The One-Two-Three Sucker Punch That Is Killing Digital Media [INSIGHT]

Two things caught my eye last week here on Mediapost. One article summarized an ANA study suggesting that a growing number of marketers are taking programmatic in-house because… fraud and transparency: ). The other article stated that, according to research by Technology Business Research, of every dollar spent on programmatic only 40 cents reaches actual consumers!

That’s right, a full 60 cents go to agencies and technology “providers.” Those numbers are in line with findings from the World Federation of Advertisers from two years ago.

The ANA also reports that in 2015 you could lose anywhere between 3% and 37% of digital ad dollars to bot fraud. How do you calculate an average number for losses if the range is so wide? And what do you apply to an ROI calculation when you know that different digital media have different levels of fraud? The ANA reported that video had up to 73% more bots than any other form of digital advertising.

Well, let’s do some simple, back-of-an-envelope math. For every dollar spent, only 40 cents reach actual consumers. Let’s say that of that 40 cents you lose another 25% to bot fraud. That is 30 cents that actually reach consumers. But wait, one in five (?) people now use ad blockers, so take another 20% away. That leaves you with only 24 cents for every dollar spent on digital advertising that can generate potential consumer impact.

I will let that sink in for a minute.

For the record: I am terrible at math (just ask my 14-year-old son, whom I can’t help with his homework anymore). But if my numbers are halfway right, you get the idea. And it is shocking!

No wonder the impact of digital advertising is still being called into question. No wonder marketers are taking programmatic in-house (although that only solves one-third of the problem). No wonder all digital impact measures can only be expressed in fractured decimals.

Never mind “content is king.” Never mind creating engaging brand stories. Their chances of being heard or seen are decimated by a rigged system designed for many things, but not consumer impact.

And what baffles me the most is that the industry has never, ever accepted ANY percentage of fraud or loss to non-transparent practices for ANY other medium. When the television advertising industry grew to such proportions that it became more and more difficult to keep track of what was broadcast when and where, the industry agreed to the ISCI code. When outdoor or local radio were accused of charging for ads that were never placed, agencies and marketers jointly developed spot-check services. The industry did these things together.

Yet here we are in the 21st century with a whole segment of the industry that is, at best, shady and at worst, completely fraudulent, with no joint initiatives to tackle them whatsoever.

Michael Lewis’ book “Flash Boys” describes a terrifying glimpse into a financial system that is solely created to benefit its creators, not the people whose money it is supposed to manage. The automated media trading place creates the potential for a very similar set-up.

I keep thinking I am overreacting, but the facts are pointing more and more in the opposite direction. How do we get out of this mess?

By Maarten Albarda, Featured Contributor
Maarten has lived in five countries across three continents and honed his integrated marketing communication skills at JWT, Leo Burnett, McCann-Erickson, The Coca-Cola Company and AB-InBev. He now runs his own integrated marketing consultancy in partnership with Flock Associates, and has written the book “Z.E.R.O.” with Joseph Jaffe.
Courtesy of mediapost