We've recently been hearing industry folks tout the need to shift the focus from science to art. Is it time to put measurement and algorithms in the backseat and once again, make creative excellence the driver? We recently caught up with an industry stalwart, Jaffer Ali the CEO of Vidsense, who is very passionate about this topic. I wanted to share some of his thoughts on the "soul" in advertising.

Centro:  In your article, "The Center Cannot Hold" last fall, you discuss the decline in the effectiveness of online advertising and that we're moving to a "failed model." Can you explain what you mean by that?  Do you really believe online advertising is all failure and no success?

JA: Online advertising has so much potential, but that potential is going largely unrealized because the keys to the kingdom were handed over to zealous "quants." During this time, we have seen the overall banner click thru rates decline from an average of 5% in 1998 to .35% in 2009. When banners were innovative and new, people responded. It was innovation or novelty that drove response, not mathematical erudition. I am online several hours every day and I honestly cannot recall one memorable banner ad in months. If we are going to succeed, we must become more creative.

Centro:  You discuss how the industry is looking to "science and math to cure its ills" and, as a result, "quality, beauty and soul [in advertising] become endangered and eventually extinct."  These appear to be incongruous comments coming from a direct marketing quant.  Isn't the success of direct marketing predicated on science, math and quantitative analysis?

JA: Well, I actually say I am a "recovering quant." If you follow the math to its asymptotic limits, you actually see where beauty and soul rear their heads once again. But more practically, every good direct marketer needs to acknowledge that each campaign is comprised of four elements: 1) creative 2) offer 3) media and 4) soul to hold it together. These four are the proteins that comprise the DNA of ALL marketing. What the "quant marketers" (who really should be called "quant monitors") do is try to crush all processes into media and algorithmic precision.

Of course the precision is an illusion. The Sanskrit words for "measurement" and "illusion" share the same root. The underlying fallacy of those with "physics envy" is that human behavior can be reduced to rationality. The same math that underlies the stock market and that of behavioral targeting both presuppose rational human behavior. Thus the "quants" do not cater to human emotion, which is much more powerful than rational thought.

Centro:  There are many companies (and billions of dollars) betting the online industry can be reduced to algorithms and quantitative analysis.  In five to ten years, do you believe this investment will have proven justified?  Will we be living in a quant-ruled world?

JA: This may be the easiest question ever asked of me. The answer is NO! The reliance on algorithmic precision is a fool's errand because it involves more and more effort and resources to be put into smaller and smaller segments. The result is smaller and smaller effects. One study has Behavioral Targeting lifting response rates 17%.  That is like going from a .35% to .41% click thru rate. This is not the type of increase that any marketer should be proud to call successful. A better creative and a better offer should lift responses significantly higher than this. But if you are only concentrating on your algorithms, you rarely have enough time for what really counts.

Centro:  In your life, and forgive us for over-simplifying your businesses, but you've made a lot of money selling a lot of things to a lot of people.  If you're not interested in advertising algorithms, what are you doing to ensure your advertising is effective and works?  What do you believe the keys to success are in the future?

JA: There is a world of difference between measuring which creative or offer performed and giving in to the snake oil of predictive modeling of BT. The former looks in the rear view mirror and BT promises the future and does so based upon a flawed view of human nature. The reason we created the Vidsense network was to offer marketers a way out. The key to success is to return to what has always worked and will always work, a road "back to the future," if you will. To reiterate more precisely, it involves unlocking the door with the following keys:

1) creative 2) offer 3) media and 4) soul to hold it together.

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