Jonah Goodhart Knows Why Advertising Works — or Fails

To Montauk Labs co-founder Jonah Goodhart, the reason ad spots work or not is hardly a mystery. The answer comes down to one core detail, and it’s something, he says, humans have less of than goldfish. To Goodhart, the reason why advertising works is centered around attention.

“Measuring attention, not clicks and impressions, is the answer to how you fight fragmentation,” Goodhart told the Signal audience in 2012. “It’s the answer to how you understand value across different websites and different mediums. It’s the first step in how you improve the process of building brands. Online attention is the new currency.”

To Goodhart (who also penned Signal360’s column this month on measurement [link]) knowing where consumers pay attention is critical. But first, a brand needs eyeballs to look at its messaging. Without that, there’s nothing to measure.

“Attention is the currency,” he says.

You can hear more from Goodhart when he spoke at the Signal conference in 2012 and 2016 below, or read our lightly edited transcripts.

 

Transcript 2012 

Jonah Goodhart
I’m honored to be here. One of the themes in today’s conference is the following consumers have adopted a digital first lifestyle, and brand builders lag their customers in doing the same. True enough. But the fact is that even the most digital savvy consumers continue to buy their soap, deodorant, toothpaste, automotive, retail, and a huge range of other products the old fashioned way, by driving to Walmart or Pep Boys or CVS, and waiting in line at the counter. In fact, only about 8% of retail sales are online. But even if consumers aren’t yet buying online at the scale of offline, their lives are digital and online. And then 8 percent is of course, increasing in any brand, whose marketers don’t maximize that potential is at risk. The problem for marketers is figuring out which advertising works.

Everybody knows how to value a click-through when looking at a direct sale. But today, brand marketers have to purchase digital media, at the type of scale done and television and print. The challenge is that there’s so much information out there, a flood of words, of learning, of facts, of propaganda, and yes, some wisdom. Our digital lives force brand advertisers to work harder. Marketers have to go beyond the old standards. It’s not enough to know how many people might see your ads, you need to know how many people actually paid attention to your ads. Attention is the new currency for brand advertising.

We’ve been working hard to understand and improve brand intelligence and analytics, and to make brand advertising more effective online. All of us are bombarded with information and options. The internet has expanded more than exponentially over the last 20 years, from the launch of the first site to more than 500 million today, with 300 million in the last year. I guess 50 million of those on WordPress. This massive increase in inflammation, ironically, results in decreased attention. Even in simple cases, capturing someone’s attention can be difficult.

Let’s take a look at something you may have seen before, which I think illustrates the point. It’s called the awareness test.

[On screen video]
“This is an awareness test. How many passes does the team in white make? The answer is 13. But did you see the moonwalking bear?”

Jonah
It’s funny right? The first time I saw that, I think I replayed it five times because I was like, There’s no way that bear was in the first screen. They definitely added that after the fact. So I went back like five times to see it. With all the information we miss, frankly, a lot of dancing bears. So how can we be sure that people are going to notice our ads? Nielsen reports that the average American is exposed to 1600 ads a day? 1600. I was counting and walking around Cincinnati is basically ads everywhere. You don’t think about it that way. But they are. So how do we capture and measure someone’s attention? The attention is ultimately the value. And then in the internet, specifically, this is particularly hard. How do we do it? One way historically, has been using clicks. Right? What was the click through on that campaign? The problem with clicks besides a number of things that I’ll talk about? Is that the not a really good metric for brands because first off, they don’t correlate to offline sales. In other words, more people clicking on an ad for Gillette or Olay or whatever. It’s not the way you’re going to optimize getting more sales. Basically, that’s the number one problem.

The second thing is basically nobody clicks on ads. I don’t click on ads. I know my brother and partner doesn’t click on ads. Statistics basically say that very few people actually click on ads. But just to be sure, we sent a camera crew out to New York City to see who clicks.

[On screen video.]
Hey, we’re here with in Bryant Park to see if people click on online ads.

Do you ever click on online ads?

No.

Oh, no.

Rarely

Well, I only do it by accident.

I don’t like it.

Not really.

Yes. As a matter of fact, but we’re not from here though.

Usually look at them like, Oh, that’s a good one. But I don’t look at them. Like, I’m gonna click on that.

Do you do notice them?

Yeah.

Jonah
There’s 10,000 dots on this screen. That’s what three and 10,000 looks like. Clicks don’t matter. Great brands and other mediums don’t need direct response measures. We don’t count clicks during the Superbowl. And no one’s counting clicks on magazine ads. Brand advertising works in magazines, on billboards, and on TV without irrelevant measurements like clicks.

On TV. It’s straightforward.On TV. If I were to project a commercial right here, when we all watch Coke and AmEx, incredible commercials from both of those guys, we all consumed it in roughly the same way. But on the internet, it’s really not that easy. If I said that I targeted an ad to every single person in this room today, whether you saw it, or paid attention to it would be very dependent on what site you’re on, what the ad looked like, etc. On the internet, it could be a video, it could be a static image, it could be on the side of the page, it could be at the bottom of the page, it could be little big, it could expand to take over the whole page. The viewing experience and how we consume not only the content, but the ads that are around us really actually matters on the internet. The equivalent would be like playing nine TV commercials on a split screen while you’re actually watching a TV show at the same time. On the internet, add to that, that you’re on your phone, you’re making a phone call, you’re texting, etc. And we’re expecting the consumer to basically pay attention to those ads. More importantly, we’re not measuring whether they do or not.

This fragmented presentation and context means measuring attention is not straightforward online. But we can succeed in measuring attention. So where do we start? We can start with attributes like viewability, and interactivity. Viewability means knowing the consumer had an opportunity to see the ad, it means it was in front of them. If I were to ask you to buy a billboard in Times Square, you might ask how many people normally walk by it. If you can measure it, you might ask how long people typically look up at it, and how long is it in front of each person. You can’t do that in Times Square. But on the web, you can do that. On the web, we can measure both whether the ad was viewable and for how long. We call this percent viewable and in view time. The iInternet allows us to interact with brands in ways no one dreamed possible consumers can explore videos, look at photos, tweet, or share their experiences on Facebook, all from within an ad.

But how do we measure interactivity in a thoughtful way that is consistent regardless of the type of ad it is? Or what site it’s on? All of the stuff that we saw today, phenomenal applications of advertising like Flipboard and live ads from Yahoo. But how do we measure that consistently across the entire Internet? How do we know frankly, that someone’s paying attention to each one, and how do we compare and contrast what happened?

We looked at it somewhat simplistically, and said, Well, you should have an interaction, which means that someone purposely did something with an ad. And secondly, how long did they do it for? The idea is a consistent metric that we can apply across any ad on any site, mobile tablets, PCs, etc. So P&G is actually doing some of this work already in partnership with MediaVest and Dynamic Logic.

My company set out to measure how consumers paid attention to a set of ads for the detergent Tide, which you guys know well, I want to show you a bit of that right now. So if you look at this, this was actually the original ad that ran. Here’s what happens when you add a heatmap visualization. This is basically a collection of every user who interacted with this ad. What you notice is that different parts of the ad get different amounts of attention. Now our focus graph this tells us exactly at what precise moment, the ad got the most attention. We can then take that information, that massive amount of data and synthesize it into something simple. What features were people paying attention to? This is actual consumer behavior. So in this case, the baby stood out. The bottle of Tide stood out, the button stood out and the Tide logo stood out the most. Let me wrap up by saying the key to taking advantage of our new fragmented digital economy is understanding it. Measuring attention, not clicks and impressions, is the answer to how you fight fragmentation. It’s the answer to how you understand value across different websites and different mediums. It’s the first step in how you improve the process of building brands. Online attention is the new currency. With that, I thank you for your undivided attention.

Transcript 2016 

Jonah Goodhart
I’m Jonah Goodhart. I’m the CEO of Moat and I am truly honored to be back at Signal. This is about making brand advertising work better in digital.

Turns out most of the money spent in the ad world is on branding. Yet in digital it’s not. In digital, most of the dollar spent today continued to be on direct response. That’s going to change. One of the challenges for brand marketers, is that there are no consistent ways to measure success in digital.

As Facebook has said, 99% of sales that come from marketing campaigns are coming from people that don’t interact directly. And 92 plus percent of all US retail spend, still happens offline. So yes, we’re living our lives in increasingly digital ways all of us are. But we still buy a lot of the things that we buy in the physical world. That’ll change. But today, we have a measurement gap. If we don’t measure the right metrics, we make the wrong decisions.

Clicks have been around for 20 years. They’re a really bad metric, in my opinion, to measure success for brands. For one, nobody does it. Three in 10,000, is about the average response rate. As Nielsen says virtually no relationship exists between clicks and brand metrics, or offline sales. Five years ago, we sent a camera crew out to Bryant Park, and we asked people if they click on ads in New York City. Warlier this month, we sent the same camera crew back to see what people would say, let’s take a look.

[Video plays]
Hey, we’re here in Bryant Park in New York City. We’re gonna find out if people actually click on online ads. Let’s go.

Do you click on online ads? No.

No

Wow.

No.

No, no.

Yes

Oh, really?

Oh, no, I don’t know.

You noticed the ads. You just don’t click on?

Yeah, you’d say the ads are actually helpful.

Yeah, they are. Yeah, I think they can be helpful, you know, in the right situation and right setting.

Thank you.

Jonah
So even without clicks, digital ad spend continues to grow. According to McKinsey, we will spend $168 billion this year alone globally on digital advertising. But TV still gets the majority of grant dollars for many marketers. And when I ask brands, why they invariably tell me TV works. In fact, in the US, we’re expecting spending TV to increase slightly this year by almost 1%. But the reality is that consumer behavior is changing.

US cord cutter households, people that are cutting their subscriptions, is up 41% In the last four years, and people that have never had subscriptions is up 31%. In the last four years. 34 million households have never had a cable or satellite subscription. Interestingly, the number one show every year gets fewer TV ratings points. We literally don’t watch scheduled TV in the same way we once did.

When you look at time spent every age group other than 50 plus over the last four years is down. And if you zoom in, to 18 to 24 as an example, not only is it down, but it’s down dramatically, 20% In two years alone, and digital is making up for that difference. When I read the Entertainment Weekly headline, that “Game of Thrones” set ratings records, what caught my attention was the “with streaming.” Turns out there on air numbers actually went down year over year.

Netflix is the largest US streaming service with 47 million subscribers. That’s half of the entire pay TV ecosystem. And it’s not just TV behavior that’s changing. Cinema time spent is down in consumption. Radio is down. Magazines are down and yes newspapers are down too. And digital and the Internet continues to get more of our time and our attention.

Facebook has massive scale a billion users a day on their platform. And as one reporter wrote, “Facebook is the Internet.” In fact, there was a recent study that said we spend more than 20 minutes every day on our Facebook app. Number two was Snapchat. That of course was until July 6, when Pokemon Go became the number one app. We’ll see what happens with that one.

Just like Pokemon Go, a lot of the increase in digital has been on mobile. Some of us are constantly on our phones. I downloaded an app called Moment, which is interesting. It measures how many times you pick up your phone every day, and for how long for me, it’s five hours a day, 74 pickups a day. The average consumer is three hours a day. So I guess I’m above average in that sense.

But interestingly, three out of four activities on our mobile devices have no advertising. It’s texting, voice and email. So the right denominator for a marketer is attention. Consumer behavior has changed. But storytelling remains the core of our society. After all, advertising is storytelling.

So as we shift to digital, we have to solve for foundational challenges. Ad viewability is a simple concept. It literally just means the ad wasn’t there. The value of a non-viewable ad is zero. It would be like driving down the highway and buying a billboard that’s flipped the other way. But just because the ad is there, doesn’t mean it was effective. Imagine if you were watching TV, and ads started showing up on the side of the screen. A couple of things would happen. But at the very least we would ask new questions. We would have to understand how to measure attention. In that context. Attention is absolutely the key. And it just means noticing something.

We’ve seen the study that Microsoft put out last year that our attention span is falling, transient attention is what they measured from 12 seconds down to eight. And they actually charted that pretty closely to smartphone increases. Yes, we now pay less attention than a goldfish.

We hold an event in Montauk, New York every year called Attention.io. Alec Baldwin came and spoke at our event. And I want to show you a few seconds of what he said on attention.

[On Screen Video of  Alec Baldwin speaking]
Obviously getting people’s attention in the media, it’s pretty easy to do, I found. There’s really not a whole lot to it. Although it doesn’t always work out the way you want it to. Certainly, before I introduce the next speaker, to me, the key is to get people’s attention and hold their attention with something that ultimately is worthwhile.

Jonah
So we begin with viewability because if the ads not there, none of this matters. If you went to Times Square your expectation quite simply would be that you can see your ad. Five years ago, the trade associations that represent advertisers, publishers and agencies got together and formed making measurement make sense. They literally said, Let’s shift from a served impression to a viewable currency. A viewable ad is just that it’s an ad that’s on the screen and a non viewable ad is an ad you can’t see. But in order to transact as a currency, we needed definitions. So the Media Rating Council or the MRC, a nonprofit group was appointed to come up with standards. Essentially, the ad on the screen for one second counts as a viewable display ad. And the video on the screen for two seconds counts as a viewable video. The same definitions apply to mobile.

With those definitions, about half of all digital ads are not viewable. That’s for display, desktop and mobile, and the same rough numbers for video. So if half of the ads are not viewable, measurement is critical.

We think measurement needs to be precise. It has to be accurate. Trust truly matters. The ANA did a study last year that said 97% of marketers believe that media owners should be measured by third parties. We were thrilled when we announced that we will be the first company to measure viewability on Twitter. We then announced that we will be the first company to measure viewability on Facebook, then the first company to measure viewability on YouTube. We recently announced that we will be the first company to measure viewability on Snapchat.

The elephant in the room is that half of the ads on the internet are not viewable and we have a humanity problem. We have fake traffic. And as a company one of the things that we do is we tried to detect and get rid of fake traffic. And so without going too far into the weeds, we identified on a very granular level, invalid non human traffic bots. Just for fun we put together a parody to talk about the differences between humans and bots.

Let’s take a look.

[On screen video]
Hey there, I’m a human.

And I’m a bot.

What’s a bot?

What’s a human?

Well, humans search the web, download cool apps and views ads.

Bots also search the web download cool ads and views ads just like a human.

Awesome. Do you buy things?

Oh, no, of course not. I’m a bot.

Then why are you viewing?

I’m just like a human. I surf the web, download cool apps and view ads. Cool.

I’m just like a human. I surf the web, download cool apps and view ads.

Oh, well, what kind of apps?

Cool apps. I download cool apps. I download cool apps, cool apps, I call apps.

You okay? You need some water?

No water.

Jonah
This year, the ANA projects we will lose $7.2 billion in ad fraud. To put that in perspective, it’s about 4% of all digital spent. In the credit card industry globally, we spend around $28 trillion. Losses are about 0.05%. In other words, digital is 80 times higher than credit cards.

Collectively, we have to solve for this challenge as an industry. So human and viewable is the first step. But we have to go further. I want to show you my favorite example, which is a Captain Phillips ad on the homepage of the New York Times, if you haven’t seen Captain Phillips, it’s a great movie definitely worth checking out. What I love about this ad and this page, is that in addition to a Captain Phillips ad, there was a viewable Capital One ad. In fact, there were two viewable Marc Jacobs ads. And there was a viewable NYU ad. Go back so you can see NYU in the bottom cap, one at the top of Marc Jacobs, upper left and right. Just being there doesn’t mean it was effective. We have to go beyond that and measure attention.

Attention is the key. And this is, by the way, a real website. Consumers are voting on experiences like this by installing ad blockers and yes, ad blockers are on the rise. In fact, based on our own numbers, we see about 19% of pages globally, have ad blockers installed, that’s desktop.

We need to create a better consumer experience in digital ads and content should feel seamless. Ads are content. Attention is the key. But how do you go about measuring attention? If I went to a physical store, and you asked me to measure attention, I might ask how many people walked by? How many people walked in? How much time do they spend inside? Was it active time or passive time? Do they interact with my product? Maybe did they buy something?

We apply that same type of thinking to digital. So when a user shows up on a mobile phone, or an app or on a webpage, we’re able to ask questions about how long they were there, whether they were actively on the page, where my ad was. Whether they scrolled down how far down how fast, whether the ad was there for how long whether they touched it interacted with it, or took any sort of action.

We roll those signals into 50 attention metrics that we measure across display video, mobile and native. The attention shift is definitely happening. As Forbes writes, “Will attention become the new metric that matters for marketers? Or as AdAge said, “Content is great. Attention is better.”

Earlier this year, a TV executive stood on stage at the Upfronts and said “Attention is the currency.” I couldn’t agree more. Attention is the currency. So with that, thank you for your time and your attention.