There is an irony to the media industry bemoaning the rise of adblocking, while at the same time it frequently transgresses prescribed guidelines over respecting consumer rights. Simon Gilbert, Patrius, chief executive, raises this issue, and draws parallels with the global financial crisis of 2008.
A recent study into the disclosure terms used in native advertising placements indicates that a third of buyers are labeling native and branded content outside of FTC guidelines. The industry feels that adblocking is unjust, so why are we feeding the revolution with misrepresentation whilst remaining perplexed?
The adtech quandary
The report carried out by Polar – a Toronto-based data science team, examined 65 publishers across North America and Europe – and key findings indicate that the prohibited term “promoted” is still widely used and out-performing the term “sponsored” on mobile by 105%.
To quote the FTC: “an act or practice is deceptive if there is a material misrepresentation or omission of information that is likely to mislead the consumer acting reasonably in the circumstances.” In such a reaching, the adtech sector is bang to rights.
For years, publishers have sold ad space to buyers in standard sizes and formats, however, recent statistics indicate a rise in adblocker usage globally, citing flashing popups and banners as contributing factors.
In 2011, Adblock Plus-owner Eyeo GmbH was founded to disrupt the billion dollar ad industry using software to suppress intrusive adverts. Each time an impression is blocked a trader loses out and the media spend disappears into the ether. The ad blocker is a ticking time bomb – the industry’s very own mortgage default.
The similarities with the financial market’s ‘hot potato’ game
The financial services industry, which draws huge synergies with programmatic advertising through high frequency trading of derivatives, became a major point of regulatory focus following the 2008 financial crisis.
The industry had failed to self-regulate, with relationships between investment banks and credit rating agencies spanning a mutually beneficial grey area leading up to the collapse of the US housing market.
Banks had neglected to properly scrutinize mortgage applicants, while rating agencies were happy to package up high risk debt and label it to the contrary.
The chain reaction came as the market turned, and consumers began to default. Throw in a slice of mass-market trading, and step aside as the major banking establishments sell-off their festering purchases in the greatest game of hot potato, while simultaneously crumbling in the wake of their joint failings.
High-risk supply meant lack of demand, causing trading desks to shutdown as liquidity dried up. When nobody’s buying because the end user is a risk, it’s game over.
In 2010, The Dodd-Frank Act was established to provide market transparency. Regulation became rife, and a distinct lack of input from key industry folk produced redundant rules which served merely to stifle creativity.
In war: resolution, In defeat: defiance
Fast-forward to present day programmatic advertising where real-time inventory trading fuels the underlying current of the internet, and the activation of a simple browser extension could nuke the entire market instantly.
The industry has, so far, responded to the adblocking revolt diligently with the inception of native ads – a non-intrusive alternative format to display advertising that has flourished in the face of adversity.
As a nascent market, the native advertising sector has a duty to remain true to its original values of providing a better user experience while retaining advertising ROI. It is therefore imperative that we continue to be assiduous with this format and put the user at the heart of its existence, lest we forget the reason for its foundation.
Much like The Dodd-Frank Act, AdBlock Plus, a non-industry participant, have defined a lackluster form of regulation: the acceptable ads standard. If we’re to defy our opponents, the definition of acceptable ads must be crafted by cognizant industry participants to ensure relevance and direction.
While it may be too late to reverse the effects of the adblocking revolt, it is time to heed the warnings and learn from those analogous industries that have fallen on their own swords.
Market trust is formed when all counterparts feel an unequivocal safety within a trading environment. The end user is the most significant factor in this equation, and the industry cannot expect to educate users on the downside of ad blocking while ambiguously labeling advertising placements in parallel.
The adtech sector might not welcome ordinance, but regulation may welcome itself through lack of self-regulation.
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