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"“Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”
John Wanamaker (1838-1922)
Marketing Pioneer and Department Store TycoonInitially, the digital advertising revolution (beginning in the late 1990s) tantalized us with a promise to resolve Wanamaker’s dilemma. Waste would be eliminated. Marketing return on investment (“ROI”) would skyrocket. We were going to be living in a new era of marketing and advertising powered by data. For the first time ever, marketers would be able to precisely measure the impact of their advertising campaigns.
Fast forward about 20 years to today and we’re not quite there. Yes, data has revolutionized how we reach consumers, how we buy advertising, and how we track performance. But a host of problems have emerged alongside these capabilities that have many marketers still fumbling around in the dark.
So what happened?
The Industry Answered With Scale, But Not Transparency
Programmatic ad buying happened.
Programmatic ad buying simply means using technology to run advertising campaigns in an automated fashion. You see, reaching consumers on all of the possible places they could be – across thousands if not millions of websites and apps – is impossible to do via direct, manual transactions between buyers and sellers. Marketers needed a way to automate this process so they could place ads all over the Internet, wherever their target consumer might be, quickly and efficiently. Programmatic ad buying answered that need.
If you’ve ever ventured onto a website or opened a mobile app, then it is almost guaranteed you’ve come across a programmatically served ad. They look like any other digital display ad, often appearing as banners at the top or bottom of a site, or perhaps a popup on your favorite app.
In 2017, US programmatic ad spending topped out at $32.56 billion, which was 78% of all digital display ad spending. By 2019, programmatic is expected to reach $45.72 billion, meaning “more than four in five US digital display dollars will flow via automated means.”
It’s a big deal and it’s only going to get bigger. So what’s the problem?
The problem is that in order to accomplish programmatic advertising – in order to traffic an ad campaign across thousands of apps and websites simultaneously – marketers need to work with a lot of different technologies. We’re talking about ad servers, DSPs, exchanges, ad networks, DMPs, to name just a few.
“The end result is a measurement ecosystem that is wholly opaque and inconsistent.”
If the whole point of digital advertising was to allow marketers to use data to power their decisions, eliminate waste, and get the best return on investment, then working with black boxes can only be described as counterintuitive.
The Black Box Conundrum
As an ad campaign is passed from black box to black box on its path to completion, the corresponding campaign data that’s generated is owned and operated by each centralized system. Marketers rarely have direct access to this source-level data and instead must rely on the reporting and measurement practices of each vendor.
These practices vary wildly.
Some vendors might measure campaign performance one way. Others might measure it in another way. Either way, these vendors are not opening the door to allow their customers to verify what is actually happening.
The end result is a measurement ecosystem that is wholly opaque and inconsistent. Data discrepancies between advertisers, publishers, and tech vendors are common. Billing reconciliation can take upwards of 5-10 days per month and cost hundreds of people hours. And if you’re a marketer trying to get a comprehensive view of your ad spending in order to determine ROI – well you can forget about it.
Transparency is nowhere to be found.
And this is just half of the issue. It may even be just the tip of the iceberg.
You see, when there’s isn’t transparency in an industry worth $225 billion dollars, something very predictable happens. Something bad.
Fraud. The Dark Underbelly of the Ad World
Advertising fraud cost marketers $16.4 billion globally in 2017 – which to put in perspective exceeds the annual GDP of a few entire countries. It comes in all shapes and sizes – like click fraud or domain spoofing to name a few – and as much as marketers try to evolve to defeat it, ad fraud evolves with them. It’s an arms race – a war of attrition – with no clear end in sight. If not appropriately handled, the global cost of ad fraud could balloon to $50 billion over the next 10 years.
We’re at a tipping point. Marketers have more data, tools, and technology than ever before to measure the impact of their advertising campaigns. But issues with data discrepancies, transparency, and fraud continue to leave them handicapped.
In an era where marketers are under more pressure than ever to prove that the money they spend is directly responsible for revenue, this is a death sentence.
With nearly $225 billion dollars in play, marketers can’t afford to operate in a world without transparency and trust for much longer. The solution is and always has been predicated on access to one unified set of data that has been verified, that’s free of fraud, and that allows marketers to properly evaluate their spend.
Indeed, this was the original promise of digital advertising.
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