The $6 Billion Digital Advertising Dilemma

Zug, Switzerland, September 15, 2015 (Newswire.com) - Digital advertising was once touted as the holy grail of marketing because it was dynamic, targeted and easily measurable – therefore quantifiable. Nearly half of marketers plan to boost their investments in digital channels this year, reports Forrester Research, and 43% of respondents said they are still experimenting with digital marketing and do not yet know what works.

This type of advertising is supposed to offer a determinate return on investment. However, Google reported last year that over 56% of ads served were not measured as viewable by humans.

There are other problems with the current digital advertising ecosystem:

·         25% of the video ad views were fraudulent as a result of software

·         61.5% of web traffic is not human according to the bot-trackers at Incapsula

·         Over half the ads that advertisers paid for, technically appeared, but weren't viewable

So what does this mean? This means that there was at least $6 billion wasted ad spending this year.

In a recent article in VentureBeat, Jim Spanfeller, the ex-CEO of Forbes.com and former publisher of Yahoo Internet Life discusses how advertisers are paying $10 per thousand impressions while publishers may only get a dollar. On ad exchanges, there is no control over who is on the exchanges. Sellers do not know who is buying the ads space and purchasers are unaware of the actual impressions that they are purchasing. There is a level of anonymity that violates the transparency that exchanges promise.

According to Guy Phillipson, of the Internet Advertising Bureau (IAB) UK's chief executive office, "The increasing role of data and automated technologies in the online ad trading process means ad verification – be it viewability, ad fraud or brand safety – and privacy, has rightly come under increasing scrutiny.”

Digiday featured a story about a digital advertising campaign in which Kraft used third-party data to target female consumers. After the campaign had run, it was discovered that the data overlay was 50 percent accurate. The article went so far as to say that digital advertising has a serious problem and that companies be “better off just throwing darts.”

This has brands and advertisers questioning whether or not digital ads are as effective as they were once thought to be.

The reality is that they have a right to be concerned about their investment in digital ads. The problem is not with digital ads themselves - but where you acquire the ads. Ad exchanges offer the ability to purchase and sell media advertising inventory, with pricing determined through bidding. This enables easier buying and selling of ad space because it covers a variety of sites at once rather than having to contract with one at a time. In these types of exchanges, publishers and advertisers alike are suffering the consequences.

Thankfully, there is a solution to these exchanges that offer many unknowns to those who use them.

There is the option of buying premium publisher ad inventory. This solves the problem of opacity with the exchange system, offering the transparency that is necessary when purchasing and selling ads. Premium publishers also provide opportunities to deal with ad traffic fraud and often provide the guarantee of viewable ads. As Spanfeller tells us, the premium approach is the way to go because knowing whom you are purchasing from can solve up to 80% of the current issues. These private marketplaces are moving forward in the right direction of accountability and transparency.

When brands and companies are looking for digital advertising, they need to make sure that they are aware of exactly what they are purchasing before investing their marketing budget in this channel. The return on investment may not be what they expect as a result of the ongoing concerns with bots, fraud, data and security issues. Marketers should carefully weigh their options, and consider that it could be wiser to stick with the private marketplaces that offer more transparency during this process. There is no quick fix for problems plaguing the digital advertising world, so successful companies will refocus their efforts on contextual marketing, customer experience, mobile engagement, and big data insights to win, serve, and retain customers.

About the Author

Bojan Jokic has been a disruptive force in the travel technology industry since 1997. 

Fueled by his passion for innovation, Bojan went on to build a market first b2b travel booking engine for a travel management company at age 29. By 39, Bojan was instrumental in creating Europe's first travel apps available on TV. Over the years, he has been the driving force behind multiple e-commerce solutions that are generating profitable revenues with millions of customers.

Bojan studied air travel and transportation engineering and holds an MBA. He currently resides in Switzerland and serves as CEO and co-founder of Epteca, an emerging technology company bringing unique 'smart selling' marketplace ecosystem capabilities to companies and brands worldwide.