Will February 2017 go down as the month that destroyed adtech?
February 2017 has been a bad month for adtech. This month’s news should shake the industry down to its very core – and rightfully so.
Marc Pritchard rocks the ad world
February began with the fallout from Procter & Gamble’s chief brand officer Marc Pritchard’s atomic bomb of a marketing address to the annual leadership meeting of the Internet Advertising Bureau (IAB) in Florida. His opening remarks set the stage for the news to come:
“Before digital technology, we were constrained. Limited formats, change at a snail’s pace. Now, we have freedom to spread our wings, to venture where no creative has been before, at lightning speed. And the result can be magnificent works of craft. But, there’s a dark side. At the same time, we’ve seen an exponential increase in, well, crap.
"Craft or crap? That’s really the big question. And technology enables both. And all too often, the outcome has been crappy advertising accompanied by even crappier viewing experiences.”
Pritchard, the top marketer at the world’s largest advertiser, then advocated for one viewability standard, accredited third-party measurement verification, transparent agency contracts, and the prevention of online advertising fraud. Most significantly, Pritchard announced that P&G will be reviewing all agency contracts and will not use advertising networks and platforms that do not comply.
Following Pritchard’s speech, The Drum found that more advertisers are considering similar ultimatums and Mark Ritson called it “the biggest marketing speech for 20 years.” Why was it so significant? Pritchard finally threw down the gauntlet that marketers had been waving around for years.
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Back in the days of print media, advertisers always demanded audited numbers to know that the circulation information provided by outlets was, you know, not full of crap. Today, too many people just accept whatever ad networks tell us. (“Oh, yes – the number of ‘impressions’ is the number of times that human beings saw your ads.”)
Not anymore. Pritchard spoke for all of us when he called for a return to the days of metric standardisation and independent auditing. It gave me goosebumps. But will online advertising survive such changes? The other news from this month makes me sceptical.
Programmatic ads fund terrorism
When I was studying journalism in the late 1990s, my first internship was at a weekly Boston newspaper that serves an affluent, blue-blooded part of the city. Former US secretary of state John Kerry lives there.
The Beacon Hill Times, the local residents, and the businesses that serve them all have an interdependent, symbiotic relationship. The newspaper covers the residents’ pressing concerns such as the opening of a new luxury jewelry store and the need for a greater presence of taxis. Businesses such as the jewelry store place advertisements.
The business owners are proud to appear in a recognised and quality-controlled publication with a deep community presence. They clip the articles and advertisements and hang them on their walls. The publication itself is central to the brand of the advertisers – and vice versa – in a way that makes them partners and two sides of the same marketing coin.
Now, imagine how business owners feel when their ads appear next to this:
The second adtech bombshell of February 2017 was the Times of London revealing that hundreds of companies are funding terrorism and other extremism through the use of automated, programmatic advertising. The largest websites of these types can reportedly earn tens of thousands of pounds every month.
This is what happens when you let machines determine your ad placements.
The promise of programmatic advertising was the removal of the humans and the intermediary publications that stand between the advertiser and the audience. It’s machines buying ads and serving them directly to a targeted group of people regardless of what they read and where they go online – even if they happen to visit Islamic State or neo-Nazi websites.
Now, Mercedes-Benz has asked its marketing and media agencies to review their campaigns. Jaguar Land Rover suspended UK-based digital advertising. Thomson Reuters has halted some programmatic advertising.
Creative agency Don’t Panic co-founder and managing director Joe Wade put it best:
"[P]rogrammatic has become an arithmetical box ticking exercise, which leads a chief executive officer to the comforting conclusion that money was well spent. Ultimately, it’s all smoke and mirrors, fake views and wasted budgets.
"Programmatic advertising isn’t working. It doesn’t get people engaged in your content, a view rarely constitutes a real view, it puts corporate reputations at risk and at its worst, it funds terrorism.”
There is no human quality control in programmatic advertising. There is no co-branding partnership between advertisers and publications. But the human beings and the media outlets themselves will always matter. "Programmatic" is one of the cancers in the advertising industry that happens when people think more about how to transmit ads than how to create good ones.
One of the findings in a report released by the World Federation of Advertisers around the time that Pritchard was giving his speech, then, should come as no surprise. Ninety percent of advertisers – just like P&G – are set to review their programmatic campaigns.
Facebook video streams plummet 94%
In September 2016, Facebook admitted it overstated average video view times by 60% to 80% for two years. The following month, Nielsen “deployed a solution from October 2016 data, from which point Facebook stream counts are reporting correctly.” (The company’s explanation and data are here.)
In the third adtech scandal of the month, Mumbrella, an Australian advertising magazine, obtained Nielsen NetRating figures specific to Australia and reported that the change in calculation method showed a 94% plummet in Facebook video streams in the country. Here is the publication’s visual representation:
Based on this information, the number of video streams in Australia – and perhaps everywhere else – are around 94% less than what advertisers had thought. Facebook’s overall numbers troubles led Judy Shapiro to write in Ad Age this month that the social network had “jumped the shark.”
Now, why do I mention Facebook in a column on adtech? Simple. Facebook is an ad network that presents itself as a social network. The idea that brands would now be able to “engage” with consumers for free through a for-profit company was a delusion that only marketers could invent. Over the span of a few years, Facebook encouraged every business to create a page for the “engagement,” then cut their reach, and then recommended that they advertise to regain their reaches.
To Facebook’s credit, the company later agreed in February – contrary to the expectations of many observers, including mine – to be audited by the Media Rating Council. (Google also did the same this month.) Time will tell where that will lead. But how much will businesses and media still use the social network when a company such as Britain’s Channel 4 News makes a “miniscule” amount of money from two billion video views?
Martech, not adtech, is the future
Almost all adtech is simply some new attempt to deliver “the right advertisement to the right person at the right time.” As such, it is entirely unoriginal and only a new version of annoying, direct-response marketing -- albeit over some new ad network or digital or mobile communications channel. And the creatives are terrible.
Martech, on the other hand, is actually useful. SEO software can help companies to increase their reach in organic search. Conversion-optimization platforms can help businesses to know what website messaging and calls to action lead to the best results. Business intelligence platforms provide invaluable insights into marketing and sales processes. I view marketing automation with skepticism, but it’s undeniable that many marketing teams are using such platforms and seeing at least some benefit.
And I’m not the only one who thinks martech will eventually defeat adtech and display advertising. According to The Wall Street Journal, venture capital investment in adtech has been declining in proportion to martech since 2014:
In addition, the vaunted ad:tech conference recently announced that it is ending ad:tech San Diego and holding only its New York City event in the United States this year. While ad:tech is still scheduled to hold events in London and other cities throughout the world, this closure cannot bode well for the industry.
The reason for the failure of adtech is simple. In 1997, Jakob Nielsen wrote 'Why Advertising Doesn’t Work on the Web'. In part, he stated:
“The web is very different from television: it is mainly a cognitive medium, whereas TV is mainly an emotional medium. This makes TV much more suited for the traditional type of advertising which is flashy and promotes superficial qualities of products…
"Where TV is warm, the web is cold… The user is not on the web to 'get an experience' but to get something done. The Web is not simply a 'customer-oriented' medium; it's a customer-dominated medium. The user owns the Back button. Get over it: there is no way of trapping users in an ad if they don't want it.”
Even today, the internet usually does not work as a medium for most brand advertising. Display advertising is a joke.
Into the future
Digital advertising is like whack-a-mole. At the best, ads pop up on websites and mobile devices and people increasingly block them with virtual hammers because the 'creatives' are little more than direct-response spam. As I often write, people tolerate offline advertising but hate online advertising.
But at the worst, adtech is killing the internet – and possibly even democracy itself. Real news sites and fake news sites are racing towards the bottom in efforts to squeeze every last possible penny out of garbage ad networks.
Just look at this comparison this month by Barrett Golding at the Donald W. Reynolds Journalism Institute. Two of these publications are real news sites; two are fake news sites. Both use bottom-feeding ads from networks such as Outbrain and Taboola. Can you tell the difference between the real and fake news sites?
There’s an old media adage that you can tell the quality of a publication by the quality of its advertisers. Everything that you see above is clickbait trash that plays to the worst of humanity by focusing on conspiracy theories, health scares, celebrity gossip, and borderline pornography. How does this reflect on the brands of these once-esteemed news outlets?
It’s time to fix the promotion mix and get rid of adtech that does nothing to help marketers and only hurts advertisers, publications, and the world in general.
Except for quality platforms such as Google AdWords, adtech and display advertising have done little to build brands, deliver real results, and improve the online user experience. Both advertisers and consumers are hurt. The only winners are ad networks, media buyers, fraudulent publishers, and ISPs who charge based on the amount of data that desktop and mobile browsers load.
But for publishers who want quality websites, the solution is surprisingly easy to know but seemingly difficult to do: Think of revenue streams that do not depend on maximising the number of pageviews and display ad impressions.
There are many online profit models that do not rely on adtech’s black boxes of bullshit in which no one knows where ads are running, who is getting the money, whether human beings are actually seeing the ads, what viruses and malware are being spread, what personal data is being collected, and how much money is being siphoned out by fraudsters and middlemen.
More adtech resources
There is a lot more that I could write about adtech, but I do not want to repeat what others have said. So, here is a list of additional resources that I recommend for The Drum’s readers:
- '10 Terrible Things About Adtech,'David Carroll, associate professor of media design at the Parsons School of Design
- “What The Verge Can Do to Help Save Web Advertising,” Don Marti (referencing this post by Walt Mossberg)
- Bob Hoffman shows how $1 of display ad spend returns $0.03 of value
- “Confessions of a Fed-Up Adtech Exec,” Digiday
- “Where Did the Money Go? The Guardian Buys its Own Ad Inventory,” Mediatel
- “How to Destroy the Business Model of Breitbart and Fake News,” Pagan Kennedy in The New York Times
- “When Real News is Fake,” Barrett Golding at the Donald W. Reynolds Journalism Institute (be sure to read the whole series)
- “How True Advertising Can Save Journalism from Drowning in a Sea of Content,” Doc Searls
The Promotion Fix is a new, exclusive biweekly column for The Drum contributed by Samuel Scott, director of marketing and communications for AI-powered log analysis software platform Logz.io and a global marketing speaker on integrated traditional and digital marketing. Follow him on Twitter and Facebook. Scott is based out of Tel Aviv, Israel.