The problems facing programmatic media
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness”.
The opening line from Dickens’ Tale of Two Cities could be an apt description for digital media and programmatic buying in this COVID-19 pandemic. Never has there been such a rapid transition to online activity, both for information and commerce. Many describe it as a decade of transformation in months.
But for all of this shift to digital, there is also bad news. My business partner in the USA, Michael Farmer, shared this article with me from The Correspondent titled “The new dot com bubble is here: it’s called online advertising”. In the article they point out that in 2018 $273bn was spent on digital ads globally. They delve into the world of clicks, banners and keywords to find out if any of it is real. What do we really know about the effectiveness of digital advertising? Not much it appears. Read for yourself here.
This is hot on the heels of the PWC / ISBA report in May, this year, on the programmatic supply chain transparency, which took two years to complete. Industry reaction has been mixed. Those in the ad tech business point to the many industry projects underway to provide greater transparency. Some appear to think this is not surprising and is in fact business as usual. And there are the outraged and shocked calling for greater accountability. Check out a summary of the report here.
So, let’s take a look at what made me go WOW! when it comes to digital media and programmatic buying this week.
THE CURRENT STATE OF DIGITAL MEASUREMENT BY ATTRIBUTION IS FLAWED
Also highlighted in The Correspondent article, the current state of digital marketing measurement is problematic, and it started long ago. In the early stages of digital marketing, ad servers like DoubleClick had a third-party cookie that identified a browser across advertisers and publishers. DoubleClick also ran a performance ad network and needed a way to pay publishers based on their contribution to “measured performance.” This was the beginning of attribution measurement like last click/last touch (LTA) that would later lead to multi-touch attribution (MTA).
The attribution method was developed to facilitate publisher payment and, without much critical analysis, was adopted by marketers as an acceptable form of measurement. Marketers were seduced by digital marketing that led them to overlook an important critical flaw in attribution measurement that still drives the lion’s share of digital marketing decisions today. Read more about this here.
WHY THE IAB IS CREATING A ‘NUTRITIONAL LABEL FOR DATA’
In response to on-going and growing concerns over data quality among marketers, the IAB Tech Lab rolled out dual data transparency initiatives last month in an effort to introduce a “nutritional label for data.” The offering includes a data transparency standard and an affiliated compliance program that together outline the “minimum disclosure and transparency standards” for companies that collect, store and offer data for marketing purposes. It’s the most comprehensive overhaul of the sector’s standardization in more than a decade. Participants claim it will significantly improve data segment quality, including its origin, recency and segmentation criteria. You can get the details on this here.
IAB AUSTRALIA CALLS ON INDUSTRY TO ADOPT PROGRAMMATIC TRANSPARENCY STANDARDS
Following on from the launch of the Australian Digital Advertising Practices (ADAPs) last month, IAB Australia has issued a call to action for the digital industry to adopt the IAB Tech Lab’s transparency standards across the programmatic supply chain and commit to other related recommendations.
According to Jonas Jaanimagi, IAB Australia’s Tech Lead, standards already exist which would address the transparency issues that were broached in the recent ISBA report. But why does the IAB have to call on the industry to comply? Why is it not mandatory? This is important for the industry to not just survive but thrive.
Formerly head of global media at Vodafone, Paul Evans, was on the early working group that produced the recent digital advertising investigation into programmatic supply chain transparency for UK advertiser body ISBA conducted by PwC.
The study – which took two years – confirmed some long-held suspicions, including that about 15 per cent of advertisers’ programmatic spend, or about a third of the supply chain costs, seems to vanish. PwC euphemistically called it an ‘unknown delta’. And that black hole is at the premium end of town. The long tail, PwC implied, would be murkier still. Even in that premium segment, only half of advertiser spend makes it all the way to publishers, which included the likes of News and Bauer. Meanwhile, of some 267m impressions served, only 12 per cent could be matched end-to-end, due to poor data. No wonder he believes programmatic is ripe for regulation. Hear what he has to say in detail on this podcast here.
AS THE COOKIE CRUMBLES, IAB TECH LAB PULLS THE PLUG ON DIGITRUST
IAB Tech Lab has announced it is shutting down DigiTrust, one of the forerunners to the various contemporary industry initiatives where ad-tech vendors collaborate to reduce the need for hundreds of software, or cookie, syncs any time an ad-supported webpage loads.
But as the online advertising industry prepares to move toward its next phase of development, as characterized by data privacy legislation such as GDPR and CCPA, and the much-touted “death of the cookie,” the trade org has decided to cease DigiTrust operations on July 31. Let’s hope the programs to replace it do a better job.
HOW AD TECH IS BRACING FOR LIFE AFTER THE COOKIE
Google’s decision to become the latest browser to kill the cookie has industry trade groups scrambling to pick up the pieces. The IAB Tech Lab, the research and development arm of the IAB, wants to lead a broad coalition of interests that can come to a consensus about how to continue online advertising. The trade organization, according to sources with knowledge but not allowed to speak publicly, is planning an announcement at this year’s IAB Annual Leadership Meeting concerning how the industry will move ahead when it comes to targeting online ads after Google said it would stop supporting third-party ads in its market-leading Chrome browser.
MEANWHILE, PERMUTIVE RAISES $18.5 MILLION AS THE SEARCH FOR A COOKIE ALTERNATIVE
Permutive, a publisher-focused data management platform (DMP), has raised $18.5 million in Series B funding. The cash injection comes as the digital advertising industry faces increased regulations and the depletion of third-party cookies. Those changes make publishers consented first-party data more valuable, meaning they’ll need partners to help organize and eventually monetize it. “What we see, as cookies disappear, is that publisher data becomes the new currency … rather than third-party cookies,” said Joe Root, co-founder and CEO of Permutive.
PROCUREMENT FOCUS MUST SHIFT TO VALUE-CREATION APPROACH
The World Federation of Advertisers is out with a new report on marketing procurement. Also two years in the making, the report is a best-practices guide for marketers who want to utilize procurement to help maximize ROI from media and marketing spending investments and not just focus on cost-cutting.
The catalyst for the report was a WFA research finding that procurement is seen as a must-have process for marketers. At the same time, most of the marketers polled in a 2018 survey said they believed the way procurement was implemented by their organizations could be improved.
A key finding is that procurement metrics tend to focus on cost-cutting goals and far less on marketing goals like how media investments contribute to a firm’s revenue growth. Perhaps if procurement turned their attention to programmatic media with a view to driving value and not just reducing cost, many of these issues would be solved faster.
It feels like this conversation around the digital supply chain and programmatic media has been going on for years. The ISBA / PWC report has simply reminded everyone of the issues and challenges with understanding where your money is going and what you are getting when it comes to digital media.
If you are an advertiser, media agency, or a procurement professional wanting to get a clearer view of your programmatic supply chain, then let me know. We can help you navigate this murky ecosystem to ensure you are getting the value you deserve.
As always, if any of this has piqued your curiosity or you simply want a more confidential discussion on any topic and the marketing implications and advertising opportunities let me know.
And stay safe. Stay healthy. Stay sane.
Cheers
Darren