Don Marti recently wrote an article criticising targeted advertising (link). As someone who spends his life helping to make messages more relevant, it's a little off-putting to be told your professional existence is harmful. Having read his article I would like to take this opportunity to refute it. I would like to take a later opportunity to write a counter-article on why I think targeted advertising is the best thing for consumers since advertising, but I'll save that for later and just concentrate on Don's article.

The core thesis behind Don's argument is a pretty simple logical chain. Before seeing advertising you know nothing, but after seeing a big ATL campaign you know one company is willing to spend big bucks promoting their product while others are not, and from that you infer the company you saw believes in their product, and if they believe in it then it is more likely to be of value to you. BTL advertising which Don dislikes does not follow this chain because it is so cheap, and so does not provide him with the same assurance.

I believe the flaw in this chain is the link between spend and belief in a product. As a marketer my objective is to remind customers about my product so that it is front-of-mind and they are more likely to buy it next time they're out. I assess a particular campaign based on the cost of that campaign against the incremental profit that campaign generates. There are a few exceptions, like brand positioning or burning cash for market share, but they don't matter here so I'll ignore them. The thing about this simple ROI assessment is that my belief in the product never comes into it - I trust the product team to make a great product but my ATL advertisements will go to people for whom it isn't the right choice.

For example, imagine you are CMO of Carpet Court - a carpet retailer. Working with your media agency you have to decide between billboards, bus-backs, TVC, and whatnot. Say your last billboard campaign costs $50k, and generates $300k in incremental revenue. Because the margins in carpet retailing are pretty good (30%), I would be quite happy running that campaign again.

Now say I'm a CMO of a very specialist carpet retailer which just happens to be a more suitable choice for Don. Because I'm smaller, the last billboard campaign I ran generated only $100k in incremental revenue and so I will not do that again. So Don is sitting there on his morning commute and he sees the Carpet Court billboard but not the specialist billboard, and so goes with the carpet court "because they back their product with advertising dollars". He's made the wrong choice.

Another way of looking at it is cost per sale. As a big established retailer, ATL often generates good cost per sale because so many of the people who see it are considerers for your product. But as any sort of challenger or niche firm with a more suitable product the cost per sale of a big ATL campaign is completely unjustified.

So the core problem with Don's thesis is that spending money on advertising relates only to expected return, it has nothing to do with my belief in the quality of the product. With this link broken, all the following conclusions no longer follow.

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