The old John Wanamaker complaint about wasting half his ad budget but not knowing which half now also applies to digital: Marketers increasingly complain about burning money on videos that no one sees, display ads that target shoppers post-purchase, and clicks made by adbots.
Indeed, about half of the marketers who participated in a recent survey from the Association of National Advertisers (ANA) and Forrester Research said they are concerned about whether they are getting what they pay for when buying digital media. And that concern is rising: The number of marketers who said they worry about the transparency of their dealings with their media buying agency went up 42 percent over the past year as the use of programmatic buying took off. The biggest worries cited in the ANA survey included differences between served and viewed impressions, ad placement concerns, and lack of visibility about the data used for targeting ads.
“One of my favorite lines in the past years is: ‘You don’t know what you don’t know,’” said Bill Duggan, group executive VP of the ANA, in an interview with CMO.com. “I’ve heard the John Wanamaker line a few hundred times, and I’m tired of hearing it ... It was about 100 years ago, but it’s probably truer now than it was.”
Although the marketing profession has been aware of the waste for some time, the concern is now peaking, Duggan said. Recent articles about ad waste and fraud in The New York Times and The Wall Street Journal are putting it in the mainstream public’s view.
The issue gets to the heart of efficiency and ROI, added Ari Jacoby, CEO of advertising firm Solve Media. Ad fraud has taken on this new urgency because it has begun affecting brand spending, instead of just direct-response budgets, he told CMO.com.
In the past, direct-response advertisers would price in a margin of waste into below-the-line campaigns, Jacoby explained. As long as the marketer was getting a lead and converting it at a price that was still profitable, the math worked, he said.
“The reason for this conflagration of chatter around bot fraud today is because heavier and heavier brand spends are going online and mobile,” he said.
Industry insiders complain that page views are being inflated by nonhuman adbots, video ads are popping up in places where they were not meant to play, and ad retargeting is out of control. Some of it is ad fraud, but a large portion is also inattention among media agencies and marketers who take their eyes off of the ball in what has become a very crowded online market, with many layers of intermediaries between the medium and the marketer.
“There’s a bunch of stuff going on--some of it outright fraud, some of it poor planning, and some of it poor execution,” Jacoby said.
Ad Fraud: Easier Than Drugs Or Guns
Suspicious online activity--most likely bots clicking around the Web--shot up 40 percent in the U.S. by the end of 2013, according to a quarterly survey by Solve Media. Nearly 61 percent of online activity in the fourth quarter was suspicious, as was 25 percent of mobile activity. With online ad spending estimated to top $18 billion next year, that means about $10 billion in spending could be wasted in the U.S. alone.
Adbots made up approximately 32 percent of global online activity, Jacoby said. Publishers are being victimized by bots and are losing the trust of advertisers; much of it is criminal activity by global organized crime, he said.
“It’s much easier to steal ad budgets than move drugs and guns,” Jacoby said.
Another trouble spot shows up in the booming area of online video, where advertising budgets have expanded exponentially with the explosive audience growth, as seen in the recently concluded Digital NewFront marketplace.
Anthony Rushton, CEO of Telemetry, a digital forensic media company, estimates that two out of three online video ads are neither seen nor heard by humans. Not enough online video advertising inventory is available to accommodate the rising tide of online ads. That means spots meant for preroll video are being shrunk to play in banner ads or jammed in to play simultaneously with other ads in the same page; they play in the background on mute, and consumers just as quickly shut them off, unseen.
“You’re buying silent, invisible GRPs,” Rushton told CMO.com. The nut of the problem is that a finite amount of premium preroll inventory is available for marketers, but the networks and agencies don’t want to accept that reality, he explained.
“There’s only so much good content out there,” Rushton said, “[but] the increasing demand for online video says the agencies can’t say no to a booking, and neither can the vendors ... but you never hear those words.”
Another area where the boom has led to waste is in retargeting, which pushes specific ads based on online users’ behavior. Insiders complain that, in the rush to personalize and target ads online, retargeting have may gone off the rails. Consumers are often served display and search ads that don’t match their needs, but instead are reacting to last clicks. It’s a case of skating to where the puck was, instead of where it will be, as Wayne Gretzky suggested.
Andrew Shebbeare, founding partner and global innovation director at Essence, said that based on what he has modeled among the digital agency’s clients, he estimates 20 percent to 75 percent of retargeting spend goes to waste. Some of it targets consumers who have already bought the product they searched for or were already going to buy it, he explained to CMO.com.
“Retargeting is taking credit for something that would have happened anyway,” Shebbeare said. Some retargeting ends up alienating customers instead because programs keep serving the same ad over and over—due to the wrong assumption that increasing frequency will make it more effective.
“A lot of the science of remarketing is knowing when to give up,” Shebbeare said. “It boils down to the onus being on the marketers to be smarter, not pummel people with the same offer. Responsible remarketing is being respectful of customers and measuring ... not based on last-click attribution.”
Marketers need to cross-match both transactional data—where searches are going—with behavioral data to create predictive models, or else they are wasting a large portion of their advertising dollars, experts have said. In a recent interview with CMO.com, Gurval Caer, chief innovation and marketing officer at Wunderman, noted how companies such as Amazon now can use more than a dozen data points to serve recommendations to consumers that predict what they will want next.
Another example is Expedia, which doesn’t want to serve up recommendations for bachelor party trips to someone planning a romantic weekend, said Andrew Warner, senior marketing director, EMEA. Speaking at a recent conference sponsored by The Economist, he explained that the search engine tracks the locations users search, along with the time frames and other associated parameters, to serve up ads that are relevant to where the user is traveling now (if using the mobile site) or planning to go next.
Improving retargeting takes a mix of analytical tools to understand the role remarketing plays to the brand and the creativity to come up with better message, Shebbeare said. The tools are around, but they are sometimes hamstrung by the size of the advertiser because a small transaction volume produces fewer data points to target efficiently, he said.
“There’s a lack of training, knowledge, and tools,” he said. “Ads that are really dynamic are hard, unless you’re an Amazon or an Expedia,”
‘An Alphabet Soup Of Intermediaries’
The issue of waste is compounded by the many intermediaries that are involved in media buying today. The structures create an obstacle for marketers to have a real view of what they are getting, insiders said.
“Back in the old days, there was the medium, the advertiser, and the agency was in between,” ANA’s Duggan said. “These days there are so many intermediaries in the real world between the advertiser and the consumer—DSPs and DMPs and this alphabet soup of intermediaries ... It’s in those intermediaries that these fraudsters operate.”
While the talk about growing ad waste runs parallel to conversations about the growth of programmatic buying, it’s not necessarily a cause-and-effect relationship, said Duggan and other experts.
“Programmatic gets a bad rap for being a petri dish of bot activity. It often is, but it is no worse, necessarily, than its contributing parts,” Solve Media’s Jacoby said.
Because of the sharp growth of online video, agencies are brokering ad buys with vendors they haven’t vetted, Telemetry’s Rushton said. “You have a systematic process of false promises,” he said.
The sell side, both agencies and networks, needs to own up to the shortcomings of the market and learn to say no to media buys that can’t be fulfilled with premium inventory, Rushton said. At the same time, marketers need to demand more thorough audits and clearer metrics, and have them put in writing. Rushton said insertion orders need to clearly spell out performance indicators, such as making sure preroll video is not put in banner ads and a minimum size requirement.
In other words, marketers, who are under the gun to prove ROI, will have to become proactive and begin demanding tougher audits, more transparency in media buys, and more oversight and quality control for placements and relevant metrics, insiders said.
“There’s no judge and jury here quite like the checkbook,” Jacoby said. “We’re starting to see marketers saying, ‘I’m paying you for a good and wholesome audience that’s made of real humans. That’s what I expect.’”
Jacoby said Solve works with more than 10,000 publishers to police almost 200,000 Web sites against bot traffic. “There are real gains being made in the space,” he said, but added, “it’s for sure a cat-and-mouse game.”
Both the ANA and the Internet Advertising Bureau have been targeting the issue of ad waste and fraud. Duggan said the ANA plans to announce some new initiatives in the next month.
“If you ask any competent marketers if they are looking for an efficient campaign that works, 10 out of 10 will say yes,” Jacoby said. “They’re increasingly more excited to weed out inefficiencies and get more bang for their buck.”