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Posted at 9:00 AM ET, 12/ 6/2010

Don Draper: Scourge of business, hero of information

By Ezra Klein

At the beginning of Ken Auletta's "Googled," Auletta talks with Mel Karmazin, then the CEO of Viacom. Karmazin is aghast at Google's campaign to measure the effectiveness of advertising by tallying clicks. "I want a sales person in the process, taking that buyer out for drinks, getting an order they shouldn't have gotten," he frets. And if that's too subtle, Karmazin continued: "You don't want to have people know what works. When you know what works or not, you tend to charge less money than when you have this aura and you're selling mystique."

It's more evidence that the greatest advertising campaign of all time was for...advertising. Another way to phrase Karmazin's comment is, "the thing you need to know about the advertising business is that the people we're selling advertisements to are basically idiots and we routinely fleece them." And he said it to a reporter, knowing it would go into a book. It's straight gangster. The brand is so strong that the people behind it can freely admit the con at its heart.*

But I don't take much pleasure in the poor performance of online advertising. The advertising industry was benevolently inefficient. It enabled pretty much every mass information medium we've ever had. Newspapers and radio and television and the Internet (Google, Facebook, etc.) are all brought to you by the advertising industry. There's perhaps no single sector that has done as much to advance human knowledge as the people who sell you soap and cars and soda. They overcharged businesses for ads in order to subsidize producers and distributors of information (and, of course, make themselves rich). The problem with Google, Karmazin once told the company's founders, is that they're messing with "the magic." And they are.


*This obviously simplifies a bit. What online advertising is showing is that most advertisements are easily ignored. Which isn't the same as saying all are ignored. Advertising seems to be a long tail business, where most of it doesn't work, or doesn't work very well, but a few campaigns transform the sectors they target. Everyone is trying to get one of those campaigns. And if you do, it might be worth every penny and many more. But if you don't, you probably overpaid. Online advertising, because it charges based on how many clicks you actually get rather than how many clicks you hope you can get, is wiping out that overpayment, which is in turn wiping out the information sources that survived on that overpayment.

By Ezra Klein  | December 6, 2010; 9:00 AM ET
Categories:  Journalism  
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Comments

And we all thought test preparation and gaming the student loan programs was the main source of funding for media.

:-)

Posted by: fuse | December 6, 2010 9:06 AM | Report abuse

Advertising expenses are tax deductible, no?

Posted by: harold3 | December 6, 2010 9:36 AM | Report abuse

Ezra, you seem to be in favor of advertising executives overcharging for the monetary benefit of newspapers and their columnists, but to have no sympathy for American IT workers who wish to command a middle-class wage: e.g. the government should be "handing out H-1B visas like candy".

I wonder why you - being a newspaper columnist - would have sympathy for the economic welfare of one but not the other.

Posted by: USVoter1 | December 6, 2010 9:40 AM | Report abuse

The thing is, clicks are not a good measure of how effective a campaign is. It has no relationship to sales made as a result of viewing the advert another time. It has no relationship to whether the customers are repeat customers, or whether those customers are discrediting the brand, or heavily pushing it.

This is fake transparency, and it represents a total failure by would-be content providers to pay attention to their own marketing and revenue.

Posted by: albamus | December 6, 2010 10:09 AM | Report abuse

albamus has part of it. Clicks are a terrible measure of ad impact. Lots of people will buy something they've seen advertised without clicking on an ad, or even -- gasp -- at a bricks and mortar store. Meanwhile, Kamazin's admission is right too: ad buyers are generally not the brightest rocks in the bucket. Neither the Kamazins nor the Googles want people to form an accurate understanding of the value of advertising. In other words: yet another market failure.

(I used to work for a publication whose pitch to ad buyers was something like "Don't worry about the fact that you can't understand a single paragraph in this publication, just look at the income and buying habits of the people who can.")

Posted by: paul314 | December 6, 2010 10:52 AM | Report abuse

Just an example in the spirit of albamus' comment: the famous Alka-Seltzer jingle "plop, plop, fizz, fizz..." almost doubled sales in one stroke, just by persuading viewers to take two instead of one. Imagine trying to measure that effect by "click-throughs". (See http://www.snopes.com/business/genius/alka-seltzer.asp for details.)

Posted by: FosterBoondoggle | December 6, 2010 11:25 AM | Report abuse

When the majority of advertising in a medium represents household brands, adding your brand to the mix helps it become a household brand as well. This is not necessarily the case when your ad appears between ads for two anonymous websites.

Posted by: jcdoerre | December 6, 2010 11:53 AM | Report abuse

"Advertising seems to be a long tail business, where most of it doesn't work, or doesn't work very well, but a few campaigns transform the sectors they target."

This is true of any creative industry, I think. In publishing, for instance, only a few books ever turn into best-sellers, and they pay the publisher's bills for all of the books that don't. Only a few movies make big money. A few popular cable channels support all of the others in the bundle. Etc.

Posted by: tomtildrum | December 6, 2010 11:59 AM | Report abuse

in many ways, advertising has profoundly ruined our world.
ruined the meanings of words,
taken superlative words, that should have been left to describe superlative moments, and used them for descriptions of orange juice, of the interiors of a new car. of a toy.

beautiful excerpts of music have been trespassed upon....the hallelujah chorus could be used for a fluffy tissue paper....bliss is promised at a tawdry honeymoon resort on a landfilled beach.

british petroleum can tell us enough times that they are working night and day, to create a safe and green world....enough times until we dont protest. dont even hear it. dont believe them. dont even care.

how it is, that this christmas, there can be a barbie doll on the market, with a video camera in it....the perfect christmas present for your favorite pedophile, and walmart and every other toy outlet, can allow it on their shelves.....is a ghastly (ghastly) statement about our lax culture...about the place that we are/have reached in our culture.

what the advertising and idealization of barbie has done alone, is enough to vilify advertising.....children's cereals....medications...the promise of happiness through vacuous, stupid, expensive "things," many, that are even very bad for us.

i will say it again. advertising has transformed and changed the direction of the world we take in every day, in ways that are mostly very perverse and of great misfortune to our potential for being spiritually elevated and finding a better path for our culture.

Posted by: jkaren | December 6, 2010 12:03 PM | Report abuse

albamus is right--advertising rarely works by making its viewers leap up and say "I'm buying a pair of Nikes THIS SECOND, BY GOD!" It works by building latent associations in people's minds so that when they think to themselves, "Hmm, I need a new pair of shoes--what should I get?" the first thing they think of is "Nike." Number of click-throughs doesn't measure this secondary, nigh-subliminal effect.

Posted by: heresiarch | December 6, 2010 1:14 PM | Report abuse

What Albamus said... it almost seems like Ezra was deliberately obtuse about this.

Posted by: jonrepartay | December 6, 2010 2:14 PM | Report abuse

"And he said it to a reporter, knowing it would go into a book. It's straight gangster. The brand is so strong that the people behind it can freely admit the con at its heart."

You need to use the phrase "It's straight gangster" the next time the Republicans roll Obama and the Democrats on some policy (like tax cuts for the wealthy) that you believe they are on the wrong side of both the polls and the policy, but that they get anyway through shear force of will.

Posted by: jnc4p | December 6, 2010 3:28 PM | Report abuse

There is some research out there (albeit from a somewhat biased source)...

(official): http://www.davidreiley.com/papers/DoesRetailAdvertisingWork.html

(mirror and doc format): http://cess.nyu.edu/exp_seminar/fall_08_papers/Retail_Advertising_Works.doc

Posted by: flsmoorjoe | December 6, 2010 3:36 PM | Report abuse

I have no doubt that traditional advertising is a scam, but I also think that there are some intangible benefits to advertising that don't necessarily show up in clicks. In my ideal world online advertisers would probably be paid more, but traditional advertisers would be paid less.

Posted by: zosima | December 6, 2010 11:25 PM | Report abuse

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