Thursday, 25 August 2016

What Does The Future Hold For Digital Advertising Industry?

The internet has changed many industries but few have changed as drastically as marketing. If you'd told marketers back in 1996 that, 20 years later, they’d be able to tweak campaigns based on their results in real time, they’d have laughed – and that’s before you even get started on augmented reality or the concept of Shazam.

The rapidly changing role of marketing will be a huge issue for agencies in the coming years – as marketers are appointed by brands and given huge budgets to create marketing strategies and hire advertising, media and digital agencies to create advertising campaigns.

Marketers are the biggest investors in understanding data today. Their power is in the ascendance. Their roles are expanding to reflect their increased importance to the business – which should be a joy for ad agencies, as long as they are aligned with the marketer. However, the challenge for ad agencies will be to link data-driven marketing to big, engaging, creative ideas that connect with consumers.

Speaking at the Advertising Research Foundation's Audience Measurement Conference earlier this year Bob Liodice, President/CEO of the Association of National Advertisers suggested that a good chunk of the digital advertising industry could go away due to ad blocking, viewability, fraud and transparency issues.
Referring to “the crisis of ad blocking” Liodice is quoted in a Warc Events report covering the Audience Measurement Conference as stating, "Let's face it: We're jamming everything on a page where we've got flashing monkeys, and dancing bears, and everything else in between. And all of that is totally ticking off the consumer. We need to put the user experience at the front lines. And that means we have to change a lot of the current ways that we monetize the [digital] ecosystem."

A recent survey by the IAB estimates that 26 percent of U.S. users block ads on their computers and 15 percent do so on mobile phones. Based on previous reports these proportions are likely higher in Asia.

Ad blocking is symptomatic of the lack of consensus over digital advertising techniques and formats.

On the other hand, the lack of transparency that exists in media buying is following a similar path. As large holding companies purchase high volumes of media, they are able to package together subprime quality ad space in such a way that it appears to be AAA, when in reality it is of little value to the clients.

Just as the ratings agencies lacked a familiarity with the complex subprime mortgage packages, when an agency provides its own proprietary metric for tracking advertising performance it becomes an obvious conflict of interest. As margins continue to wane, and advertising budgets continue to shift from print to digital, the model continues to evolve and isn’t yet optimized. Due to the quarterly reporting requirements of large publicly traded agencies (and their subsidiaries), the luxury of optimization is lost. Instead, agencies push media packages that improve margin instead of clients’ campaign returns.

To provide a client with the best possible media mix, an agency must look at the assignment from a holistic perspective. This requires vetting all potential media providers instead of simply looking at the media inventory an agency holds and selling it as a tranche, or packaged, media plan. This is the only way to provide the best and most cost-effective media vehicles for a client.

To save digital advertising, as distinct from other brand activity online and in social (though much of this is of dubious value) then there is need to a start-over. Start again and figure out how to create a consensus between publishers, advertisers and consumers about how advertising is allowed to work online. How it interrupts, how it engages and what data it uses.

Adtech experts could, of course, continue to ignore this crisis. Effective advertising benefits from a reduction in supply as it increases the value of what’s left. But there is a real danger that valuable publishers are going to be screwed if we don’t figure this out. And that wouldn't be good for anyone.

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