dollars, and the high-flying market crashed. Many naysayers
gleefully concluded that the Internet itself had failed.
Yet as these cyberskeptics crowed, a company called Overture Services was pioneering an innovative advertising application for the new medium. When Web surfers carried out searches, it turned out, they welcomed related ads. And if they clicked on one, the advertiser paid the search engine. Google soon implemented this system on a mammoth scale and turned clicks into dollars. Advertisers could calculate their return on investment down to the penny. In this domain, the insights of a Mad Man counted for nothing. Search ran on numbers. The quants rushed in.
While the rise of search battered the humanists, it also laid a trap that the quants are falling into now. It led to the belief that with enough data, all of advertising could turn into quantifiable science. This came with a punishing downside. It banished faith from the advertising equation. For generations, Mad Men had thrived on widespread trust that their jingles and slogans altered consumers' behavior. Thankfully for them, there was little data to prove them wrong. But in an industry run remorselessly by numbers, the expectations have flipped. Advertising companies now face pressure to deliver statistical evidence of their success. When they come up short, offering anecdotes in place of numbers, the markets punish them.
This leads to exasperation, because in a server farm packed with social data, it's hard to know what to count. What's the value of a Facebook "like" or a Twitter follower? In this way, marketing resembles other hot spots of data research, including brain science and genomics. In each one, scientists are combing through petabytes of data, trying to discern whether certain genes or groups of neurons cause something or simply correlate with it. It's not clear, because these are immensely complex systems with millions of variables -- much like our social networks. Even as researchers swim in data that previous generations would have swooned over, they struggle to answer crucial questions regarding cause and effect. What action can I take to get the response I want?
Debates rage as quants accuse one another of counting the wrong things. Take I.B.M.'s Black Friday study. While the numbers indicate that few shoppers clicked directly from a social network to buy a laptop or a fridge, some may have seen ads that later led to a purchase. If so, valuable influence went unmeasured. "I.B.M. is looking at a single point in time," says Dan Neely, the chief executive of Networked Insights, a marketing analytics company. Neely's team followed Macy's Black Friday campaign on Twitter, which started weeks before the big day; it generated a viral flurry on the network, he says. Clearly, many big advertisers are still believers: last week, Facebook shares got a boost from reports that Walmart, Samsung and other boldfaced names have recently stepped up social- media advertising.
But gauging the effectiveness of these ads is still a challenge. "It's hard to measure influence," says Steve Canepa, I.B.M.'s general manager for media and entertainment. That, in fact, may be the ultimate lesson to draw from the social media marketing miracle that wasn't. The impact of new technologies is invariably misjudged because we measure the future with yardsticks from the past.
Dave Morgan, a pioneer in Internet advertising and the founder of Simulmedia, an ad network for TV, points to the early years of electricity. In the late 19th century, most people associated the new industry with one extremely valuable service: light. That was what the marketplace understood. Electricity would displace kerosene and candles and become a giant of illumination. What these people missed was that electricity, far beyond light, was a platform for a host of new industries. Over the following years, entrepreneurs would come up with appliances -- today we might call them "apps" -- for vacuuming, laundry and eventually radio and television. Huge industries grew on the electricity platform. If you think of Apple in this context, it's a $496 billion company that builds the latest generation of electricity apps.
Social networks, like them or not, are fast laying out a new grid of personal connections. Even if this matrix of humanity sputters in advertising and marketing, it's bound to spawn new industries in consulting, education, collaborative design, market research, media and loads of products and services yet to be imagined. Maybe, just maybe, it will even be able to sell soap.
is a technology journalist who blogs at thenumerati.net, and the author of "Final Jeopardy: Man vs. Machine and the Quest to Know Everything."
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