On today’s show, we are happy to chat with Bob Hoffman, the author of four Amazon #1 best-selling books about advertising. He is also one of the most sought-after international speakers on advertising and marketing. One of his books, “Bad Men: How Advertising Went From A Minor Annoyance To A Major Menace” exposed many of the dangerous data abuse practices that are now making international headlines. (It was selected “Best of Marketing 2017.”) He is creator of the popular “The Ad Contrarian” blog, named one of the world’s most influential marketing and advertising blogs by Business Insider.
Bob’s commentary has appeared in the BBC World Service, The Wall Street Journal, MSNBC, The Financial Times, The Australian, New Zealand Public Broadcasting, Fox News, Sky News, Forbes, Canadian Public Broadcasting, and many other news outlets throughout the world.
In this episode, you’ll learn:
- How is social media marketing changing our lives?
- Are there any ethical issues that companies might be infringing on in their current ways of marketing?
- How advertising fraud is costing companies billions each year?
- Where are the biggest companies spending their advertising money?
- What should people know about social media in 2020, and the upcoming elections?
We would like to thank Andreas Ramos who made the introduction that allowed the interview to happen and to Niesar & Vestal LLP law firm which allowed us to conduct the interview in their facility. I want to thank you personally for supporting this channel.
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Books and Resources
- Bob Hoffman’s LinkedIn
- Bob Hoffman’s Books on Amazon
- Bob Hoffman’s Website
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Disclaimer to the Transcripts:
Intro 00:00
You’re listening to The Silicon Valley Podcast.
Shawn Flynn 00:03
On today’s show, we sit down with Bob Hoffman, who’s the author of four Amazon #1 best-selling books on advertising. He is also one of the most sought-after international speakers on advertising and marketing. One of his books, “Bad Men: How Advertising Went From A Minor Annoyance To A Major Menace” exposed many of the dangerous data abuse practices that are now making international headlines. Bob’s commentary has appeared in the BBC World Service, The Wall Street Journal, MSNBC, Fox News, Sky News, Forbes, and much more.
Shawn Flynn 00:35
On today’s show, you’ll learn about: how is social media marketing changing our lives? Are there any ethical issues that companies might be infringing on in their current ways of marketing? And what should people know about social media in 2020, and the coming elections, and much more on today’s episode of Silicon Valley.
Intro 00:53
Welcome to the Silicon Valley Podcast with your host Shawn Flynn who interviews famous Entrepreneurs, Venture Capitalists and Leaders in Tech. Learn their secrets and see tomorrow’s world today.
Shawn Flynn 01:16
Bob, thank you for taking the time today to be on Silicon Valley.
Bob Hoffman 01:20
My pleasure. Thanks for having me.
Shawn Flynn 01:22
Now, Bob, can you please tell us a little bit about your career and your background up to this point?
Bob Hoffman 01:28
I spent about a little over 40 years in the advertising business, in the agency business, and I retired six years ago. Since then, I have been writing and speaking about advertising. In my advertising career, I was CEO of two independent agencies, and the US operation of an international agency, but my basic skill is as a copywriter. I was a copywriter for several years and through a series of comic mishaps, I became CEO of a couple of agencies. My background is mainly with large advertisers, McDonald’s and Toyota, AT&T, and Bank of America.
Shawn Flynn 02:11
Most of our audience has a tech or finance background. Can you give a little bit more information on what copywriting is to give us a base for moving forward?
Bob Hoffman 02:19
Copywriting is the words that you see in ads. A copywriter is someone who writes for commercial purposes. And there’s lots of them in the world. And most of them aren’t very good and that’s why most of advertising isn’t very good. But there are some good ones and there’s some good advertising, and good copywriters are generally creative, interesting people.
Shawn Flynn 02:44
And then copywriting, that would work with anyone that does words so all the little ads for Google ads or signs for billboards, everything that’s the copywriter’s work?
Bob Hoffman 02:55
It’s all copy. Yes.
Shawn Flynn 02:57
And how has this industry changed over the last 10 years?
Bob Hoffman 03:02
The advertising industry has had a rough go the last 10 years. We were expecting that this 10-year period would be one of the most fruitful and productive in the history of advertising. We had amazing new tools and amazing new media. And we’d never had them before and the whole thing was certain to lead to all kinds of new opportunities for advertising. Our ability to reach consumers, one to one, with web-based platforms and media couldn’t help but make us more connected with consumers. And brands’ ability to listen to consumers through social media and react quickly also couldn’t help but connect us more with our consumers.
Bob Hoffman 03:47
Consumers themselves would be some of our biggest assets by participating in conversations about our brands and helping us understand and define what the brands should represent. And yet the past decade has been one of the most disappointing and disheartening periods that I’ve experienced in my advertising career. It’s widely believed both inside and outside the ad industry, that advertising has gotten worse, not better. Consumer research that shows that regard for advertising and for the advertising industry is at a new low. Marketers are disillusioned. They don’t trust the advertising industry, the trade organization, the Association of National Advertisers in the US, has officially stated that they believe corruption in the advertising industry is quote “pervasive.” The work we’re doing for brands has not been terribly successful.
Bob Hoffman 04:47
A recent study by Nielsen showed that consumers are 46% more likely to change brands than they were just five years ago. And that only 8% of consumers say they are strongly brand loyal. Regulators and governments are after us. They want to know what we’re doing with data, and whether we’re acting illegally and collecting and trading and selling personal data, and private information about consumers.
Bob Hoffman 05:20
As for consumers themselves, one study showed that of all forms of advertising, the eight types that are most disliked by them are all forms of online advertising. As a result, ad blocking apps are now reportedly present on somewhere between 1 and 2 billion devices. Meanwhile, tens of billions of dollars are being stolen annually from advertisers by online ad fraud. And our business is declining. Marketers are taking their advertising duties in-house or they’re hiring consulting firms to do what we used to do. Plus, of course, we have the monopolistic effects of certain very, very large platforms, which would never be tolerated on dry land, but are tolerated online. And further, our industry has been right in the middle of dozens of scandals. So it has not been a good 10 years for the advertising industry, in my opinion.
Shawn Flynn 06:29
Let’s break down a lot of what was just said right there. So, a couple of my questions right off the bat was, you’d mentioned 46% of people are switching brands, I think it was in five years. Does that have to do with the demographic shift of the millennials versus the boomers? Or is this just, there’s no connection?
Bob Hoffman 06:51
Yeah, I think it’s the latter. I think that brands have forgotten what long term brand building is about and so consumer connections with brands has gotten less tight. And the actual quote was that 46% of consumers say they are more likely to switch brands than they were five years ago. And the whole, you know, one, not the whole purpose. But the most important purpose of advertising is to build a strong brand. And the indications that the brands are weakening the brand’s gravity is weakening is an indication that advertising is not as effective as it used to be.
Shawn Flynn 07:37
Could a part of that be kind of the campaigns themselves was right now, a lot of these companies are just using Twitter, Instagram, and sending it a quick message. Or maybe in the past, there’s more long-term thinking?
Bob Hoffman 07:50
Yes, that’s exactly what’s happened. What’s happening is that the advertising industry has gotten very short term in its horizon. There are really two lineages of advertising. The first lineage if you look at the tree of advertising the roots, there are two major roots. The first is the Madison Avenue style brand building, kind of advertising, the kind of advertising that you see for Nike, McDonald’s, Apple and all the large brands. And that kind of advertising has a certain flavor to it. And it’s focused on building brand loyalty over time and building brand strength over time. The second lineage of advertising is the direct response, short term kind of advertising. It used to be “clip this coupon and sent it in,” then it became “dial this 800 number,” and now it’s “click now.”
Bob Hoffman 08:53
When web advertising started 20 or 25 years ago, we all expected it to be of the first lineage, the Madison Avenue style lineage, the brand building style. But it turns out it hasn’t been. It’s been the direct response, click here, click now, kind of advertising. Generally, that style of advertising is bad. It’s not as creatively interesting as the Madison Avenue style of advertising. And its short term oriented and it generally doesn’t build… and if you think of all the big brands in the world, like I said, the Nikes and the Apples and the Budweiser and the McDonald’s and the Cokes and the Pepsis, they weren’t built by “click here now. Dial this 800 number, put this coupon” style of advertising. They were built by more thoughtful brand building kinds of advertising.
Shawn Flynn 09:50
And right now for these ad campaigns, who are the ones coming up with them? Is it the copywriters and marketers or is it more the engineers?
Bob Hoffman 10:00
The engineers aren’t so much coming up with the ads. But the attractiveness of advertising to creative people has diminished because of this style of advertising. You know, if you look at the world of creative writing, and creative art direction, at the very top, if you’re brilliantly creative, you become a fine artist or a novelist or playwright. Second level, you become a commercial artist or, you know, you write for television, stuff like that. Third level used to be advertising. Okay.
Now, advertising has been demoted to the fourth level, because writing and designing for the web has replaced the advertising industry, in my mind, in terms of attractiveness to creative people. Now, having said that, that’s a huge generalization. And there are some brilliantly talented people working in advertising who are totally ace. And there are some hacks working, writing novels who are, you know, fourth level. But as a generalization, I think that’s true. And consequently, we aren’t getting the kind of talent in the advertising industry that we used to get. On average, we still have some brilliantly creative people who do wonderful stuff but there are less of them.
Shawn Flynn 11:24
I guess let’s talk a little bit about these people. What type of background do marketers normally have? In my mind, they just go to marketing and get that as their major in college and graduate and go into the field. What was the training prior versus the training now?
Bob Hoffman 11:39
Okay, we have to first bifurcate: there’s a difference between marketing and advertising. Advertising is just one aspect of marketing. Marketing entails a whole lot more than advertising. Marketing is pricing and distribution, and new product development, and all kinds of stuff, financial stuff and business stuff that the advertising industry really isn’t that key in. The advertising industry is about the communications function within the whole marketing umbrella.
So, marketing people generally, you know, they have MBAs, they go to school and get a degree in marketing. Advertising people come from all over. Advertising, you know, writers and art directors in advertising agencies. I’m talking about the creative people now, come from all over. You know, they may have been English majors in college or art majors in college, they may have gone to a design school, they may have taken advertising as a major in college, or like me, they may just be jerks who walked in off the street and convince someone that they could do the job.
So when we talk about where the advertising and marketing people come, most of the marketing people have training in marketing even within advertising agencies. There are marketing people who are classically trained in marketing. But creative people can come from a lot of different realms. Some of them are trained in advertising, and some are just people who have been able to demonstrate creativity and gotten jobs in agencies.
Shawn Flynn 13:17
There was a mention of ad fraud, what is ad fraud? And going into that, do people know that’s what they’re doing?
Bob Hoffman 13:25
Well, ad fraud is not created by the people who make advertising. Ad fraud is created by crooks, who are technologists. And ad fraud is stealing somewhere between $5 billion and $50 billion a year from marketers, and I’ll get into that in a second. Ad fraud is, according to the World Federation of Advertising, by 2025 that is, five years from now, ad fraud will be maybe, a second largest source of criminal income in the world after drug trafficking. That’s how big it is. Once again, I’m not a technology guy. I’m a copywriter. So, I’m going to give you the idiot version of how ad fraud works, but I think you’ll be able to understand it. Ad fraud works when, this is the simplest type of ad fraud, software impersonates websites and impersonates people.
So people buying online advertising, think they’re buying advertising on a website, but the website doesn’t exist. The website is software impersonating a website that looks like a website to other computers. So Computer A buys advertising from Software B that looks like a website but isn’t. It also does it by creating phony web traffic. So you go to what you think is a website that has a million viewers. But it turns out it’s not really a website. And they aren’t really viewers, they are bots, they are software strings impersonating people and software strings impersonating websites. That’s one form of ad fraud.
Bob Hoffman 15:25
Another form of ad fraud is stacking. So you go to a website and you see an ad. What you don’t see are 1000 other ads stacked behind the ad that you see, that someone’s getting charged for running that you never see. What you also don’t see is pixels that register as ads. A single pixel that can be registered as an ad, that some marketer who is paying for that thinks you’re seeing an ad but actually, all that’s happening is that a pixel is appearing on your webpage. Now, like I said, there are dozens of other fraudulent tricks that are being played on marketers, that are costing them billions of dollars a year. And it is apparently not that difficult to get into this game. The fraud is so widespread, that it is apparently not a difficult thing to do.
Shawn Flynn 16:30
I have so many questions with that because I would think that the marketers, the advertisers would know that these sites don’t exist, but I could also see them just kind of spraying an ad to thousands and thousands of websites and not being able to actually track any of them. Are the people being taken advantage of? Is it mostly big corporations or is it everyone?
Bob Hoffman 16:54
It’s everyone. So what we have in the advertising world these days is what’s called programmatic advertising and programmatic is just a fancy word for computerized advertising, buying and selling. What happens is, you know what, when you bought TV, media time. TV media time was fairly easy to buy, you know, you bought a spot-on Seinfeld. And you could see if it was on Seinfeld or not, right? And you could buy a page in the New York Times. And you could see if it was New York Times, and you bought a page in Sports Illustrated magazine. And you could see if the ad was in Sports Illustrated magazine. Well, the web comes along, and web technology comes along, and everything gets screwed up because there are literally tens of millions of websites on which you can buy advertising. And it’s impossible to keep track of where your… whether that advertising is running. Even it’s impossible to keep track of where it’s running.
Bob Hoffman 18:03
In traditional media, you bought a publication. Once again, you buy a page in the New York Times on Sunday, and you go Sunday, and you see the ad is there. It’s not there. It’s very easy. Online, what technology has done is you’re no longer buying a publication, you’re not, for the most part, you’re not buying a publication, you’re buying a person. So what happens is, instead of knowing where your ad is running, the ad is following you and me around and feeding the ad to us at a location where we may go that the advertiser doesn’t know.
Let me give you an example of how this works. Let’s use the New York Times again. Let’s say they want to follow me. They want to give Bob Hoffman an ad for golf balls. So they could buy the ad in the New York Times and show me an ad for golf balls on the New York Times website. But the online ad world is smarter. They say instead of look, instead of paying $1 to show Bob Hoffman a golf ball on the New York Times website, we’ll follow Bob Hoffman till he gets to bikinibabes.com. And we’ll show him that golf ball ad on bikinibabes.com. It’s the same person, the same ad. And instead of paying $1 to show it to him, you can pay a nickel to show it to him, because bikinibabes.com is not like the New York Times, and you can get it much cheaper there.
And that’s the value proposition of what is called programmatic advertising. Instead of showing me an ad at an expensive website, it follows me to a cheap website and shows me the same ad there. Okay? Except the only problem is bikinibeachbabes.com doesn’t exist. It’s phony. It’s a software string that looks to the computer that’s buying the ad like it’s a website. And it looks like it has a million viewers, but it actually has none. All it has is bots, pretending to be viewers, bikinibabe, beachbabes.com gets money for the ad that it’s running. And I lose money because I wasted my money. I, the marketer, wasted my money, thinking I was showing an ad to someone on a website that doesn’t exist.
Bob Hoffman 20:36
So there’s a whole lot of very complex and hard to figure stuff going on in online advertising that is costing marketers billions of dollars. Yeah, there’s a guy named Dr. Roberto Cavazos. I hope I have that right. He’s a Professor of Marketing at the University of Baltimore. He has studied fraud in all kinds of categories for over 30 years. He recently participated in a study of ad fraud and said he’s never seen anything like it. He says it’s beyond anything he ever imagined. He estimated the amount of fraud in online advertising this year is approaching $30 billion.
Shawn Flynn 21:26
I would think that with all these engineers and these technical solutions that if they see a problem this big, they would be working on solutions for it.
Bob Hoffman 21:36
Fraudsters are always three steps ahead of the good guys. The good guys are always chasing the fraudsters around trying to figure out how they’re doing this and putting in a blocking technology to stop them from doing it. And by the time the blocking technology is there, the fraudsters are onto something new. There are companies that specialize in solutions to this, but frankly, in my opinion, they aren’t very good. And they’re always behind the curve. Remember that the fraudsters have tremendous incentive to do what they’re doing. And the people who are blocking it aren’t quite as incentivized to do it.
Shawn Flynn 22:18
That makes sense. You also had mentioned scandals, now is ad fraud scandals the exact same thing, are we talking a whole another category?
Bob Hoffman 22:29
We’re talking about all kinds of scandals. Scandals involving people being followed everywhere they go in the world; scandals involving influencers, who don’t really have the followers that they claim to have; scandals involving social media, where big time social media people are buying followers online. I mean, if you want to get a sense of what kind of scandals there is just google “buy Facebook followers,” “buy Twitter followers,” and “buy Instagram followers.” And you will see that all these people who not all of them, many of the people, who marketers are paying money to as influencers, aren’t influencing nearly as many people, as the marketers think they are. You know, you can buy 10,000 followers on Twitter for like $50 or something. It’s a joke.
Shawn Flynn 23:35
Do you think there’ll be a lot of lawsuits that will result from this in the future when these influencers are found out?
Bob Hoffman 23:42
Sure, they will. There already are. I mean, so many of the marketing and advertising metrics online are phony, that they’re already lost. As a matter of fact, Facebook just a couple of weeks ago, settled a lawsuit for $40 million from some people who claimed that Facebook had inflated its metrics on video viewing by up to 900%. Facebook is famous, or in the marketing world, Facebook is famous for having unreliable metrics.
Shawn Flynn 24:20
Is that true with a lot of the other big corporations out there that their metrics that are being advertised may not be what’s actually happening?
Bob Hoffman 24:28
Yes. You know, the online advertising industry was supposed to be far superior because we would know exactly what the metrics are, we could measure everything. Well, turns out all the metrics are phony or unreliable. Nobody agrees on metrics about anything. Like I said, when it comes to ad fraud, the range runs from 5 billion a year to 50 billion a year. That’s a range of what like 1,000% or something. I mean, that’s ridiculous. But that’s the way it is and you know, how you measure things and what you’re actually measuring is so fraught with questions and unreliable methodologies. It’s very, very difficult for marketers to really know what the numbers are.
Shawn Flynn 25:18
And I have to ask about data because should we be concerned that our data is being collected?
Bob Hoffman 25:25
We should definitely be concerned that our data is being collected. I mean, I wrote a book about this called “Bad Men: How Advertising Went from A Minor Annoyance To A Major Menace.” And the point of the book is that the advertising industry used to be an industry that imparted information to us. It is now equally an industry that collects information about us, and they collect it without our knowledge, and they collect it without our consent. In my opinion, it’s scandalous and dangerous, and it needs to be reined in.
Bob Hoffman 26:05
Now in Europe, they have something called the GDPR, the general data protection regulation, which the EU put into effect last year. To some degree, it protects the information, the personal private information about consumers from the marketing industry. But it’s very complicated and it hasn’t really yet been terribly effective, in my opinion. Now, here in California, on January 1st, there’s a new regulation called the California si****, I can’t remember the full name of it, it is going into effect then. It generally has the same points that the GDPR in Europe has, and we’ll see how that affects the online advertising industry in the US.
Bob Hoffman 26:55
But the big picture is this. The big picture is we know what it’s like, when governments have too much information about people. We saw what it was like when the KGB knew everything about every citizen in the Soviet Union: where they went, what they read, who they talk to, what was in their mail. They tapped their telephone conversations. They had secret files about everyone. We know what that’s like when the government does it. But we don’t know what it’s like when marketers have that kind of information.
When marketers know everyone we’re talking to, everywhere we’re going, the content of our emails, the content of our text messages, where our location is every minute of the day, and what secret files they may have on us. We don’t know where that leads. It’s unprecedented. But I have a feeling it doesn’t leave any place good you know, and the fact that the marketing industry has had the ability to do this without our consent, without our knowledge is very dangerous to us as individuals, I believe, and also very dangerous to democratic societies. We have this principle of privacy, where people should have a right to live a private life without everyone following them around and know what they’re doing. That’s part of the fabric of democracy. And it’s being challenged now. And I think it’s something we have to be very, very concerned about.
Shawn Flynn 28:31
Do you think that maybe with people being more and more cautious about going online or their data, will that bring about reinvigoration, I guess, of television, radio or print ads?
Bob Hoffman 28:46
I don’t know. You know, TV is starting to track people also the streamers. The streaming TV also has similar kinds of tracking abilities that online advertising has. I don’t think we’re going to go backwards. Now, I think, you know, in my opinion, mass market advertising is much more effective than individual one to one, so called personalized advertising is, but I don’t think anyone else… I don’t think there are very many people in the marketing industry who believe that anymore.
I think I’m out on a limb on that. But I do believe that mass market advertising, TV, radio, outdoor print, are much more effective brand building media, than thus far, online media have been. If you think about going to the largest supermarket in your neighborhood, go to Walmart or Target, walk through and make a list of all the brands that were built with online advertising. And you have a list of zero pretty much. There’s no soft drinks. There’s no beer. There’s no potato chip. There’s no paper towels, there’s no toothpaste, there’s no soap in your local supermarket that was built online. Everything, they were all built by TV and radio and outdoor in the mass media. And there’s a reason for that.
Bob Hoffman 30:13
I think, like I say, I’m out on a limb. But I think traditional TV, radio, mass market is public advertising. Online advertising is generally private advertising. It’s highly personalized. It’s one to one kind of advertising. I don’t know what advertising you’re seeing. You don’t know what advertising I’m seeing online. We all live in our own little digital world online. We don’t know if anyone else is seeing it. And we may all deny it but we all want to be part of the social fabric.
Nobody wants to wear their father’s suit to the high school dance, right? We all want to be socially acceptable. And brand messages are part of the social context, a part of the culture. If I watch a football game, I know that it’s acceptable to drink Budweiser beer and have an iPhone and drive a Ford truck, because everyone else knows it. I know that everyone else knows it. Online if I see, you know, an ad for these headphones on something.com I don’t know if anyone else is seeing it. I don’t know if my friends are going to think, “Why did I buy those headphones? Those are stupid.” And you know, we all deny it. Nonetheless, we all feel it, the social pressure to be culturally acceptable. And advertising and stickily mass-market advertising does that.
Bob Hoffman 31:41
You’re driving down the country road and you’re in the middle of nowhere and you’re hungry and you’re at Nowheresville, USA. And you come to an intersection on the left, there’s a McDonald’s, and on the right, there’s a Bob’s Burger and you’re hungry and you feel like getting a burger. Well, the odds are that Bob’s Burger is going to be 10 times better than the McDonald’s burger, but the odds are 10 times higher that you’re going to go to McDonald’s. Why? That’s what advertising does. It makes things more acceptable, more trustworthy, even when they are not necessarily logical. And that’s what mass market advertising does. That’s what TV and radio and outdoor and print do that I think online advertising has not yet been able to do that. Maybe it will. I don’t know. I hope it will. There’s no reason why online advertising shouldn’t be as effective as any other medium in terms of building brands. But thus far, I don’t think it has been.
Shawn Flynn 32:43
That does remind me of a little story not too long ago. There’s a buddy of mine, asking me about an ad on YouTube saying, “God. This one ad runs all day long. I only see this one ad.” And I told him like I don’t know what you’re talking about. And this guy, artificial intelligence, you know, programmer. He’s like, “No, no that ad. I’ve seen it every day.” With me going, “I’ve never seen it.” And we actually got into a little argument over it, because he couldn’t fathom not everyone seeing this ad even though he’s a programmer, he showed this.
Bob Hoffman 33:16
That’s what I was talking about before. Online, you’re not necessarily buying YouTube. You’re buying that programmer guy; you’re buying a person. You’re not buying a medium, or a publication. So we’re all in our own little gigi world seeing our own little advertising content. And it’s different from mass media. And that’s why you didn’t know this is something that’s been following him around forever, that you’ve never even seen. It doesn’t work that way. Billboard, everyone sees a billboard every day, not everyone sees a TV commercial, but a lot of people see a TV commercial. And that makes a big difference I think in its cultural impact.
Shawn Flynn 33:58
Do you have an opinion on the rise of social media influencers and if they’ll be around or as impactful in the future?
Bob Hoffman 34:08
social media influencers are just another term for something that advertising has had forever. And that is testimonials by big shots and celebrities. We’ve all you know, John Wayne in the 1950s smoked Camel cigarettes or some you know, he was on a billboard. A social media influencer is just the new name for something old. And yeah, they’ll always be around. They are sometimes effective, but not always. And the problem with it is there’s so much corruption in it. There are so many phony followers. There was a study done by a group a long time ago that found that the highest degree of phony followers was Ellen DeGeneres who had 58% of her followers were phonies. These were bots. I’m not trying to say that Ellen did that. But there’s an incredible amount of phony baloney influencers and in social media followers of all kinds.
Shawn Flynn 35:14
With all this, where are the big companies spending their money on advertising then?
Bob Hoffman 35:19
Big companies are spending their money primarily online. Online advertising is now the largest form of advertising followed by television. The rise of online advertising has eaten into all other forms of adverts. It’s particularly harmful to print advertising newspapers, which is really a shame because print advertising is part of the structure of democracies that is very important to protect, I think. And they’ve taken the biggest hit from the rise of online advertising and to some degree, it’s their own fault. They gave their product away for nothing. They allowed the online you know, they allowed Google and Facebook to connect with their product for nothing. They didn’t protect what they had created. And the result is that they’re suffering substantially from it.
Shawn Flynn 36:16
I’ve heard you talk about three advertising delusions: brand, digital, age delusion. Can you go on a little bit more into detail on that?
Bob Hoffman 36:26
Yeah, the brand delusion. It was really the social media delusion. And we thought that, you know, if you go back 10 or 15 years, and you read the literature of our industry, social media was going to replace advertising. People would go online and they would enthuse about products and brands and they would tell their friends about it, then this would be viral, and you wouldn’t have to advertise anymore. You would go on Facebook. You put up a Facebook page for nothing. You would post things and people would read it and share it with their friends.
And this is all fantasy land. It never happened. If you go to Facebook now you go to Twitter now, and you tried to find conversations about… Remember, join the conversation. But they are not enough conversations about brands, go online and look, go to Facebook, go to Twitter, see if you find conversations about brands. There aren’t any. Baloney. Facebook became the biggest bait and switch in history. Instead of putting up a free Facebook page, which people would follow, Facebook is now the largest repository of what it was supposed to replace, which is traditional paid advertising. The only brand messages you’re seeing on Facebook is traditional paid advertising, which Facebook was supposed to replace. So that was a delusion.
Bob Hoffman 37:53
But the whole social media delusion thing, we have to be very careful about our definitions. There’s a difference between social media and social media marketing. Social media is without question, a worldwide phenomenon. There’s no question about that. But social media marketing was supposed to be essentially free marketing. That’s why it was called social media. It was people talking about brands and spreading information about brands socially. It never happened. And that’s why all social media marketing now is not really social media marketing. It is paid traditional advertising on social media platforms.
Shawn Flynn 38:38
How do you think advertisers are going to separate their campaigns in the future with the baby boomers and then the millennials?
Bob Hoffman 38:48
I think the whole generational division of consumers is mainly nonsense. I think there’s just as much diversity of opinion and behaviors within generations, as there is between generations. But you know, the research industry has to have something to sell. Every 20 years, they come up with a new generation that’s completely different from the previous generation. But it turns out they’re not completely different. They’re just a different age and a different stage of life. And when they get to the stage of life, that you and I may be at, their behaviors are going to be quite similar to what our behaviors are now. They’re confusing the beliefs of people with their ages, it’s actually the age drives the behavior, not some kind of huge cultural difference between baby boomers and Gen Xers. And I promise you, when millennials become the age of baby boomers, their behavior is going to be very similar to what the behavior of baby boomers is now.
Bob Hoffman 40:01
One of the problems with all this generational nonsense is that marketers became obsessed with millennials. You know, all they wanted to do is reach millennials and everything. Every marketing conference was all about millennials and every marketing, meaning how are we going to talk to millennials. Meanwhile, the people with all the money are over 50. They’re not millennials. People over 50 have 70% of the wealth in the United States, people over 50 do over half the consumer spending in the US. People over 50 buy 57% of the cars in the US. People over 50 if they were their own country, if they were their own country, Americans over 50 would be the third largest economy in the world, bigger than the entire economy of Germany, Japan or India. And yet, people over 50 are pretty much ignored by the marketing industry. They are the target for between five and 10% of marketing activity, even though they control 70% of the wealth, and buy over half of all the stuff. That makes no sense, no sense at all. It’s absolutely insane. It’s completely insane. It makes no sense.
Bob Hoffman 41:18
But when you look at the makeup of the advertising and marketing industry, you will understand why. In the US, I think it’s 47% of the adult population is over 50. In the advertising industry, 6% of the employees are over 50. So, what it is, is marketing by selfie stick, they market to themselves. It’s narcissism disguised as strategy, but the advertising and marketing industries are obsessed with 18- to 34-year-olds, even though I think 18- to 34-year-olds buy like 12% of cars. And yet, if you look at automobile advertising, 18 to 34-year olds are in every pretty much every car.
Shawn Flynn 42:12
Now, the older demographics that are being ignored, is this also true for a global aspect for these huge brands?
Bob Hoffman 42:21
There are some brands who should target young people. If I was Taco Bell, I don’t, you know, no one over 34 is going to eat that. You have to know who the reasonable target for your product is. But the obsession with young people just is… it makes no sense.
Shawn Flynn 42:37
If you could change anything about the advertising industry, what would it be?
Bob Hoffman 42:42
I’d have a higher salary. That would be. No. Tracking is the most dangerous thing the advertising industry does. The advertising industry has to stop tracking. It has to be… We are too irresponsible to police ourselves; we’ve proven that. We’ve proven that we’re too irresponsible to police ourselves. We need interference from people who are responsible and know how to do it. And the technology industry is very important in this. The advertising industry never really was technologically sophisticated. And all of a sudden, technology came our way. And we’re able to do things that we could never do before. And if we had set out to use technology in an irresponsible, dangerous way, we could not have done much better than we’ve done accidentally using technology in dangerous and irresponsible ways.
Shawn Flynn 43:50
Bob, thank you for taking the time today to be on Silicon Valley. I also want to thank Niesar Law for allowing us to record in their facility today. Also, Andreas Ramos, who made the introduction to Bob, which allowed this interview to happen today. So Bob, once again, I want to thank you for being on the show today.
Bob Hoffman 44:08
Thank you, Shawn. It’s a great pleasure.
Shawn Flynn 44:11
And Bob, if anyone wants to get ahold of you or learn more about you, what website, email or way to get ahold of you would you recommend?
Bob Hoffman 44:20
I have a blog called the Ad Contrarian and a newsletter called the Ad Contrarian newsletter. And I have a website, a company website, http://typeagroup.com/
Shawn Flynn 44:36
We’ll have all those links in the show notes. So please visit us on The Investor’s Podcast website and click on Silicon Valley. And you’ll see that in the show notes along with this amazing episode of Silicon Valley. All right, thank you.
Outro 44:48
Thank you for listening to The Silicon Valley Podcast. To access our resources, visit us at TheSiliconValleyPodcast.com and follow our host on Twitter, Facebook, and LinkedIn @ShawnFlynnSV. This show is for entertainment purposes only and is licensed by The Investors Podcast Network. Before making any decisions, consult a professional.
