Bob Hoffman Discusses The Dangers Of Digital Advertising
B.L.: I'm B.L. Ochman and I am the cohost of the Beyond Social Media Show, the podcast for marketing, advertising and digital communicators. I have the good fortune to be here today with Bob Hoffman. Bob's the author of five Amazon number one selling books about advertising. He's also one of the most sought after international speakers on advertising and marketing, and it has been said about him: "He's the best speaker we ever had.' which is an awfully nice thing to have said. He is a creator of the very popular Ad Contrarian blog and newsletter, which you must subscribe to immediately. And he's been named one of the world's most influential marketing and advertising blogs by Business Insider. He's also been the CEO of two independent agencies and the US operation of an international agency. In 2012. He was selected ad Person of the Year by the San Francisco Advertising lub. When we talk, you'll see why. Bob's commentary has appeared in the BBC World Service, The Wall Street Journal, The New York Times, MSNBC, the Financial Times, the Australian, New Zealand public broadcasting, Fox News, Sky News, Forbes, Canadian public broadcasting, and many others throughout the world. So welcome, Bob, thanks for being here.
Bob: Thank you for having me be here.
Why do you hate Facebook?
B.L.: So many marketers, and advertisers believe there's no better place to target ads and Facebook and you very clearly don't agree. So I'd like to talk about what's wrong with advertising today and the role that Facebook plays. So I just want to read something you said that cracks me up. You said "the bullshit that Zbag has been peddling about Facebook's relentless tracking is that it's good because it allows for more relevant advertising and consumers say they want more relevant advertising. For years I've been saying that is pure, unadulterated horseshit. We now have unassailable proof that it is. Facebook would like us to believe that it's simply a bulletin board where people are free to post their beliefs and that this is healthy for society. But their own internal report about the 2016 election revealed the truth. It unambiguously described the way these platforms direct people into extremist groups of all stripes." So you describe advertising as akin to spyware and that is very dangerous. So give us some understanding of that.
Online Advertising is dangerous spyware!
Bob: Sure. Online Advertising has become very dangerous, because it is, like you just said, as much spyware as it is advertising. You know, the researchers tell us that about five people click out of 10,000 ads served. But all 10,000 of those ads served can collect information about us. So what is that online? Is it really about clicks? You have to run 10,000 ads to get five clicks. But you can collect information with all of those 10,000. Something is very wrong there. The online ad industry has been very cagey, and very duplicitous about what we are told about what's going on in online advertising. It has led to some very dangerous things. We know for example, the fact that 64% of people who join extremist groups on Facebook, join those groups, because Facebook sends them to those extremist groups. And these extremist groups have become dangerous, as we saw on January 6, and it's very unambiguous what's going on. But we in the advertising and marketing business have chosen mostly to ignore it.
B.L.: Well, not all, you know, many marketers say that Facebook is the best way to target specifically. And, you know, apparently it works and that's why they don't want to give it up but you clearly don't agree with that.
Online advertising is Undermining Our Freedom
Bob: I don't care if it's the most efficient way to target. When did the convenience of marketers become more important than the privacy rights of individuals and the integrity of democratic societies? I mean, that's what's happening with this stuff. It's undermining our freedoms. It's undermining our confidence in democratic institutions. We know what happened with Cambridge Analytica, that's not that that's not a mystery.
B.L.: And Facebook knew what happened
Online advertising is unequivocally dangerous
Bob: Of course, they knew! So who cares if it's more efficient for targeting for some companies? I'm sure it is. Some companies find it useful. And other companies find it wasteful, just like all types of advertising. But that's not the issue. The issue is not whether, you know, personal target one to one, precision targeting is effective or not, that's not the issue. The issue is, is it dangerous or not? And it clearly and unambiguously is dangerous, and we need to stop it, because we're going down a very dangerous road. You know, we know what happens when governments know everything about us when they follow us everywhere, when they have secret files on us, when they listen, in our conversations. When they read our mail, we know what happens, we know about the KGB, and the Stasi and the Gestapo. But we don't know what happens when marketers do all those things.
When marketers follow us everywhere. When marketers read what we're writing, when marketers listen, in our conversations, when marketers have secret files about us that we don't know, we don't know where that leads. This is unprecedented. But we know we're starting to know what's going on with it. Because we're starting to see the results of the algorithms that they are creating, based on the information they're collecting about us and tracking that they're doing on us: that that data is being fed into algorithms, which goes into platforms like Facebook.
How Facebook algorithm radicalizes
Bob: For example, where your Facebook page is completely different from my Facebook page, because the algorithm knows what I'm interested in and what you're interested in. And the algorithm wants to keep us on Facebook as long as it can. So what does it do? It feeds us juicier and jucier information, which they call more engaging information. But it is really more radical information. It takes us down rabbit holes that introduce us to people whose point of view is like ours, but it's a more radical notion of ours. And it introduces us to those people. And it creates very dangerous groups. And the Facebook algorithm helps those groups grow. And those groups become radicalized and dangerous. And it's not ambiguous. We sit we saw what happened on January 6. And we're going to just continue doing this, or we're going to put some barriers to the kind of dangerous activity that online advertisers and marketers are exposing us to,
B.L.: I interviewed jj Kostman, who's a data scientist, and I said, are they able to stop this? And he said, of course, it just doesn't match their business model. All of the social networks could stop this tracking right now. And they don't so what are the alternatives? How are we going to get this to change? Is there a way that we can do that?
How can social platforms be made to change?
Bob: There are two possible ways to do it. One is through consumer pressure. And the other is through legislation. The industry itself will never change, unless it's forced to. They are too irresponsible to change. They've known. And they're too rich, and they're not going to change on their own volition. So either consumers have to pressure them to change, which is starting to happen, or legislators have to wake up and create legislation that gives consumers a fair deal compared to what the technology companies are getting. Right now. There's a tremendous imbalance of power between the technology companies and the average consumer. And it's an asymmetry that has become very dangerous.
Are Apple’s privacy changes good?
B.L.: So one thing that happened recently was that Apple changed its privacy algorithm. According to them, but equally they're developing their own tracking system for advertising. So what do you think about that? I thought that was pretty freakin sneaky.
Bob: Now apple's a little better than most actually. You know it Apple is certainly not free of sneakiness as you say they also have their little things that they're doing that are not very pleasant. But they're a lot better than the Facebooks and the Googles are. And Apple could actually if they wanted to, they might be able to revolutionize what's happening in online advertising, by setting a really strong example of how online commerce and online activity can be brought back to a normal relationship there. I don't know if you know Shoshana, Zubov. I don't know if you've heard of her, she wrote a book called "Something About the Surveillance Economy". She's brilliant, like a really smart Harvard person. And she had an article in The New York Times last week about her feeling that Apple could really make some big net now that they've taken a first step toward putting some pressure to stop third party tracking on on their in their mobile operating system, they can really go ahead and make a difference if they choose to now they have made privacy part of their marketing program. And it's an important part of what they're saying to the public about privacy. And, you know, if they're serious about it, they can make some big changes,
Legislators have a vested interest
B.L.: I think we'll see if they're really serious about it. But a good first step, I think Google did something is gonna do something good next year, in ending third party tracking on their Chrome browser. These are all good steps, they're not enough. We've got a long way to go, there's way too much still way too much tracking going on, the government's are still not enforcing their regulations. Like over in Europe, we had the EU passed the GDPR, which is supposed to protect individuals, but they have not done very much enforcement at all. And it's pretty much a joke here in California where I am, we have the CCPA, which is essentially the same as the GDPR. And once again, it has not really been enforced. There's way too much playing around going on. And so governments have to wake up a little bit I think. But you know, the legislators kind of believe they want this one to one personalized advertising. They want to be able to reach their constituents one to one. So they have a vested interest to some extent, in continuing what's going on.
How programmatic advertising steals money from brands
B.L.: It seems like everyone has a vested interest in not having changed. But one of the things that you write about a lot is programmatic. And you have written that money's being stolen from marketers. It's a whole fiasco. And that advertising is not any better for programmatic. So tell us a little bit about what's going on there.
Bob: Well, an organization in the UK called izba ISBA, along with Price Waterhouse, and Cooper did a study a two years study of 12 of the largest, most sophisticated online advertising brands brands like Disney and Nestle and, you know, really big, sophisticated and they found that a 50% of their money disappeared into the ad tech world. In other words, only 50 cents of every dollar they spent actually went to advertising. The rest of it was vacuumed up by ad tech vendors, and that of the 50% that was vacuumed up by ad tech vendors. 30% of that completely disappeared and was untraceable and no one knows where it went.
$45 Billion disappears
Bob: So if you take a look at online advertising as about a $300 billion business worldwide, 15% of that is $45 billion disappearing into nobody knows where. And that is for the most sophisticated advertisers. Can you imagine how much money is disappearing from the average advertiser! You know of all the studies they did 88% of the time, the money that was spent was not traceable from beginning to end. Mind blowing! Somewhere along the line in 88% of cases some money has been disappearing.
B.L.: Where do you suspect it goes?
At least 20% of programmatic goes to fraud
Bob: Well, there are a number of suspects. A lot of it goes to fraud. Nobody knows how big fraud is. Everyone has a different estimate. But most people I trust most think that at least 20% of online programmatic advertising goes to fraud. And the longer the long tail is, the more fraud exists. And here's how programmatic advertising adds to fraud. One of the value propositions of programmatic advertising is that I can find you, your target customer at a cheaper place than if you bought directly. So for example, let's say I want to reach someone like B.L. Ochman. Am I pronouncing your name right?
B.L.: Yes, you are.
Programmatic goes to sites that don’t exist
Bob: So she reads the New York Times, and I could buy ads on the New York Times and reach BL. But why should I do that? Let's do this. Let's follow her around the web. And we'll find her at, you know, sewingneedles.com. And instead of paying $1 to reach her on the New York Times website, I can pay a nickel and reach out on sewingneedles.com website and with the same ad to the same person. That's the value proposition of programmatic advertising. The problem is sewingneedles.com doesn't exist. It's a bot. It's software that looks like a website but doesn't exist. And also BL Ochman doesn't exist. She is a bot who you are selling advertising to.
B.L.: I'm not a bot!
Bob: You're the real BL. But the bot BL is also on the web. And these, the fraudsters are always three steps ahead of the good guys, the bad guys are always three steps ahead. And they are becoming more and more sophisticated. And they can create more and more with more and more software that looks like a website or looks like a person. And they can get advertising money through that by you. They put up some software, it looks like it's a website. Coca Cola sends ads to that website, except the website doesn't exist.
Who are the crooks?
Bob: And the crooks get the money. And who are the crooks? Well, probably organized crime, probably state sponsored criminals, probably some terrorist organizations. And probably just some, you know, teenagers in their mother's basement collecting money. So it's very murky. You know, there's no international registry of online fraudsters where you have to go sign up to get credentials to be a fraudster. And as you know, the whole point of fraud is to avoid detection.
Good fraudsters never get caught
Bob: The good fraudsters are never found. It's only the bad ones who we find out about. And we know about plenty of bad ones. So it's very disconcerting, you know, I've been in the advertising world for so long and to see it become so corrupt, and it's disheartening to me.
“Nobody with any brains listens to influencers”
B.L.: So what about influencers? You know, we're told that they're more believable because they're like us, and they're not big corporations. What do you think about them for advertisers?
Bob: I am a big un-fan of influencers. I think it's very bad for kids. You know, it's particularly young people who get sucked in by these influencers. Nobody with any brains listens to these people. But there are a lot of young people without brains. And they are influenced by idiots and morons. And it's not good for them. Particularly - and I'm going to get shit for this - I know it but it's particularly bad for girls. For some reason girls, I don't know, are attracted to these creepy women who are not really good role models who are all about what they look like, rather than who they really are. They're not particularly intelligent, most of them, they're just, you know, famous for being famous,
B.L.: You're definitely gonna get shit for that.
Lots of influencers are “creeps”
Bob: But I think there are a lot of feminist women who agree with me, who think that this is dangerous for young girls to be to be following these creeps around, and then they're not all quick, you know, some of the influences are okay, but most of them, most of them are creepy. And this is nothing new. We've had testimonials in advertising since advertising began. This is not new. But what's new now? A it has a new name, it's been rebranded Are you hearing that noise that's going on out there,
B.L.: Don't worry about it.
Influencers are nothing new
Bob: It's been rebranded as influencers. We used to call them, you know, endorsers or testimonials, right? And there's just more of them. And online, they are more accessible than they used to be to the public.
B.L.: Oh, you know, equally so though, I interviewed Miranda Head who's a TikTok influencer with 7 million followers for her cooking show. And she gets sponsors of, you know, cookware and things like that. And she's a lovely young woman. And, you know, they're, you can't paint them all with a broad brush and say they're all trash, but an awful lot are and, you know, there's an awful lot of fraud there, too.
The idiocy of ageism
B.L.: So, let's change the topic a little bit. Let's talk about ageism, and what it's doing to advertising and to business in general. And that is related to influencers, isn't it?
Bob: Yeah. Ageism has been a problem in the advertising industry for a long time, but it's particularly bad now. There's no sense to it. People over 50 have 70% of the wealth in the US, they buy over half of all consumer spending. If people over 50 in the US were their own country, they would be the third largest economy in the world, bigger than the total economies of Germany, Japan and India. That's how much economic influence they have. And yet, five to 10% of marketing activity is aimed at people over 50. It's ridiculous, it makes absolutely no sense.
Ad agencies: marketing by selfie stick
Bob: But it has become a ritual in the advertising industry, and in the marketing industry, to target young people. And there's no data to support it. There's no logic to support it. But there is, what's the word? There's rituals and legends that support it. And that's why it's being done. People in the advertising industry are all young. You walk into any advertising agency, and the first thing that hits you is everyone's young, and who the young people want, they don't want to talk to old farts like me, they want to talk to young people like themselves. And so they create advertising for young people like themselves. They create strategies, so called strategies that aren't really strategies at all. They're really just narcissism disguised as a strategy that convinces their clients to target people like them. And what it is, is it's marketing by selfie stick. That's what it is.
Bob: And marketers somehow have not caught on yet. To this, and marketers themselves are, are too blind to because, you know, not everyone's interested in the excitement of youth. Nobody cares about the boredom of middle age or the problems of old age. You can't become a famous advertising or marketing person talking to old farts, You win awards by doing ads that are young and hip. That's how you win awards. And that's what the marketing and advertising industry likes to do. It's very silly. And I've been writing about this for a long time, too.
B.L.: Well, it's a scourge, really. And, you know, if you are looking for work, and you look at the ads for employment, the most you're ever going to see is 10 years experience. Which means, you know, don't be over 30.
You can’t get an ad job if you are over 35
Bob: Yeah, you cannot get a job in an ad agency if you're over 35 these days, it's impossible. It's ridiculous. And it's a shame because advertising has become really, really terrible. I mean, I don't think I'm the only one who's noticed this. But advertising has gotten really bad. As a matter of fact, there's a lot of research that indicates that people have lost all kinds of trust in advertising, that people hate advertising.
And one of the reasons is, it's being done by a lot of people who are amateurs who really don't know what they're doing, who haven't been around, who don't know how to talk to people. When you're 26 years old, it's very hard to imagine yourself as being 55. And what does a 55 think and what does a 55 year old want? If you're 55? you kind of know what 26 year olds are like. You were one once so you have a kind of an idea. When you're 26, you don't know what a 55 year old is like. And so there we have a whole lost generation of very talented creative people, and advertising people who have been let go, because they, you know, they're bad casting. they're not young. And hip.
Speaking to members of Parliament about online tracking
B.L.: Some of them are hip, they're just not young. So yeah, go ahead. But so you recently spoke to members of parliament about online privacy for kids? How did that but what was that reaction
Bob: I was asked by members of parliament to talk about the issue of online tracking. They are considering legislation to protect kids from data vampires who are following them all over and collecting information about them. You know, there are some startling statistics about this. But yeah, I'm gonna get this wrong. But it's something like this. By the time a kid is 15, they are already like a million data points floating around good, bad kid, what they go to online, what they've clicked on with it.
And so in the UK, they're trying to come up with legislation to protect kids from the data vampires. And I was asked to do a little talk about the dangers of tracking and what's happening in tracking. And that happened last week, and, you know, it was a zoom call, I wasn't live. So I don't really, you really don't know how it's going unless you see people's faces. But the reaction that I got from the MPs, who were who I could see on the zoom call, I think was very positive. And the questions that I got afterwards, also indicated to me that they were very aware of the issue, and they were interested in actually doing something about it. And so I'm hoping that what I had to say was useful to them, and will lead to some relief from the constant and relentless surveillance that were under by the marketing and advertising industry.
B.L.: I would hope that would happen here as well. But I don't hold out a lot of hope for it happening here to be honest with you. I mean, there's just too much money involved and you know, too many people who are enjoying things the way they are, because so many are making money off of them.
Nobody wants to kills the Golden Goose
Bob: Too many people making too much money. Nobody wants to kill the golden goose. And I wish I could be hopeful that our legislative bodies were a little more responsible about this, but time will tell if they are or not.
B.L.: Well, we can only hope so tell me what's your next book going to be about?
Bob’s Next Book: how advertising became a major menace part 2
Bob: In 2017, I wrote a book called "Bad men, how advertising went from a minor annoyance to a major menace". And I am working on Bad Men part two, because in 2017, when I wrote the book, privacy was not really a big issue. Very few people were paying attention to it. But in the intervening four or five years, it has become a very important issue. And a lot has happened. And I want to update that book. And that's what I'm working on right now.
An amateur musician
B.L.: So I have to ask you about all the musical instruments behind you. Okay, so you told me before we started that you play them all.
Bob: I was in a band in high school. The worst band you ever heard in your life! I haven't been in a band. And I'm not a good player. I'm strictly an amateur player. But I enjoy it. It's a hobby. So that's what all the instruments are for. They're, they're hobbyist things. They're not professional.
Subscribe to Bob’s great newsletter!
B.L.: That's a pretty strong hobby. I'm counting more than a dozen! So Bob, I want to thank you so much for your wisdom. And I will include all the ways to get in touch with you in the show notes and on the YouTube video, and everybody, if you're not already subscribed to Bob's website, you really must get his newsletter because every week, it's got stuff that you're not going to really see anywhere else. You know, your point of view is so extraordinarily unique and important, you know, super important. So I thank you for taking the time with us today. I really appreciate it. And I'm going to stop right now. Thanks.