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Ad Industry Launches Programmatic Probe

30 Apr

thThe Association of National Advertisers (ANA) recently announced that it will commission a study to identify ways to address the myriad of issues plaguing the programmatic marketplace. Both the ISBA and World Federation of Advertisers (WFA) are supporting the effort.

Citing ongoing concerns regarding “thin transparency, fractured accountability, and mind-numbing complexity” the ANA believes that these issues, combined with the percentage of digital spend going to cover fees charged by ad tech intermediaries, are costing advertisers billions of dollars per year. By their estimate “only 40% to 60% of digital dollars invested by advertisers find their way to publishers.” Of the funds that do reach publishers, a recent study by the ISBA found that “15% of budgets simply disappear without a trace” supporting thin transparency claims.

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For perspective, according to Zenith Media, 65% of U.S. digital media is placed programmatically. For perspective, advertisers spent approximately $139 billion on digital media in the U.S., representing 54% of total media spend.

Unfortunately, the promise of improved efficiency and effectiveness related to programmatic has yet to be realized. With evolving privacy regulation and a higher incidence of fraud (fake traffic) to add to the lack of clear insight into the fees charged, true inventory costs and placement quality, it is difficult to explain the rapid growth of this form of buying. Yet it seems there is no turning back as programmatic buying has become dominant in digital and expanded to other media types as well.

Despite these challenges, many media pundits suggest that traditional metrics for evaluating media success (i.e., impressions, clicks, views, completed views, etc.) are not apropos for assessing the efficacy of programmatic. They argue that in the end, it is all about actions and outcomes. However, a Google Ad Manager study found that an increase in video ad viewability, for instance, from “50% to 90% can result in a revenue uplift of over 80% (averaged across desktop and mobile).” No one would argue that views and outcomes cannot occur without exposure to real people and legitimate human traffic.

Thus, with advertisers continuing to fuel the growth of programmatic buying across media types, the timing could not be better for the ANA’s initiative to investigate this sector of the media marketplace.  As the 1st century BC writer and philosopher, Publilius Syrius once said: “It is better to learn late than never.”

Fraud & Privacy Regulation Create Digital Media Challenges

21 Apr

ChallengesDigital media’s value proposition is the ability to more finitely target audience segments, moving beyond traditional demographics, leveraging deterministic user data to paint rich, behavioral-based customer profiles, delivering a marketer’s message to those customers inexpensively, at scale.

This dynamic resulted in the rise of U.S. digital media spend from $26 billion in 2010 to $139 billion in 2020 (source: IAB/ PwC).

Yet recent developments, including increased regulatory activity surrounding consumer data privacy protection (GDPR, CCPA) and the resulting moves away from the use of third-party cookies to track website visits and collect consumer data to help marketers target their messages, have exposed some challenges related to digital media and customer targeting that the industry must now contend with.

The primary issue going forward is the fact that the major browsers have stated that they “will not use alternate identifiers” to track consumer web browsing activity. Further, consumers remain distrustful of sharing personal information, which has significantly thwarted marketers’ opt-in efforts, limiting their personalization and targeting strategies.

Secondly, data brokers and data management platform (DMP) providers may offer little credible support in this area. In a recent Forbes article entitled, “How Accurate is Programmatic Ad Targeting” Dr. Augustine Fou suggested that few AdTech providers “have users that voluntarily provide” demographic information. This means that the targeting “characteristics or parameters that a data broker or DMP has on users are derived.”

Thirdly, digital media fraud continues to limit marketing optimization efforts. In their 2021 “Marketing Fraud Benchmarking Report” Renegade and WhiteOps profiled some of the outcomes experienced by marketers whose databases have been corrupted by fraud. These include:

  • Website traffic spikes, not connected to new content
  • Steep increases in traffic associated with marketing campaigns
  • Wide variances in time-on-site metrics, depending on traffic source
  • Lower than expected conversion rates
  • Diminishing quality of in-bound leads

The primary cause behind these occurrences is fraudulent bot activity. In addition to skewing digital media audience delivery and campaign performance indicators, this fraudulent activity has also corrupted consumer databases. Thus, marketers may experience difficulty in determining what percentage of their target profiles and contacts are real or fraudulent, leading to ineffective and expensive retargeting and profiling efforts.

The alternative being suggested by many is to fall back on contextual marketing. In short, placing a marketer’s advertisement in the most appropriate context (e.g. adjacent to the most relevant content). This means either working with publishers and websites directly accessing their first-party data to target advertising based upon user activity and content preferences to shape ad targeting decisions or, in the case of ad networks, serving up ads based upon page content, keywords and metadata.

Unfortunately, some browsers such as Google will not allow advertisers to access contextual content categories and or identifiers to inform their ad targeting efforts. Additionally, one important trade-off of contextual targeting is that data is not collected on the user for use in creating buyer profiles or in predicting future behavior and thus has little value in establishing targeting parameters or in remarketing.

With 54% of U.S. media spend being allocated to digital and 65% of that being programmatic (source: Zenith Media), marketers and their advisers have their work cut out for them as they navigate the new digital playing field.

Time for Advertisers to Reach Out to the Regulators

26 Oct

Like many business segments, the ad industry has never been one to welcome government involvement when it comes to policing itself, and perhaps rightly so. That said, now may be the time to embrace the regulators.

Why? Simply put, digital advertising fraud is out-of-control. In a recent article in Campaign U.S. author Alison Weissbrot shared the results of a recent study by ad verification company Cheq and Professor Roberto Cavazos of the University of Baltimore suggesting that U.S. advertisers will lose $35.0 billion to ad fraud in 2020. In a sector that represents $333.0 billion in annual spend this means that ten cents of every dollar spent by digital advertisers is siphoned off the top by fraudsters. For perspective, the author cites the fact that this level of fraud is greater than that impacting the $3.32 trillion credit card industry. And the problem is not limited to the U.S. alone. Consider the finding from Juniper Research’s 2019 report on advertising fraud, which indicated that globally lost $42.0 billion to digital ad fraud last year.

Renowned fraud investigator, Dr. Augustine Fou once commented that, “ad fraud is more lucrative than tax fraud, counterfeiting goods or being a Somali pirate.” Adding credence to the increasing role of organized crime and criminal nation states in digital ad fraud, The World Federation of Advertisers (WFA) recently stated that “fraudulent internet advertising schemes will become the second-largest market for criminal organizations.”

For all of its well-intended efforts, the advertising industry has been unable to effectively counter this growing threat. Thus, it may be time for The World Federation of Advertisers, the Association of National Advertisers, the 4A’s, the IAB and their members to reach out to lawmakers and regulators to join in a coordinated effort to uncover ad fraud at its root and to develop more effective means of enforcement to both deter and punish the criminal organizations perpetrating the fraud. The 18thcentury French social commentator, Montesquieu once said that; “there are means to prevent crime – its punishment.” Combining the expertise of the ad industry with the regulatory and enforcement capabilities of lawmakers makes good sense.

The problem of ad fraud is not abating. With the expanded use of technologies such as programmatic buying and artificial intelligence and the complex, often non-transparent nature of the advertising supply chain, the risk of fraud remains high, threatening not only digital ad spend but emerging media sectors such as mobile and connected television as well. 

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