A better understanding of ‘waste’ in advertising

Marketing is a tough gig. All too often perceived as a cost centre rather than a value driver, the pressure is on to make sure budget is seen to be used well.

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This scrutiny, particularly felt when consumer confidence is down and there are external headwinds, can lead to a disproportionate focus on more readily available (and more readily understood) metrics to defend expenditure. The desire to be seen to be doing the right thing also drives an understandable eagerness to eliminate waste in all its forms.

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Eliminating waste sounds like a key step to take if you're trying to show how judicious you are with your spending. After all....

You wouldn’t want money going to non-viewable ads, or ads that deliver no active attention.

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You’ll want to be sure that no spend that has fallen foul of the fraudsters and black boxes, where impressions are seen almost entirely by bots.

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You’ll also be examining any outlier CPMs to see if costs can be trimmed there.

Also for the chop might be ads that don’t fall directly into the targeted audience persona, or which deliver a higher CPC too.

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But what if not all waste is, errr… a waste?

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In fact, what if some forms of "waste" are strategically valuable? Marketers truly seeking to be cost effective value drivers must learn to distinguish between harmful inefficiencies (actual waste) and the kinds of investments that build brand equity and market presence (might look like waste, ain't waste).

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I’ve arranged my thoughts on this into a look at three critical types of advertising waste, how they might impact your strategy, and how to ensure you only cut out waste that really does nothing for you.

1. Ad fraud and ad stuffed MFA

Various reports, including a study by Lunio, estimate that ad fraud could cost businesses more than $70 billion annually. This is money spent with zero return, often on ads that never even reach a human audience. Invalid traffic, botnets, domain spoofing, cookie stuffing, all techniques to take money from advertisers in full knowledge that there will be no return.

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Beyond fraud, the focus in programmatic advertising on which pipes, rather than which placements, often leads to ad impressions on low-quality websites, referred to as "Made for Advertising" (MFA) sites.

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These are the kind of sites that tease you with what a 90s celebrity looks like now, and then get you to click through a gallery of c-listers until your self loathing kicks in and you close the tab. Or they offer that one trick that dentists/dermatologists/doctors don’t want you to know, and are then stuffed to the rafters with ads, leaving the actual content (which is invariably not original, and probably an unwise use of vinegar or turmeric) almost impossible to read. These sites exist purely to scoop up unwisely spent ad budget, offering minimal value to advertisers or consumers.

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The Association of National Advertisers (ANA) analysis reveals that around $9bn is wasted globally in this way. Together, MFA and fraud results in a shocking level of wasted spend.

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Which of course begs a few questions.

Why is there so much fraud? Why so much ineffective spend?

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The reality of it is, we’ve created an advertising system that optimizes for the wrong things: impressions at the lowest cost, that deliver the easiest metrics to track and report.

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The hunt for low CPMs and cheap clicks, has proven a wasteful distraction from the things that really drive business value.

All of this, even though we’ve known for over 10 years that clicks don’t correlate to sales, and that pursuing clicks can actually hamper your efforts to build awareness.

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Sadly, the pursuit of clicks, conversion, short term ROAS, still dominates the results when searching in Google or ChatGPT on how to make digital advertising more effective. Marketers and some of the agencies that they appoint are still scrambling to spend money in order to take credit for something that would quite likely have happened anyway.

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Marketers need to ensure their media spend is delivering ad impressions to humans, and is doing so with the purpose of building lasting positive memory structures.  These are the factors that make us more likely to buy goods and services.

2. Broad builds brand: How reaching an audience that is not in market is the opposite of waste.

Running an ad campaign and aiming it at people who are not immediately in the market for your product may seem frivolous and wasteful. Conventional, metrics driven, wisdom says these impressions are wasted. They don’t drive immediate conversions. They don’t drive clicks and site visits. To a great many marketers this would look like waste. However, marketing science tells a different story.

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The empirical data bears out that brand growth comes from increasing mental and physical availability. This means reaching a much wider group, even those not currently shopping in your category.

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Research from Ehrenberg-Bass Institute shows that light buyers, who purchase infrequently or irregularly, are essential to growth. If your ads only target the people ready to buy now, you’re missing out on future customers who may enter the market later. The perceived waste of a broad targeting strategy is actually an investment in long-term results. Reaching a wider audience ensures your brand stays top-of-mind when consumers are ready to purchase, even if that’s months or years down the line.

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Furthermore, based on a study of 18,000 ads by System1, the types of ads that work well in the long term are also rather good at driving short term results. As observed by Mark Ritson in his assessment of the research in Marketing Week “Not only is it possible for long-term brand building ads to also deliver short-term sales activation, we can conclude that the better an ad is at brand building, the more likely it becomes that it will also deliver on short-term sales too.”

Against this backdrop of compelling evidence, it’s clear that focusing only on activating the ‘in-market’ audience is actually the wasteful route, despite what the most readily available metrics would have us believe.

3. Waste as a Signal: Building Perception and Prestige

Finally, some waste serves a crucial signaling function. High-quality advertising placed beyond your core audience can signal the value, prestige, or scarcity of your product. It’s a tactic frequently used by luxury brands, but it’s not limited to high-end markets.

To give one classic example of signaling, banks used to build, own and occupy grand buildings as a display of the stability and longevity of their operations. This conveyed a sense of both wealth and the sense that they weren’t at risk of collapsing and taking your money with them.

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In a similar vein, advertising isn’t just about selling; it’s also about reinforcing your brand’s position in the market. Both to those who are or are likely to become potential buyers, and to a broader swathe of the populace. By reaching beyond the immediate customer base, brands can create a sense of ubiquity and desirability. Your beautiful new CHANEL handbag wouldn’t hold the same appeal it does unless EVERYONE knew how expensive and exclusive Chanel handbags are.

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Also consider high spec automotive brands that advertise in airports or sponsor premium film and drama on TV. Many people who see these ads will never buy the product, but their exposure builds the brand’s perceived exclusivity and quality. This, in turn, influences the core buyers, who feel validated in their choice, knowing the brand is widely admired.

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You will also never see a digital Apple ad with any other brands on the same page. That exclusivity comes at a premium. Cost cutters would see that as waste, but the unconscious value that is imbued in that exclusivity sends consistent signals about Apple being a step up from other technology brands.

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Beyond the big ticket items take the example of major film releases. The ad campaigns for these need to convey to the audience that these films are major cultural moments, ones where you don’t want to miss out on being part of the hype. Which drives you to see the film in the first weekend for fear of being out of the loop. ‘Wastage’ is critical here, because to be ubiquitous, to carry that sense of presence, requires un-missable formats, and a high frequency of opportunities to see.

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So in these cases, waste is a key strategic choice. The media selection carries a set of implied brand values that add to the impact of the creative.

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Advertising Chanel only to a high net worth audience would gradually diminish the brand value. What might seem prudent would, in fact, be a terrible waste.

Shifting the Mindset: When Waste Becomes Strategic

The tl;dr: not all waste is bad, some is actually pretty good for your brand.

You need to differentiate between waste that drains your budget without delivering value, and waste that plays a strategic role in driving growth.

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Ineffective spend, such as fraudulent impressions or ads on low-quality platforms, should be ruthlessly minimized. At Media Futures Market we work with a curated list of quality media owners and vendors that makes this straightforward. For an extra safety net, anti-fraud specialists can help, to see if your campaign is delivering ads to bots.

Broad audience targeting and waste as a signal require a more nuanced approach. These forms of perceived waste may not yield immediate ROI, but they lay the groundwork for sustained brand growth and differentiation. And that is key to successful marketing.