💾 Archived View for gmi.noulin.net › mobileNews › 5955.gmi captured on 2022-06-11 at 21:23:51. Gemini links have been rewritten to link to archived content
⬅️ Previous capture (2021-12-03)
-=-=-=-=-=-=-
Worries about fraud and fragmentation may prompt a shake-out in the crowded
online-ad industry
Mar 26th 2016 | NEW YORK
THIS year, for the first time, advertisers in America may spend more online
than on television. Worldwide, online ads may surpass television in 2017,
predicts the forecasting unit of Interpublic, a giant ad agency. Digital
advertisers ambitions border on the divine. They are omnipresent, nestling
their ads in news sites, search results and Instagram feeds. They are
increasingly omniscient: no longer do advertisers know just general things
about you a worldly professional, say, with superb taste in journalism but they
target you, specifically. Omnipotence, however, is proving harder to achieve.
The industry has not so much a supply chain as a tangle. More than 2,500
companies are involved in the supply of digital ads, according to Luma
Partners, an investment bank. Marketers worry that their ads will linger unseen
in obscure slots or worse, be served to robots posing as human consumers.
Meanwhile millions of real ones, fed up with online ads, want to block them.
Among investors, enthusiasm for ad tech has waned. Digital advertising s woes
are not existential. Spending will continue to grow. But the current turmoil is
likely to reshape the industry.
Programmatic , or automated, buying and selling of ad slots was supposed to
make advertising online simpler, and in many ways it has. Advertisers bid for
space on a webpage that a consumer has just clicked on, based on cookies and
other tags that are tracking his online activities. The auction is held, and
the winning ad transmitted, within milliseconds. The idea is to help
publishers get the best price for their slots and advertisers the best return
on their investment.
The trading of online ad slots is as complex as it is fiendishly fast.
Thousands of firms jostle to analyse consumer data and buy, sell and monitor
ads. Middlemen repackage inventory (as ad slots are known in the business),
then sell it to other middlemen. An ad impression sold programmatically can
change hands 15 times before finally being bought by an advertiser, notes Peter
Stabler, an analyst at Wells Fargo, a bank. We have an immature supply chain
that is constantly evolving, says Randall Rothenberg of the Interactive
Advertising Bureau (IAB), which represents media and ad-tech firms. That brings
both innovation, he argues, and headaches.
Some problems are more easily fixed than others. In recent years the various
participants in the industry have bickered over viewability : webpages are
usually bigger than the screens they are viewed on, so if a reader sees only
part of an ad on his screen, for a fraction of a second, how much should the
advertiser pay? The Media Rating Council (MRC), which sets the rules for
audience measurement, now considers a display ad viewable if a consumer can
see half of it for at least one second. Videos must be seen for two seconds.
But some advertisers want more. GroupM, a buyer of ad slots on behalf of
consumer brands, considers an ad viewable only if the consumer can see all of
it. Consumers must play at least half a video with the sound on. The MRC is
still working on standards for ads on mobile phones.
On the whole, however, the debate over viewability points to online advertising
s promise, not its failings. It is impossible to know if a television viewer
has gone to the bathroom during the commercials or if a Vogue reader skips a
particular page of ads. Online, marketers have at least some means of tracking
who saw what, the better to understand which ads work.
Fraud is a peskier problem. Bad actors hide within advertising s supply chain,
unleashing robots to see ads and suck money from advertisers. The subtly
titled Trustworthy Accountability Group, backed by the industry s trade
associations, wants to create a registry of vetted online-ad firms and use
special identifiers to track which firms get paid for each impression, the
better to trace problems as they arise. AppNexus, which runs a big ad exchange,
filters out ad slots that seem to be attracting lots of fake readers , offers
rebates to advertisers which detect bot fraud and has cut the number of ad
impressions sold by middlemen. Such steps will lower fraud, not banish it. The
Association of National Advertisers reckons fake impressions will cost its
members more than $7 billion this year.
An even thornier challenge is the growing number of consumers blocking ads
altogether (see chart). Some consider it creepy to be watched so closely.
Third-party tags can be messengers for malware. Ads drain smartphones
batteries and their users data plans. Tags to track viewability and bots make
such things worse.
Little wonder, then, that AdBlock Plus, a popular tool, has been downloaded
more than 500m times. The company keeps a list of ads it deems tolerable, and
thus lets through. Sites with lots of ads, such as Google, pay a fee to be on
the list. AdBlock Plus says this is proper, as the paying firms must still
offer palatable ads. Critics, including the IAB, call it extortion.
Ad-blockers are most troubling for publishers, which rely on advertising
revenue. But brands have reason to fret, too, if they cannot reach consumers
online. The IAB is urging them to make advertisements less irksome, so that
consumers are less inclined to block them. The Washington Post is one of many
companies hoping that native ads, which mimic the paper s editorial style,
will be less annoying. But the company is also speeding page-load times and
testing various dummy ads to see which types consumers dislike least. As these
experiments continue, ad-blocking will impose broad costs on publishers,
estimated by Wells Fargo at $4.6 billion in America and $12.5 billion globally
this year.
A secular shift
All these problems may just be inevitable teething troubles. We haven t had
this kind of transformation since television came in the late 40s and early
50s, says Marc Pritchard, the marketing boss at Procter & Gamble, the world s
largest advertiser. Grappling with these challenges, however, may spur a shift
in the industry s structure. There will always be startups, particularly
because technology changes so quickly. But on the whole, power is likely to
move to fewer, larger companies.
Rob Norman, GroupM s chief digital officer, expects advertisers to continue
shifting towards large platforms such as Google and Facebook, and a select
group of firms that agree to stricter standards on viewability. Brands concern
about fraud and fragmentation may help simplify the supply chain. Some brand
owners, such as Procter & Gamble, control their own programmatic buying.
Others are pruning the number of other firms they deal with. We would always
prefer fewer partners, says Jamie Moldafsky, chief marketing officer for Wells
Fargo. A variety of larger companies such as Yahoo, Oracle and Salesforce have
bought up smaller firms, the better to offer themselves as one-stop shops to
advertisers.
The best positioned firms, however, are Google and Facebook. Terence Kawaja,
Luma s founder, notes that the two companies have more than half of the
mobile-advertising market, a share he expects to rise. Thanks to logins, each
can track consumers from their computers to their phones and back again. Each
has a broad, ever-expanding suite of services. On March 15th Google unveiled
new tools, including one to manage data on customers.
Rivals are worried. TubeMogul, a provider of ad-buying software, has a new
advertising campaign claiming that Google has excessive power. This is in part
to defend its own interests TubeMogul s criticisms include Google s decision to
limit the ways by which brands can buy ad space on its YouTube video service.
But it is not unreasonable to worry that the pressures to rationalise the
fragmented online-ad industry might eventually push it too far in the other
direction.