On Jan. 30, I wrote an item describing how Procter & Gamble CEO Bob McDonald was going to “moderate” — i.e. reduce — his $10 billion global ad budget because his brands can get “free” impressions on Facebook and Google.The article enraged some ad execs, who were livid at the notion that advertising on Facebook is “free.”
It’s not, they insist. The kind of exposure generated by P&G campaigns like the Old Spice Guy only comes after a significant amount of old-fashioned media is bought by the company’s ad agencies, much of it on Facebook.
This issue of whether social media platforms are increasingly creating spaces where clients that once required massive media expenditures can now get exposures for free is worth picking apart. It goes to the heart of the existential crisis facing the ad agency business right now: What if there comes a day when agencies are no longer needed because advertisers really can reach everyone they need free of charge?
More than 336,000 people read the story in the last seven days, and about 155 people debated it in the comments section underneath. I also received a small number of angry emails. One reader, Steve Hollingsworth, wrote to say, “In my experience it certainly is NOT FREE! Could you clue me in?”
First, let’s recap what McDonald actually said on his Q4 earnings call (emphasis added):
… with things like Facebook and Google and others, we find that the return on investment of the advertising, when properly designed, when the big idea is there, can be much more efficient. One example is our Old Spice campaign, where we had 1.8 billion free impressions.
My interpretation is that McDonald is aware that on Facebook and other social media, like Twitter and Google+, brands can get plenty of free impressions through Likes, sharing, email forwarding, blog links and so on. 10 years ago, P&G would have had to pay publishers and broadcasters for every single one of those impressions. Now, millions of them are literally free. For instance: It cost $0 to upload Old Spice Guy to YouTube. And this Old Spice video has had 40 million views.
That argument, however, went down like a badly mixed martini among ad execs:
Bob Hoffman, president of GearonHoffman in Boston, said in an email:
Twitter and Facebook advertising is not free … Social media programs are not free.
Far from it. In fact, managing and maintaining digital advertising And creating and monitoring social sites takes roughly twice the manpower as broadcast and online display advertising.
Clients don’t like it, because digital advertising and social campaigns require more people to manage, track, analyse, optimise, slice etc. These people are paid salaries. In dollars. Sheesh … Check your facts.
Zack Barnett, director of web communications at the University of Oregon said:
While P&G might be cost cutting and concentrating resources on digital ads, FB advertising is not free. By contrast, for the company to have a presence on Facebook would be free. The headline, which perhaps the copy desk wrote, is not right, however, and should be amended.
You can read the comments section for yourself: Dozens of people, many of them clearly employed in the ad business, were annoyed at the notion that it’s “free” to advertise on Facebook.
OK, I get it. The biggest branded social media campaigns — like Old Spice — are indeed supported by media dollars and then managed and tracked by agency staff.
That’s not the point.
The issue is that if a client chooses to, and if the idea behind the campaign is compelling enough, a company can, in theory, do a huge amount of advertising on Facebook, Twitter, Google+ and YouTube while spending almost nothing. In fact, if you can only make your digital properties go viral by spending huge sums, that’s an indicator they’re not very good. A good ad will go viral on its own — for free.
At Business Insider, for instance, we promote all our headlines on various Facebook and Twitter accounts. A huge portion of our traffic — which generates revenue from our advertisers — comes from social media. The P&G story, for instance, went viral inside Linkedin, which is why so many people read it. We don’t pay a dime for any of that marketing, and I’d be laughed out of the office if I suggested we hire an ad agency to get more of that traffic for us.
Not every company is in the editorial content business, naturally. If you’re selling detergent or canned goods, social media is a much bigger challenge. But the point remains: Companies can promote themselves on Facebook for free if they want to (through their branded Pages) and need not pay Facebook a dime for further exposure.
So why are ad execs so angry about this truism?
The answer, I suspect, is contained in Point 2 of this comment made by Steve Parker Jr., the founder of Levelwing, a full-service digital advertising agency (emphasis added):
1. Kudos to Mr McDonald – clearly there is abundant waste in advertising and media and most brands are still turning a blind eye on making it more efficient or being at all accountable to their creative and media budgets. Looks like a semi-positive step in the right direction at P&G – who arguably waste more in advertising than most.
2. Internet advertising and social et al are NOT FREE, come on Jim – don’t perpetuate that argument – it hurts the industry. It is not nearly even close to free – perhaps more measurable and effective and many criteria would be a sound statement. But not free.
“It hurts the industry.” Precisely. P&G’s McDonald is about to reduce his ad budget, or restrain its growth, and that is by definition going to reduce the fees P&G pays to the hundreds of ad agencies attached to its brands. Meanwhile, P&G will be asking its remaining agencies to come up with more, better, cheaper ideas that generate greater free impressions in social media.
The trend is obvious. P&G can advertise for free on Facebook, if it wants to. And that’s a threat to agencies whose business models rely on heavy media expenditures by their clients.
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