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Digital advertising and the counter-revolution

YouTube’s recent problems with advertisers boycotting the video platform after their brands appeared alongside extremist content has raised concern about the nature of ad tech. But in reality away from that specific example there have been growing questions from some high-profile firms about digital advertising in general.

The stats remain heavily slanted towards online ads. According to Zenith Media’s latest Advertising Expenditure Forecasts, internet ad spend is set to surpass traditional TV advertising for the first time this year, making up 36.9% of total expenditure. The fastest growing segment is social media, boasting a 51% year-on-year growth rate.

But the underlying trend also confirms that internet ad growth rates are slowing, expected to fall to 12% over the next year and by 10% by 2019. One reason for that might well be attributable to growing scepticism in some quarters about the reliabilty of the results and the metrics from digital ads.

JPMorgan Chase, an early and enthusiastic user of programmatic advertising, has slashed its digital advertising. This came on the back of pulling its ads from YouTube due to the extremist content issue, but the real reason is a wider issue. The bank had been running online ads on 400,000 websites, but following a review of how many of those were ‘safe’ for its brand, pulled out of 395,000 of them.

The review was prompted after an ad for Chase’s private client services popped up on a site called Hillary 4 Prison, under a headline proclaiming to publish “the horrifying truth about the Satanic liberal perverts who run Hollywood.”

What’s particularly interesting, apart from the sheer scale of the cutback, is that there has been no discernible decline in the effectiveness of the return JPMorgan Chase has seen. After a 30 day review, only 12,000 ads – 3% of the total for the period – resulted in any activity beyond an impression.

Kristin Lemkau, the bank’s Chief Marketing Officer, told the New York Times:

It’s only been a few days, but we haven’t seen any deterioration on our performance metrics. Before the YouTube thing happened, we were just looking at programmatic. Now the question is, what else is out there that we should be looking at whitelisting?

JPMorgan Chase is not alone. At the recent 4A’s Transformation conference in Los Angeles, Taco Bell CMO Marisa Thalberg confirmed that the fast food firm is cutting back on its digital spend in favour of more traditional – and measurable – platforms, such as TV and radio:

TV’s important to us. TV still works for us. Radio actually still works for us, believe it or not.

This doesn’t mean that the firm is giving up on digital, but that it needs, according to Thalberg, to:

figure out how to use digital a little bit more effectively to really get [the] business result. While I do love and believe in digital, we went down some garden paths with it last year.

She also pointed to the ‘dark side’ of digital advertising:

It’s a bit of a morass right now. I think there are really big, dark clouds that are hovering over our industry that make it very scary to be putting money into the marketplace.

Measurements

It’s a sentiment that echoes that of Procter & Gamble, the world’s largest advertiser, which in January put the ad tech industry on notice that it needs to change its ways and operate to higher standards. Chief Brand Officer Marc Pritchard declared:

The days of giving digital a pass are over. It’s time to grow up. It’s time for action. We’ve given them plenty of notice, more than a full year for many.

A particular issue for P&G is the lack of standard metrics to allow for apples and apples comparisons and measurements. Pritchard said:

[We spend] enormous amounts of time trying to understand, analyze and explain the differences between Facebook, Instagram, Twitter, Snapchat, Pinterest, Pandora, YouTube and the dozens of different viewability standards claimed to be the right metric for each platform.

He added:

What finally put me over the edge was a conversation with a top executive from one of the major companies. After a long discussion, the executive said, ‘I know you want us to get third-party verification from an accredited source, but you should know that there are many companies, including your competitors, who are ‘leaning forward’ and spending billions with us without that measurement.’ At that moment, the image of my dad popped into my mind saying, ‘If all of your friends jumped off of a cliff, would you jump too?’.

For its part, P&G is fully endorsing the Media Rating Council viewability standards for digital media. These define display ad impressions as “viewable” if at least 50% of pixels are on-screen for at least one second and video as viewable if at least 50% of the player is on-screen for at least two seconds. It now expects all of its providers to adopt the same standards. Pritchard declared:

Time is up. We will no longer tolerate the ridiculous complexity of different viewability standards.

That’s a message that’s likely to be heard more and more often, according to Randall Rothenberg, CEO of the Interactive Advertising Bureau:

By putting its money on the line for standards compliance, Procter & Gamble launched a shot across the bow of entire marketing-media ecosystem. JPMorgan Chase doing a quality review of all its sites and eliminating 98% of its publishing partners is an equally industry-shaking move.

Together, these giant brands are saying the digital advertising supply chain isn’t too complex for the average marketer to understand. They are saying that brand safety is a prerequisite for advertising that drives growth, and everybody needs to comply – or else. They are saying that industry associations and the work we do bringing companies together to agree on the standards and practices that should and must bind us matter. I have no doubt that P&G and JP Morgan Chase will be followed by a wave of big brands taking similar actions to secure the digital industry supply chain on behalf of brand and consumer safety

Rothenberg has no time for those who are in denial:

Critics already are caviling that new demands for quality will definitively lead to higher advertising prices in digital media. Well, of course they will – for the same reason that food in supermarkets costs more than food that fell off trucks. There is no such thing as a free lunch – unless you want to risk botulism.

Others fret that one of the glories of the Internet – the long tail of small specialty sites that generate so much valuable niche news, entertainment, opinion, and services – will be disenfranchised as marketers start limiting their programmatic buys to pre-qualified lists of publishers. To which I say: I have little doubt there are a hell of lot of long tail sites that made JPMorgan Chase’s cut from 400,000 to 5,000.

Besides, even the smallest hot dog pushcart has to follow the city’s health code.

And finally, in no other industry on earth do retailers put goods on their shelves before checking that they’re safe for human consumption. Wal-Mart doesn’t do it, Kroger’s doesn’t do it, and we – the retailers of ideas, journalism, entertainment, and ads – shouldn’t do it either.

My take

The IAB CEO asks whether we’re in the throes of a revolution. I’d rather describe it as a counter-revolution. In analyst call after analyst call, companies cheerily announce how much they’re ramping up their digital marketing and ad spend, without ever disclosing much detail about what kind of return they’re seeing on this. Clearly digital advertising isn’t going to go away and social media platforms in particular are going to carry on seeing growth. But if major advertisers are finally ready to call digital providers to account, that can only benefit the long-term future of the industry.

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source: diginomica

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