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Tags containing: "brand safety"

Advertising | Industry-Research

What marketers need to know about the impact of negative digital advertising experiences on their brands

Programmatic advertising will account for 80% of all digital display advertising in 2017. However, this technology-driven ad buying process has seemingly created as many problems at it’s solved, in the forms of both wasted ad spend and brand risk exposure. In response, CMOs are taking steps to protect and safeguard their brands by reducing spend in certain digital channels until better controls and compliance measures are in place.

With all of the talk over the past couple of years about ad fraud and compromised viewability rates, we as an industry have sort of overlooked the implications of online advertisements that are seen, but in sub-optimal settings. That is to say: How are consumer behaviors impacted when they interact with ads in an unseemly or unexpected context? (Example: a banner ad layered over a hate group recruiting video on YouTube.) Marketers need to understand the impact of these negative advertising experiences.

This issue, to be sure, has been a persistent problem for advertisers since the early days of the business. One needs to look no further than Harry Crane (Rich Sommer) of Mad Men’s Sterling Cooper agency. They launched the firm’s new television department and charged it with monitoring a client’s ad buy just as the medium took off. Fans of the show quickly learned what media buyers the world over already know: Advertisers do not appreciate their promotions running anywhere but in the slots they’ve approved.

Managing this challenge across the digital channel has been a problem since the first banner ad was sold in the early 2000s. And it has only worsened in the wake of programmatic. To date, this issue has evaded intense scrutiny because the digital channel is some much more cost effective than its offline counterparts. But, as advertising economics continue to evolve and companies become smarter about managing a multi-channel environment, brand safety in the digital channel is gaining steam.

Leading this movement’s charge are private companies such as Integral Ad Science and industry organizations like the Association of National Advertisers (ANA) and and CMO Council. Indeed, digital marketing auditing is emerging as a cottage industry unto itself as advertisers are becoming more aware of inefficiencies in the channel. 

To that end, this month, the CMO Council released a report titled “How Brands Annoy Fans: The Impact of Negative Advertising Experiences,” which explains the steep consequences associated with ads running in undesirable places.

Here’s what you need to know about the findings:
  • Almost half of survey respondents say they would consider defecting from brands who fail to control where their ads appear. This suggests that marketers should be “deeply concerned” over the integrity of content environments.
  • 66% of those surveyed say their respect for brands decreases when they encounter ads near hateful, inappropriate, or distressing content.
  • Where an ad runs is just as important as its message. And consumers seem less likely to give their preferred brands “a pass” for appearing in inappropriate environments or next to jarring content.
  • 85% of those surveyed expressed some level of concern about how easily they are directed or redirected to offensive or objectionable sites.
  • According to publishers, consumers are actively contacting them to ask if their properties endorse certain content, given their stated values.
  • With increasing fervor, consumers are demanding that brands respect their time and their messages appear in environments they trust.

The bottom line: Context matters. All parties in the digital advertising ecosystem must ensure that great advertising experiences are delivered in equally excellent environments.

Tim Bourgeois (@ChiefDigOfficer) is a partner at East Coast Catalyst, a Boston-based digital consulting companyspecializing in strategic roadmaps, digital marketing audits, and online marketing optimization programs.

Perspectives

Direct buys and non-blind programmatic need context to solve brand safety

The dust has largely settled after March’s brand safety scandal – however the problem hasn’t gone away. Although some brands are reported to have returned to Google advertising by May, others – including Pepsi, Tesco, and Marks & Spencer – were still waiting for solid guarantees from Google over and above what has already been promised.

The changes Google says it has already taken to improve brand safety haven’t been bedded in, aren’t sufficient for some brands, and still lack a vital component – third party verification. Google has promised to deliver such verification in the future, but before it’s implemented, marketers refusing to risk their brand reputation are opting for ad providers who can make promises on where their ads will appear as well as delivering third party verified monitoring and reporting on where ad creative actually did appear.

Third party monitoring, reporting and verification is imperative, of course, but it can really only help brands, publishers and ad tech companies to react to any concerning ad placement. Many brands would prefer a zero tolerance for any ad misplacement rather than an acceptance that misplacement will happen from time to time. Those marketers are likely to be the ones who focus their ad buying and planning on ad campaigns bought directly from ad inventory providers or, at very least, non-blind programmatic ad campaigns.

An incredibly insightful analysis by MediaPost’s Sean Hargrave identified this very issue. He suggested a correlation between the mere one in four media buyers who feel informed of their ad suppliers’ brand safety measures and the 28% who say they know where all their ads are going. He recognized quite reasonably that these buyers most likely focus on direct, non-blind programmatic buys. That means that they receive assurances of the quality of the ads. However, lumping blame on the blind buys alone fails to consider how some of the most sophisticated targeting technologies are the contemporary causes of even more catastrophically compromised ad placement.

Consider the Context

In fact, a Financial Times’ report on the aftermath of the scandal serves as a perfect case study. Their journalists’ research identified ads for Huawei, wix and even the Advertising Week Europe event displayed before a YouTube video from a UK-banned preacher. My strong hunch is that the European technology correspondent was researching those brands online for that article, other articles or other valid reasons, and the ads were behaviourally or re-targeted.

This one instance shows how dangerous it is for ad campaigns to rely on behaviourally and retargeting technology in isolation. They can be great at targeting brands’ biggest and established fans, but if those very consumers are presented with targeted ads for their favorite brands whilst browsing shocking content – which they are more likely to do because they fear it than agreement with it – then the damage is huge. Yes, that consumer might well be the right fit for the brand’s latest product. But that won’t matter if they are connecting within the most brand-damaging environment and state-of-mind. Here, the fundamental failure is one of context. Ad campaigns that do not include analysis and targeting of ad campaigns to the context of the content will always be at far higher risk of damaging their brand.

Need to Know

Being transparent about the publications which display campaigns’ ad creative, and backing that up with brand safety technology as well as independent third-party monitoring are essential qualities of any decent ad supplier. Yet even the most premium, brand safe media titles can carry compromising content. They have to. There are bad things in the world that people have a right to know. That’s why assessment of context – both its safety and relevance to campaigns – must be at a granular level, assessing not just the articles, but the keywords and phrases used within those articles.

Let’s be clear: categorization of content into buckets for advertisers to choose where to advertise is not contextual targeting. Content categorization alone is wildly insufficient, especially when users categorize their own content. Extremists don’t consider themselves “extremists”, so they might categorize revolting content as “current affairs”, “culture”, or “sex and relationships”. True contextual targeting understands the actual words used to identify content as both relevant and brand safe for advertisers.

Get the Signals Straight

Incorporating contextual does not mean abandoning other forms of targeting, such as behaviorally, demographic, or re-targeting, even when purchasing ads programmatically. There’s great ad tech available programmatically that can combine contextual signals with audience data to target campaigns to relevant consumers in brand safe environments. That said, pure reliance on computers to assess both audience and contextual appropriateness for ads will always be more risky than involving humans, even with the introduction of artificial intelligence. Ad buyers and planners know this, as nearly three-quarters of them (74.2%) say it’s more difficult to ensure brand safe environments when buying programmatically on open exchanges.

Hence managing brand safety must involve human beings. Computers just cannot match our abilities to identify the contextual appropriateness and relevance of content for advertisers. People are needed to vet publishers’ operations and content to ensure they meet advertisers’ stated quality standards. They’re needed to monitor and react to the news agenda which may introduce brand damaging content into campaigns. People are needed to operate the targeting and brand safety tech and to make sure things are going right for advertisers, publishers and consumers. Of course some ad providers rely on consumers rather than professionals to perform such functions. Not only is that an abdication of responsibility, but the horse has bolted by that point.

Doug Stevenson is the Co-CEO of contextual advertising platform Vibrant Media, and based in San Francisco. As the co-founder of Vibrant, Doug has co-led the company’s expansion with Craig Gooding from when the company began operations in 2000. Doug was awarded ‘Entrepreneur of the Year’ from Ernst and Young and was a Distinguished Honoree for the International Business Awards, Executive of the Year in North America. Prior to founding Vibrant, Doug worked at AOL Europe as Head of E-commerce and has 25 years of publishing, media and Internet experience with AOL, CompuServe, Netscape, Haymarket Publishing, and BBC Magazines/Redwood Publishing.

Advertising | Perspectives

Advertising’s flight to trusted partners

Fun fact: 96% of TSA Precheck passengers wait less than five minutes in line. This innovation is no less than a modern marvel created to save valuable time during an unprecedented increase in security. Meanwhile travelers “unknown” to TSA are relegated to the slow lane removing their shoes, pulling out liquids and laptops, and assuming the position to be body-scanned.

Now imagine for a moment that precheck has been eliminated. Every. Single. Passenger has to be hand-frisked, one at a time in a Single. File. Line. It would rip out the remaining thread of joy in air travel. You would scream. I would scream. There would be a collective cry of despair from travelers across America.

That’s what we see happening in our digital advertising industry today.

“Brand safety” is the latest float in the parade of ad tech problems. I know we’ve seen it before but it’s back with a vengeance. Unfortunately, we’re also seeing a rerun of ad tech firms trotting out “brand safety” filters. Some have even suggested that their tech can work like an ad blocker to prevent the advertisement from loading in an “unsafe environment.” Oh dear. This baggage needs to be hand-searched for restricted materials. Please step out of the line and join the security officer for a reality check.

The security firm White Ops stated in its 2015 Bot Benchmark Study, which analyzed fraud, that the real answers to advertising problems lie in the economics rather than the technology. We thought this was a fairly astute perspective, particularly from technology people.

Advertisers don’t need another layer of technology. Instead, they need transparency so that they know where their ads and money are going. This same approach can apply to solving for nearly every issue in digital advertising. Spend your advertising investments with publishers you know, and you’ll eliminate most of your issues.

Just a few weeks ago, JP Morgan Chase shone a sparkle of sunlight across our beleaguered industry by doing something so simple that there is no way anyone in the Silicon Valley would propose it. They had humans (remember them?) evaluate publishers for their campaign. These people whittled down the targeted sites on which their ads appeared from 400,000 to less than 5,000. The campaign had the same results. I repeat: same results.

Rather than treat every single ad impression as if it’s a random collection of pixels on an unfamiliar page of an unknown website, marketers who seek out trusted publishers already have the advantage of knowing their ads are likely to be viewed by an engaged audience in clean, well-lit environments. By this so-called “whitelisting” of sites, they’re undertaking the equivalent of the “Known Traveler” program: I know your site because it has been carefully evaluated. We can accelerate the process and I won’t need to slow you down with a pat down. In fact, we can speed you right through with a smile on your face.

I sense a movement from marketers (and audiences) towards trusted publishers. In this brighter future, viewability vendors, IVT vendors, and brand safety vendors are all unnecessary when working with quality publishers like the members of DCN. Instead, advertisers can confidently say “I know them and I don’t need to waste my time and money with layers of security measures that will hinder the experience.”

Keep your laptop in the bag. No need to remove your belt, jacket, or shoes. Let’s make this trip fast and fabulous.

Advertising | Perspectives

Did angry advertisers really boycott YouTube? The answer may surprise you.

In March this year, a few big national brands were reported to have been found running adjacent to hate speech and even videos promoting terrorism on YouTube in the UK. This triggered a cascade of negative press with articles titled “YouTube is facing a full-scale advertising boycott over hate speech” (The Verge) or “YouTube boycott over extremist ads slams shares” (USA Today).

In the immediate aftermath on March 23 Google’s stock dropped 4% and some top advertisers stated that they would stop advertising on YouTube.

Specifically, there were eight brands frequently mentioned in the press as stopping YouTube advertising: Starbucks, Dish, Pepsi, GM, AT&T, Johnson & Johnson and Walmart. With all the fiery press commentary (which I read with more than a hint of schadenfreude), I was curious to see if the list of brands that said they were boycotting YouTube actually went through with it. Some did, while others did not.

Here’s what we found.
  • Starbucks, Dish, and Pepsi stopped buying abruptly in April.
  • GM, J&J, and Walmart continued to advertise on YouTube.
  • We found an increased number of national brands on You Tube Preferred channels, which aggregates YouTube’s top content, such as Michelle Phan and Good Mythical Morning. There was a definite flight to quality.
  • GM’s ads moved to the YouTube homepage, where there are absolutely no editorial adjacency concerns.
  • J&J said that they “paused” in late-March, but in April, they were back up-and-running with ads. They even announced a new partnership with YouTube during New Fronts.

YouTube quickly acted in order to retain business by shifting national advertisers into the safest inventory. GM and Walmart are clear examples of this. As a result, only a handful of brands that were considering defecting actually stopped buying. And in the six weeks since the original controversy, Google reported strong quarterly results, and the stock is up more than $100.

The experience does however speak to how significant brand safety is becoming. In fact, during this year’s New Fronts, many publishers and broadcasters emphasized that their strength is the sort of brand-safety you only get from platforms that proudly wear the name “media company” and, as such, have robust editorial oversight.

Todd Krizelman (@ToddKrizelman ) is Co-Founder and CEO of MediaRadar (@MediaRadar). Growing up near the epicenter of technological innovation in Palo Alto, California encouraged him to become an entrepreneur and co-found of one of the world’s first social media sites, theGlobe.com. Krizelman also held leadership positions at Bertelsmann’s Gruner + Jahr and Random House. With his expertise in ad sales and innovation, Krizelman joined veteran web architect, Jesse Keller, to found MediaRadar in 2007.

Advertising | Industry-Research | Perspectives

It’s time to take action against ad fraud

The digital ad fraud controversy – which encompasses everything from fake clicks to compromised viewability and increased brand risk – has been an issue for marketers for several years now. But it isn’t something marketers want to spend too much time thinking about, and for good reason. Wasted advertising dollars, unsavory marketing tactics, and a legitimate degree of helplessness to fix the issue makes for unpleasant conversations.

But every few months, with remarkable regularity, a fresh incident or research study re-introduces the topic into the digital marketing discussion. This spawns a stream of articles in the mainstream business press, putting marketers back on the hot seat. The most recent development involved ads running on YouTube next to extremist videos, which lead to coverage such as “AT&T, Verizon Pull Ads From Google Over ‘Hate’ Videos” from the Wall Street Journal, and “Google Tries to Stop Ads From Appearing Next to Hate Speech” from the New York Times.

All the while, specialists continue to monitor industry activity and hone tactics aimed at helping advertisers minimize the impact of fraud. IAS is one such company. Twice a year, they publish an assessment that tracks digital media quality and the effectiveness of best practice techniques to combat fraud.

Here’s what you need to know from the research:
  • “It’s Time For Action.” Or so says Marc Pritchard, the Chief Brand Officer at P&G. The second half of 2016 brought a host of media quality issues to the forefront of marketers’ minds with fake news, extremist sites, and “Methbot” dominating the headlines. Transparency and trust will continue to be key issues in digital advertising this year.
  • Proactive Management Works. IAS research showed significant performance variation between campaigns using ad fraud prevention (1.6% fraud incidence) and those that did not (13.2%).
  • Timing Matters. The risk of ad fraud increases in the late hours of the night, while people are sleeping. Ad fraud begins to climb at 12:00 a.m., peaks at 4:00 a.m., then declines slowly till it reaches a steady level at 8:00 a.m. and throughout the day.
  • Brand Safety Improved, But Remains a Focus. The volume of brand safety infractions decreased compared to H1 2016, from 9.5% to 8.6% of impressions on all buy types flagged on objectionable content in H2. However, with the advent of fake news and the increase in violent and extremist content, brand safety remains a critical issue for advertisers.
  • Video Viewability Increased; May Invite More Fraudsters.  Considered more effective than display advertising, video ads continue to grow in demand. As such, video CPMs and subsequent expectations of quality are high. Over a sample of six billion impressions, video viewability showed significant improvement compared to H1, increasing from 40.0% overall to 58.2%, and outperformed desktop display viewability for the first time. Still, advertisers need to keep close watch on video campaigns as the higher CPMs make the medium more susceptible to fraudsters.

Tim Bourgeois (@ChiefDigOfficer) is a partner at East Coast Catalyst, a Boston-based digital consulting company specializing in strategic roadmaps, digital marketing audits, and online marketing optimization programs.

Advertising | Perspectives

Will humans make a comeback in the wake of the YouTube boycott?

Programmatic advertising, with its cheap and easy targeting of individuals based on their online browsing habits, has appealed to brands since its onset. Yet the risks, while always known, have never really come to the fore, until now. Advertisers have been up in arms over the realization that their ads were showing up alongside racist and extremist videos on YouTube and other sites, and essentially underwriting hate.

While automation has its upsides, this is a time for human intervention. That means brands making more efforts to find safe spaces curated by humans, and YouTube using more human engineering to help match brands to better content. Not to mention users making judgments on what it means when big brands support objectionable content (even if they don’t realize it).

An Unfolding Disaster

A ticktock of events, including a damning Times of London investigation and decisions by the Guardian, AT&T and Verizon to pull their advertising from YouTube’s “hate” videos, shows just how big this problem has become for Google and the industry. The advertiser boycotts have continued with Johnson & Johnson, PepsiCo, McDonalds and even Havas Media Group following suit.

Adweek commissioned the market research company Survata to survey daily YouTube video viewers in a weekend online poll about whether they deemed ads as endorsements of the content; the results were both worrisome and relieving, depending on how you viewed them. Thirty-six percent of the 502 respondents said yes, they do interpret ads as endorsements. But about half of respondents also said that this didn’t make them change their opinions about these brands.

Regardless of what audiences may actually think, investment firm Nomura Instinet estimated the advertiser boycott could have damaging effects on parent company Google, and cost the search giant as much as $750 million in revenue. Google and other firms, meanwhile, have countered back. Google is tip-toeing around whether the problem is as big as everyone says and feels, and RBC Capital Markets said in a research update that the part of Google’s business affected by the YouTube fiasco is technically only about 10 percent of the company’s revenues. And the $750 million is also less than one percent of Google’s projected sales for this year, which means Google might not take a huge hit if it reacts fast enough.

Meanwhile, Google has altered its rules for what videos can carry advertising, and invested research efforts into improved AI to better understand the context and sentiment of YouTube videos. Increased scrutiny on its public performance likely means it’ll invest in this even more.

The JPMorgan Chase Experiment

With Google being one of the world’s biggest platforms, it’s difficult for most brands to simply opt out and boycott completely. But larger firms are experimenting with ways to bypass total automation and use human judgment to find the coveted safe brand spaces.

Take JPMorgan Chase. The company told the New York Times that it has started whitelisting websites that run its ads via Google. Prompted by the realization that an ad for Chase’s private client services had appeared on a site called “Hillary 4 Prison,” it ran a 30-day test period in which an intern manually clicked through 12,000 websites where JPMorgan ads were appearing, to see whether they were being featured alongside objectionable content. The intern flagged about 7,000 ads that were appearing where the company would prefer them not to be.

Now, JPMorgan has arranged a “human-checked” list of 1,000 YouTube channels it has deemed safe for its ads to appear. And it has dropped the number of websites showing its ads from 400,000 to 5,000. So what did it learn from the test? Performance appeared to the be same, even though the ads were displayed on far fewer sites. Chase’s CMO Kristin Lemkau told the Times that whitelisting was becoming de rigeur now at the bank, and that “at some point, a human is going to take a look.”

New Skepticism About Automation

JPMorgan’s move into whitelisting, the YouTube controversy and advertiser boycotts are stirring larger conversations on the necessary evolution of the digital advertising industry. It’s not just that the technology is failing or not yet up to the standard of human editors, but that relying on programmatic advertising allows networks to “grade their own homework.” And this kind of blind advertising is bad for business.

Outsourcing monitoring to third-party auditors and in-house ad networks, which I previously wrote about, is a potential solution. But the issue is that programmatic has become a growing default that’s hard to slow down. Forrester Research said in a report that only 29 percent of marketers in 2016 took steps to whitelist websites for their ads. And some smaller brands simply can’t manage the resources to do that.

Hany Farid, a professor at Dartmouth and senior adviser to the Counter Extremism Project, has also said that Google, Facebook and other major companies ought to deploy more human editors to filter content — because the hype around AI is just that: hype.

But the bottom line is that human intervention is costly, and would be a paradigm shift for the way the advertising industry has evolved in recent years. It may be the way to go, but it’ll take some time for it to become just as automatic as programmatic.

Perspectives

A timeline of the YouTube brand safety debacle

The link between a positive sentiment around context and ad effectiveness has been established. And, though there’s not yet been definitive research on the subject, the reverse seems an intuitive given. Ads running in negative or unfavorable contexts would be less effective.

So, it might seem that the recent uproar around Google YouTube ad placement could be seen as a boon for premium publishers. But as has been well-documented, a lack of marketer trust in digital advertising is bad for the entire ecosystem, not simply the bad (or careless) actors. So it is with great interest that our industry has watched Google’s YouTube brand safety saga unfold.

Here are the highlights of how the story has developed so far:

March 16, 2017
March 17, 2017
March 21, 2017
March 22, 2017
March 23, 2017
March 24, 2017
March 25, 2017
March 26

FT | Advertisers seek Google discounts in video backlash

March 27, 2017
March 28, 2017
March 29, 2017
March 30, 2017
March 31, 2017
April 3, 2017
April 4, 2017
April 28, 2017
May 15, 2017
October 12, 2018
February 2019
Advertising | Perspectives

The ad tech forest is falling. Here’s why

Over the past few years, marketers and publishers have become increasingly concerned that they can’t see through the forest of ad tech. Predictions of carnage in the “ad tech complex” are not new. Terry Kawaja, founder of LUMA Partners, has long foretold hard times. While Terry is in a privileged position as a mergers and acquisitions expert, his February statement that a whopping 90% of the current ad tech companies will disappear (without successful exits) took many by surprise.

As you likely know, I’m a firm believer in the open and competitive internet. One of its great advantages is an environment in which innovation and disruption can spawn seedlings of new ideas and opportunities without great barriers. In addition, I’ve long been on record that programmatic ad technologies will unlock new efficiencies in the market. Automation is the future and we should embrace it.

But there is no doubt that the trees have started to fall and the forest has begun to thin. I’ve personally been eager to take an axe to a few of them that are rotten to their core. But how they fall will be important. There are five strong forces about to hit the ad tech landscape that are likely to cause damage to those who are unprepared. Publishers should use this as notice to their operations teams to ensure their businesses are ready.

The Forces at Work

  1. Brand Safety

    The press had a field day lately covering Google and YouTube’s “brand safety” crisis as more than 300 advertisers publicly boycotted Google. It was the number one topic on both sides of the Atlantic as I witnessed at ExchangeWire NYC last Wednesday in NYC and the next day at European Advertising Week in London. All eyes are currently on Google. But the reality is this issue has affected our industry for many years.

    Brands are damaged when advertisers and their “agents” (quotes used intentionally) rely too much on technology to guide the flow and placement of their advertising. This is a familiar issue to the other half of the Duopoly, Facebook, too. Audience targeting without consideration for environment works fine for direct marketers who are simply trying to fulfill demand through clicks and moving product off shelves. But when brand stewards look to digital to create desire and demand—and shape minds—the context and environment for their advertising is vital. Clearly, the pendulum swung too far. As with many other road bumps for Facebook and Google, they’ll use their scale and dominance to lure advertisers back into the fold. However, many small and mid-sized ad tech companies won’t be able to adapt as advertisers seek assurances on their ad placements.

  1. Margin Pressure

    Advertisers have taken note of the amount of value leakage with these same intermediaries in the ad tech ecosystem. It’s clear that almost no one sitting in the supply chain has been truly accountable to the two principals, the marketer and the publisher. Remember, these are the only two stakeholders that are recognized brands and rely on the trust of the consumer. Marketers have now set a goal of 70% of their investments going to working media while the first lawsuit is being filed by a premium publisher.

    The investment community’s interest in ad tech has been built on outsized margins and models. If you’re in the middle of a supply chain, this can only be achieved by maximizing self-interests as principals. This has led to unsustainable growth through black boxes, volume rebates and incentives, inventory arbitrage and reselling of data and services. Advertisers have clearly put the industry on notice to end it. (See Rubicon’s most recent 10K disclosure.)

  1. VC Funds Dwindle

    Over the past year, the Sand Hill interest in ad tech has been drying up. There is a brutal combination of a maturing landscape and an absence of predictable exit strategies. While the public market has been unfriendly to ad tech for the past couple of years (see FUEL, RUBI, PUB, TRMR, MM), Google, Facebook, Oracle and Aol have also stopped buying. Yes, Chinese dollars are still out there but no one should be excited about this option. If trust and transparency need to be built in the ad tech ecosystem, it’s not wise to invite investment from China.

  1. Policy changes

    Google and Facebook are under a lot of pressure here in the U.S. Very quietly last week, ad tech was hoodwinked into supporting the Senate’s vote to abolish the FCC’s rules which will open the doors for all ISPs to now resell consumers’ browsing history and location data. This will relieve any concerns at Google and Facebook that rules may creep into their businesses as the bar has now been lowered even further.

    The regulatory concerns that forced Google to allow header bidding are gone in the new Washington. More importantly to ad tech, every ISP now has the ability to compete and replace the ad tech services business. Verizon is in the pole position to own this space having cobbled together and transformed an array of ad tech assets into an ability to deliver the full supply chain with unique access to the sensitive data of nearly every American coupled with the inventory of MSN, Yahoo, Aol and the wider web.

  1. G-D-P-R

    These are four letters that most small to mid-sized ad tech companies have wrongly delegated to their legal counsel. However, they need to know the European Commission’s General Data Protection Regulation (GDPR) is coming at them like a freight train that will impact their entire business. In a little over 12 months, the already finalized GDPR will be the law of the land across Europe.

    Importantly, it will create risk and obligations globally as it will serve as the de facto gold standard on data protection for much of the world. Well, except for the United States. Although the jury is still out, it likely will serve as an opportunity for any publishers who have a strong and trusted relationship with their consumers. However, it’s universally understood GDPR will take a chainsaw to much of ad tech as none of these companies have relationships with consumers to solicit or justify consent in order to continue their data collection.

The Aftermath

What is the broader impact on the ecosystem if Terry is right and much of the ad tech forest truly falls? It’s hard to tell. With careful planning, the companies who deliver consumer products will avoid impact. There is a fairly good argument it will benefit most DCN members—premium publishers.

Interestingly, the advertising relying on the ad tech ecosystem is a very small fraction of the internet economy. An expert at Harvard Business School, working with the IAB, put out their third version of a research study attempting to size the US internet advertising market. I took issue with this research, along with others, as it counted every bit of internet-based commerce–from Uber to Citibank to Amazon purchases–under the category of “advertising.”

That said, the study does allow us to better analyze the contributions of the ad tech ecosystem. The IAB/HBS study approximates the US internet advertising market at $1.21 Trillion (6% of GDP). Using the IAB’s own estimates of the revenue in ad tech, not counting the Google and Facebook duopoly, only a measly 1.5% ($28 billion) of the internet advertising market is at risk.

I guess the question is, will the felling of the ad tech forest even make a sound? And an important question for the industry: What happens if there are only two trees left standing?

Advertising | Perspectives | Research | Revenue

Bad Ads: Research Shows They May Cost More Than They’re Worth

No one likes to click a link on a tantalizing bit of content only to be assaulted by a barrage of intrusive and annoying advertising. That fact is as in your face as a blinking pop-up ad prompting you to punch a monkey to win an iPad. And unless it’s the result of fat fingers, you aren’t clicking these annoying ads; you are hitting the back button as fast as you can to find a more pleasant place to consume content. And here’s the part that should send a chill down the spine of premium content publishers: Microsoft research has found that they’re not just bad in customers’ eyes; there’s also a high cost to be paid by the publishers that run them.

The research, The Economic and Cognitive Costs of Annoying Display Advertisements, set out to better understand the cognitive impact of annoying ads on users, and also to quantify the economic cost of annoying ads for publishers. Let’s just say their findings are more than a little jarring. The research shows the economic cost of “annoying” ads is about .153 cents each (for the revenue wonks, this works out to a $1.53CPM). Given that Turn reports that more than 53% of all online ads sell for between $.10 and $.80CPM and we know premium publishers typically earn around $1.35CPM from open exchanges, a little math paints a disturbing picture. We’ve always known digital ads can impact users and the bottom-line but not in the wrong direction.

If you believe the research—undertaken by an impressive team of researchers whose experience includes work for Yahoo, Google and Microsoft—then publishers need to know that running ads which site visitors find to be irritating, annoying, inappropriate or offensive has a significant net cost, both to brand value and the bottom line.  Private marketplaces reinforce this need for brand safety for all.  Chasing page-views and impressions at scale has diminishing returns and makes a sites more vulnerable to bad ads. What this means is that by running these ads, often to maximize sell-thru rate of your inventory, you’re actually chasing short-term revenue rabbits without understanding where that rabbit hole leads.

The Microsoft researchers conclude that “the practice of running annoying ads can cost more money than it earns.” That’s right: a site might be better off not running ads at all because of the net loss they will incur if some or all of their ads are perceived as bad by their users. A site or app actually needs more quality content and premium ads to make up for the economic loss from bad ads.

As is the case with bad advertising, we all know great ads when we see them. And research shows that there is a “halo effect” to advertising that is positioned within the context of a strong media brand with quality content, so it only stands to reason that the reverse would be true: that there would be a negative effect to a media brand associated with bad advertising. Microsoft’s research confirms this, finding not only that people notice annoying ads and complain about them, they are more likely to abandon sites on which they were present. Interestingly, in the presence of annoying ads, people had to work harder to understand content that contains annoying ads. In other words, they’re distracting and a general nuisance to user experience.

 

Again, it’s very important to note this isn’t simply about low-quality dating ads, yellow-teeth and belly-fat ads. Media companies need to consider the subtle and long-term effects that any ad running on their sites may have on user retention and revenue. The alarming rise of Adblocking software adoption makes clear that customers are fed up with poor advertising experiences. And once customers are driven to this extreme, they are taken out of the ecosystem for everyone, good and bad advertisers alike. Already 41% of 18-29 year-olds in America have opted-out of digital advertising altogether by installing an adblocker.

But we can’t simply take the lazy position that “people just hate ads.” It simply isn’t true. And the Microsoft research backs that up. We can also clearly see examples of superior advertising and content experiences on Vox and Conde Nast sites, among many others. Premium publishers like the members of DCN who focus on high-quality content, premium, well-lit experiences and brand-safe environments should be well-served as this all shakes out because they are laser focused on creating great customer experiences that are only enhanced by the relevant, quality advertising experiences that support all of the terrific content that they enjoy.

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