half of my advertising budget, I just don’t know which half.” In his day, he didn’t have to contend with online advertising and click-fraud.

Take it with a grain of salt, but a trade group representing the nation’s biggest advertisers has found that bots are costing advertisers billions of dollars. According to Bill Cromwell at Media Life, the report…

offers an in-depth look at bots, software that imitates humans by going to web sites and clicking on ads and activating online videos, creating fraudulent traffic that advertisers end up paying for. The study predicts bot fraud will cost global advertisers $6.3 billion next year.

In mass media, advertising involves three parties. The advertiser wants to deliver a message. The publisher, such as a television station, magazine, or website, will display the ad in exchange for a payment. An advertising agent places an advertiser’s advertisement in a publisher’s publication. The first two parties are almost the same in the online world, but the role of advertising agent is often done by an advertising network. (Google owns the largest advertising network in the world.) Most commonly, advertisers pay for each click their ad receives. If memory serves, the higher the click-through rate the more money the publisher and advertising network receive from the advertiser. This is clicks generated by software, rather than human beings who will actually respond to an advertising message, is a problem.

Lastly, I say to take this with a grain of salt because advertisers are likely looking to drive the price of online ads down. Moreover, the organizational co-author of the report, White Ops, is a technology firm that sells bot-detection software. It absolutely makes sense that they would find that bots and click-fraud are a big problem for advertisers.

About a week ago in class, I presented to you, as an example of “disassociation,” the case of the Taco Bell Drive-Thru Diet.

Here’s another example of dissociation: Starbucks is going high-end. For years, Starbucks has become more or less the default coffee shop in most of the world and certainly in America. However, there’s been competition coming from cafes that feature baristas with fancy hats among other accoutrements. That’s right, instead of serving coffee that has been “roasted within an inch of its life,” as The Awl’s Matt Buchanan refers to it, Starbucks will serve single-origin, small batch coffees that will be prepared by hand. This is to placate, ahem, discriminating coffee drinkers, like me. And as I order a $7 manual pourover coffee that will take five minutes to make, I will not be reminded of the Starbuckses that crowd every corner of Manhattan, every airport concourse, and mall in America. They will be disassociating themselves from that Starbucks.

To distinguish Reserve from its mass-market cousin, Starbucks is banishing, to a great extent, its green mermaid logo at the new shops and in the product line. The Reserve stores and line of coffees instead carry a star logo, along with a red “R.”

From a coffee-drinker and armchair-business–analyst perspective, this could either be a great opportunity to bring high-quality single-origin coffee to the masses or it could be Budweiser Select.