The five factors that blight online advertising

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Measuring the effectiveness and efficiency of advertising performance online has very different dynamics and characteristics compared with traditional media. Laetitia Zinetti Diard, Strategy Development Director at Ebiquity, identifies five factors that blight online advertising, and outlines a new approach for ensuring online display delivers significant and meaningful return on investment.

Online advertising is complex, fragmented, and sprawling. It offers millions of opportunities to reach billions of consumers directly, across multiple technologies and platforms.

Digital advertising is also characterized by many more links in the transactional chain between the advertiser and the publisher than traditional advertising, including media agencies, automated trading desks (ATDs), and demand and supply side trading platforms (DSPs and SSPs) transacting media programmatically through real-time bidding (RTB). As a consequence, online advertising has more terminology and TLAs (Three Letter Acronyms) than traditional: more opportunities for marketers trying to keep up with technological advances to get lost in a fog of jargon.

And, paradoxically, while digital advertising generates vastly more data than traditional, it is, at the same time, the least transparent of all forms of commercial communication. This complexity and lack of transparency prevents brands from getting clarity on both performance and spend. Put simply, many advertisers do not know who they are reaching, where, and how, or at what cost. This is very much to their disadvantage, as the margins for online advertising are significantly higher than for offline, and the multiple links in the chain each attract a small proportion of spend.

In this brave new world of digital, there are the five factors that blight online advertising – five issues advertisers need to address directly if they’re going to get value from their online marketing spend.

1.Salami sliced budgets

The increased number of links – also known as businesses – in the chain between advertiser and publisher means there are more opportunities for value to be eroded before any commercial communication ever appears. Figures from the World Federation of Advertisers (WFA), confirmed by Ebiquity’s own research, show that typically only 40 percent of an advertiser’s budget actually reaches online publishers. Put another way, charges and rebates – unknown to and unseen by the advertiser – are leading to as much as 60 percent value erosion of total ad spend.

2.Poor targeting

Unlike other channels, digital advertising is transacted on the basis of impressions. Advertisers buy space on a cost per thousand (CPM) impressions basis, not based on the actual audiences they will reach. Many advertisers rarely see complete audience data, and the wealth of information potentially available to them from both media owners and agencies is not properly leveraged for precise targeting.

“Almost two-thirds of all online ads aren’t delivered to the correct target consumer.”

It’s fair to say that, in digital, there’s no going after ‘mums with kids’ or ‘urban young men’; no successful targeting by demographic groupings. Almost two-thirds of all online ads aren’t delivered to the correct target
consumer. What’s more, with over 60 percent of computers and tablets shared, cookies often end up showing the wrong ad to the wrong individual – in the wrong region, of the wrong age group, and the wrong gender.

3.Non-human traffic

Advertisers pay for impressions irrespective of whether the right target is reached or not, or whether the impressions are real or not. The truth is, many online ads are ‘viewed’ automatically by bots and not by real people. Bots click up impressions, but fail to deliver an actual human audience with buying power.

Fraudulent traffic hijacks publishers’ inventory, serving ads to no one. According to the Association of National Advertisers (ANA), this is estimated to cost $7.5bn annually in the US, representing 11 percent of all online
display advertising. The ANA also estimates that 22 percent of online video viewing is non-human, while, separately, Unilever has calculated that it is losing 29 percent of its advertising volume to non-human traffic.
Again, for an ecosystem so rich in data and potential accountability, online display is failing advertisers.

4.Viewability

As many as half of all online ads are nonviewable according to the World Federation of Advertisers (WFA), and yet most advertisers pay for all impressions, whatever their true viewability status. Moreover, the criteria
for actual viewability are set incredibly low online. The Internet Advertising Bureau (IAB) deems an ad to be viewable provided 50 percent of the ad’s surface (total pixels or picture elements) is viewable for one second.
For video content, the IAB stipulates just two seconds. Quite how outrageously low online viewability standards are currently – and particularly in comparison with those set for TV – was lampooned recently by the Fox TV
network in an ad campaign, fronted by actor and producer Rob Lowe.

5.Brand safety

Finally comes brand safety. For many brands – for instance R-rated or 15/18 certificate movies, PEGI-16 and 18 video games, and alcoholic drinks – it’s vital that ads appear in age-appropriate and content-appropriate
environments. Yet it is common knowledge that ads for alcoholic drinks often appear on websites targeting teens or mothers to be. It’s not that advertisers are encouraging their media agencies and myriad intermediaries to openly flout the self-regulatory proscription of targeting these audiences. Rather, ads are
served in inappropriate properties thanks to algorithms automating ad serving and the complex chain of companies between brands and publishers.

Because advertisers are being poorly served by the current ecosystem, we are currently in the process of developing OPTix, a data aggregation platform and consultancy service that brings together all relevant data sets to measure, benchmark, and optimize online advertising performance. These data sets include impressions delivered against plan, audience delivery, viewability/brand safety/ geolocation scoring, and both actual CPMs and True CPMs. By pulling all available data together into the same place, advertisers can
make sense of online performance for the first time – understanding where ads are actually being served, who sees them, how often, and how this compares to plan. By demystifying the consequences of the different links in the transactional chain, advertisers can identify inefficiencies and drive genuine performance enhancements for online display.

“By pulling all available data together into the same place, advertisers can make sense of online performance for the first time.”

In a fragmented market characterized by both rapidly evolving technology and almost uncontrolled scale increases in automated, programmatic media buying, advertisers are being sold short. With half of all ads not
actually displayed and a third of all traffic fraudulent or fake, it’s time advertisers fought back. While the issues – or the theory behind them – may be understood by many brand custodians, the scale of the problem is not. It
is only through an independent measurement platform that brands can take control of online advertising, driving accountability and transparency in a world that has been opaque and served by vested self-interest for too long. With an increasing share of advertising dollars heading online, tracking matters like never before to drive campaign performance, not to mention cost and performance benchmarking.

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About Author

Managing Principal, Media Management

Laetitia began her career in the Marketing team at Air Mauritius in Paris before joining Qantas. During her 7 years at the airline’s Marketing team in Paris, she planned and managed the execution of their multi-channel marketing activity. She spent over 4 years as European Media Manager for Nissan devising strategy, managing budgets and agencies across Europe. She became MD of Ebiquity in France in 2010 before taking on a Strategic Development role in London 4 years later. She now heads up our growing Media Management capability globally, ensuring Ebiquity’s teams worldwide can meet advertisers’ growing demand for strategic media consultancy.

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