@andrewchen

Get the newsletter · 2018 essays (PDF) · Featured · Recent

AdAge article on agency perspectives of online versus traditional advertising

Around the bay area, I hear a lot of derogatory comments about brand advertisers and agencies about how they just “don’t get it,” how “TV is dead,” and other assertions. That may be true one day, but the traditional market is still quite big and it’s an uphill battle today.

There was recently a great AdAge article called $80 Billion? Online Display Market Is Being Overhyped that I want to pull some quotes from.

On the perception of where online ad spend fits into the overall marketing budget:

The inconvenient truth is that for all its new-media spin, display
advertising is “old” media — a commercial message to be placed next to
editorial or entertainment content. And we know by now that
measured-media growth has pretty much ground to a halt as marketers
continue to increase their dollars in unmeasured disciplines such as
web development, public relations and database marketing at the expense
of paid advertising. Ad spending among the top 100 U.S. advertisers
last year grew a paltry 1.7%, with measured media only up 0.3%.
Measured-media spending is in decline in Japan, and it’s not much
better in the U.K.

On how much money, percentage-wise, that brand advertisers spend online:

The question is: Should the fact Procter & Gamble spends only 1.5%
of its marketing budget on display ads be viewed as a warning signal by
online ad sellers, or as an opportunity? (Even Unilever, Ad Age’s
Digital Marketer of the Year, spends little more on display, allotting
it 2% of its budget.)

On their perspectives on other media channels to reach consumers:

Of course, part of why large companies such as P&G spend so little
on the web is because of the feedback they get from the marketing-mix
models they still use to determine media outlays: TV and other old
media still work. (P&G increased its magazine budget by 7% last
year.)

Ultimately, for startups that are trying to tackle the advertising space, the reasons above are a lot o the reasons why it’s hard to change agency behavior – either to make them use your self-service interface, or to use a different set of metrics to evaluate their spend, etc. The amount of dollars they’re spending online, while often strategic and very much growing, is simply not large enough to justify redoing their entire business model.

Read the whole thing here.

PS. Get new updates/analysis on tech and startups

I write a high-quality, weekly newsletter covering what's happening in Silicon Valley, focused on startups, marketing, and mobile.

Views expressed in “content” (including posts, podcasts, videos) linked on this website or posted in social media and other platforms (collectively, “content distribution outlets”) are my own and are not the views of AH Capital Management, L.L.C. (“a16z”) or its respective affiliates. AH Capital Management is an investment adviser registered with the Securities and Exchange Commission. Registration as an investment adviser does not imply any special skill or training. The posts are not directed to any investors or potential investors, and do not constitute an offer to sell -- or a solicitation of an offer to buy -- any securities, and may not be used or relied upon in evaluating the merits of any investment.

The content should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Any charts provided here are for informational purposes only, and should not be relied upon when making any investment decision. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, I have not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. The content speaks only as of the date indicated.

Under no circumstances should any posts or other information provided on this website -- or on associated content distribution outlets -- be construed as an offer soliciting the purchase or sale of any security or interest in any pooled investment vehicle sponsored, discussed, or mentioned by a16z personnel. Nor should it be construed as an offer to provide investment advisory services; an offer to invest in an a16z-managed pooled investment vehicle will be made separately and only by means of the confidential offering documents of the specific pooled investment vehicles -- which should be read in their entirety, and only to those who, among other requirements, meet certain qualifications under federal securities laws. Such investors, defined as accredited investors and qualified purchasers, are generally deemed capable of evaluating the merits and risks of prospective investments and financial matters. There can be no assurances that a16z’s investment objectives will be achieved or investment strategies will be successful. Any investment in a vehicle managed by a16z involves a high degree of risk including the risk that the entire amount invested is lost. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by a16z is available at https://a16z.com/investments/. Excluded from this list are investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets. Past results of Andreessen Horowitz’s investments, pooled investment vehicles, or investment strategies are not necessarily indicative of future results. Please see https://a16z.com/disclosures for additional important information.