How The Pandora Model Would Save The Advertising Industry

by Scott Bishop on March 23, 2010

Can a Simple Like Button Change Advertising

What If Ads Had a “Like Button”?

 

I sat in a mobile marketing presentation at SXSW excited to hear the presenters vision of where the mobile space is headed.

On the surface, mobile advertisements are a marketers dream.  The advertising services are location based and activated via geographic location.  Sounds great, right…If I’m driving by McDonald’s, I get an ad for McDonald’s.

The crowd really got jazzed up with the results that mobile advertisements get.  Mobile ads get a 7% Click Through Rate (or CTR).  Meaning, for every 100 impressions, 7 people click on the ad.  Compare that to an averaged click through rate of 2% or less and mobile location based advertisements sound like a dream come true for marketers.

All hail mobile ads!

Judging by the thunderous enthusiasm at those results, the crowd agreed.  Unfortunately, the presentation and reactions let me know what I already assumed…advertising will never get better. (Insert deep sigh)

Am I the ONLY one who thinks 7% sucks!!

Is 7% really the future we can hope for?  Is it so glorious when a few more than 9 out of 10 people hate your ad?

Why Only 7%

It makes sense that mobile advertising gets a higher click through rate because they’re based on location.  If I drive through a McDonald’s, a coupon for the their new Latte pops up on my car’s GPS.  What more could I want?  I’m driving by a McDonald’s, and poof…an advertisement for McDonald’s.

But just as telling is why mobile advertising is only 7%.

What happens if I don’t drink coffee?  What if I don’t like McDonald’s?  As advanced as an ad that knows your location is…it’s not smart enough to know what you like.  And that is where things go downhill fast.  As much technology as we have available today, how can our ads not be smarter than that?

Shouldn’t Advertisers Be Better At Guessing What We Want?

How To Make It Better

At the very least…shouldn’t a user be able to select whether or not a particular ad hit the mark or not.  Why not a “Like” or “Dislike” button, such as what Pandora does.

The streaming music service allows its users to create their own radio stations based on preferences they select.  Every time a song is played, a user selects a “Thumbs Up” or a “Thumbs Down”.  As the Ups or Downs are selected Pandora’s algorithm can more intelligently choose a song you will like, and it’s amazingly accurate.

Yes, I know Facebook Ads have a “like” button built in, but too often that means I’m subscribed to that advertisers feed.  I find that annoying.  I like the Pandora idea because its magical algorithm selects, with pretty high accuracy, what I like.

Why Can’t We Apply Preferences To Advertisements?

I understand that we’re always going to be living in a world where ads are everywhere.  But as the world of hyper-marketing allows brands to speak to the individual, why doesn’t this transcend to the advertising model in most mediums?

If I have the ability to select whether or not an advertisement is relevant to me…the more relevant the ads can be.

So while mobile advertisements are an advancement in the industry, there is still a long ways to go.

(Note:  This post comes from a conversation I had with @Pragerd)

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Scott S. Bishop is editor for Real Time Marketer and a marketing strategist with a specialty in social media.  He is an avid blogger and active across the net.  He is @thescottbishop on Twitter

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Tagged as: advertisements, advertisers, CPT, impressions, marketers, marketing presentation, mobile advertising, mobile location, mobile marketing, sxsw

Article by Scott Bishop

Scott Bishop is editor for Real Time Marketer and is the Director of Social for an integrated marketing firm. He is an avid blogger and active across the net. He is @thescottbishop on Twitter

Scott has written 120 awesome articles for Us.

  • http://twitter.com/Atomicdust Atomicdust

    Not a bad idea, Scott. I like the idea of 'liking' ads that benefit me and 'disliking' those that don't apply. But I'm the type of person who doesn't mind ads- sometimes it clues you in on new places/things to do, sometimes it gives you discounts…. But there are a lot of people who would thumbs-down every single ad that popped up. And advertisers won't want to see their ads failing. Those negative nancies could ruin the system for everyone else.

    -Danielle, Atomicdust

  • http://www.scribnia.com/author/show/473/david-spinks/ David Spinks

    I definitely think that ads are going to become more and more personalized. As we make more information about ourselves publicly available, business will come up with more ways to automate messages to appeal to our specific tastes.

    Would a like/don't like button work? I'm not sure. If I click don't like, am I saying I don't like the company? I don't like the ad? I don't like ads in general? On pandora it works, because we want to listen to music and so we're happy to customize it. For ads, we don't usually want to get ads, so we're inclined to not like them.

    The best ads will always be the ones that aren't intrusive. They fit in to your day almost naturally. When you can get a message to someone without interrupting them, they'll be much more receptive of its purpose.

    -David, Scribnia.com

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  • http://www.theoceanagency.com Danny Prager

    I really like the ad model of Hulu, where in many cases you get to choose both the length of your ad, and less often, which product from the sponsor you'd like to see advertised.

    While this may not be perfectly translatable to mobile advertisements, we need to come with advertisements that are more effective, more relevant, and more useful for the consumer. Allowing a consumer to chose what ads they want to see when may be an interesting first step? Or maybe it's too disruptive?

    The key to raising that 7% creating advertisements that actually improve my quality of life, or at the very least sell me on the perception that my life is improved.

    Really excited that this conversation made it on to your blog. I've made it on to RealTimeMarketer, hi mom!

  • http://www.rosssimmonds.com/ TheCoolestCool

    Yesterday I was fooling around on a new App and accidentally clicked the ad on the side. Something tells me that some of this 7% includes people who have made this mistake. Which in my opinion makes the 7% even less attractive…

    I like what David said about ads becoming more and more personalized. I can only dream of the day where we can use the information from programs like Blippy on the masses. While I'm not blown away by the click through rates YET – I think we all will be soon.

  • sbishop

    I know that advertisers / marketers would hate to see a “Thumbs down”, but essentially they're getting that now. With click through rates at 2%, they're not even getting a “no”…they're just getting ignored. At least a preference option would try and make some of the ads “smart”. I know this will never create a scenario that makes every ad worth while, but maybe advertisers could at least get into double digit click through rates.

  • http://tdhurst.com tdhurst

    Wouldn't you rather be publicly loathed than secretly hated? With your option, they'd KNOW what wasn't going well and could fix it.

    Without a channel for non-positive feedback, how do you ever really improve?

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  • sbishop

    Personalized Ads are the future. That was the whole point of the post…like Pandora, the more you can “like” an Ad to it's relevancy to you, the more personalized they'll get. I think too often we're stuck in the old ways to think about things like Per Click and Impressions. With the hyper-personal nature of the internet and now media with DVR/TIVO, etc…I'm hoping these older media industries follow. Thanks for the comment.

  • sbishop

    Great point. That model would certainly allow for feedback. To often Ads are only measured by success after-the-fact, when it's too late. A consistent measurement while “in play” would allow for adjustment throughout and during a campaign. You'd think that feedback would be wanted.

  • Daniel Davis

    If advertisers want “click through”, how about… I don’t know… advertising things their customers actually WANT?
    Pandora, for instance, was mentioned here, but while its music algorithm is lovely, its ads make me cringe. I like soft piano music, folk and acoustic guitar. I am also married. Yet I get ads for crass crap like a show that repeatedly states “I played Dixie from my butt”, singles dating and Britney Spears concerts.
    I am never, ever, ever going to click on any of these advertisements. Ever. Pandora’s sponsors will never make money from me, because the ads they are showing are completely inappropriate to the things I buy.
    Until someone can make a “pandora algorithm” for ads, there will always be an abysmally low clickthrough rate for them.

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