Martini CEO, Erik Pavelka on Fixing online advertising: How to beat bots, scammers … and the invisibility problem

What do we know about online ad viewability? Enough to know that it’s a significant problem.

We know that the American Association of Advertising Agencies (4A’s), the IAB, and the advertisersthemselves all want online ad viewability to become a reality. But diagnosing a problem is much simpler than curing it, and on that front the online advertising community still has a long way to go.

Even reaching a consensus about what’s possible has been difficult.

The IAB recently released a “State of Viewability” report, setting 70 percent viewability as the standard that should be expected for online ads in 2015. The 4A’s has reportedly refused to endorse the guidelines, making the argument that brands that pay for, say, one million views, shouldn’t actually be paying for 700,000.

But the fact of the matter is, even getting to 70 percent viewability is an overly optimistic expectation for many in digital advertising. Whether it’s bot fraud and scam publishers, or more mundane problems like ads failing to load, windows being obscured in the browser, or a user scrolling quickly up or down the page, there still isn’t even a reliable way to judge ad viewability, let alone guarantee it.

But the attention being brought to this issue — and the pressure being placed on the industry from advertisers, publishers, and ad networks — can be a transformative moment in the digital ecosystem.

The drive for viewable inventory is fundamentally changing how we in the industry define quality, price, and performance. The relentless push to programmatic exchange buying has certainly caused the industry to slip into the cheap and scalable approach to online advertising. But does that math really pan out given low viewability levels and high levels of fraudulent traffic?

Approximately five years ago, CPMs on average were roughly $5, as depicted in the blue line in the chart below. The past 5 years have seen not only an increase in ad impression demand, but a supply increase at a more rapid pace through the advent of DSPs, SSPs and fraudulent impressions. A net decrease in CPMs to near $3.50 CPM is the result, as we see in the green lines depicted in the chart below.

quality of ad impressions

Until recently, this lowering of prices down the supply/demand curve has been viewed as a net positive effect. Unfortunately, it has obscured very important and often neglected byproducts — poor inventory, poor viewability, significant fraud, poor ad engagement, and unclear actual costs per engagement.

  1. First, poor inventory needs to be weeded out in favor of high quality inventory. Whether it be through direct purchases via publishers, through private exchanges, or through media companies that have bundled ad inventory, agencies and advertisers need to have access to quality inventory.
  2. Second, inventory needs to be parsed for those impressions that are guaranteed to be viewable and those that are not guaranteed to be viewable. If an advertiser is analyzing their media spend properly, viewability will be a significant component of the analysis, as the non-viewable impressions truly are wasted impressions.
  3. Third, a full 25 percent to 33 percent of all impressions purchased via exchanges are purported to be fraudulent. By purchasing directly through those trusted publishers and media companies, fraud should largely become a moot point. There still may be some issues that need to be addressed, but by and large trusted sources should monitor their inventory for fraud and provide the number of impressions that they claim to guarantee.
  4. Fourth, by realizing the effects of poor viewability and high fraud, the advertiser needs to develop a true ad engagement rate. Whether it is bottom or top of the funnel goals, engagement is first effected by an interaction within an ad unit.

These aren’t just problems that affect marketers’ bottom lines. Our advertising infrastructure is the system that binds and supports the digital economy, like the tunnels, sewers, and foundations that lie unseen beneath a city.

As an industry, we will continue to push for cutting costs and inefficiencies, but there needs to be a corresponding push towards quality advertising. We need to continue to evolve how we reach our audiences through direct publisher relationships that provide high quality viewable inventory. There are plenty of other viable models being pursued by agencies, DSPs, SSPs, and ad networks, but until quality and engagement are as valued as efficiency and pageviews, these problems will persist.

 

 

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