Features

5 Reasons the Digital Advertising Industry Is Lost

Written on
Feb 3, 2014 
Author
Jim Moar  |

ADOTAS – Digital advertising, with all of its data and analytics, was supposed to be a utopia for tracking, measuring, and optimizing ad value. We have a long ways to go and the challenge is increasing every day.  Digital advertisers now find themselves stuck between flawed paradigms and crumbling methodologies, looking for a way to fulfill the original promise. As advertisers, we recognize the path we’re on will not take us where we’d hoped, so it’s time to correct course and effectively evolve the fundamentals of digital advertising. Once corrected, the advertising industry can finally meet its goals while accommodating the interests of the consumers on whom it depends.

But first, what is making this so hard?

1. National security flaws indirectly and unfairly damage advertisers’ reputation. The recent exposure of NSA activity and other “information sharing” scandals have increased consumer wariness about sharing personal information online and through mobile. Advertisers naturally have been looped into the conversations of information sharing and are often seen as guilty by association. This lack of trust has led consumers to make conscious decisions to avoid sharing information with advertisers, perhaps because they do not fully understand how the information is used. This may be partially why advertisers are the 2nd most disliked group in the US, behind hackers.

2. Channel fragmentation continues to cause media mix headaches. With each emerging online and mobile advertising channel, advertisers are faced with re-evaluating their media mix spend and tactics. This is only becoming more complicated with the introduction of in-app, social and native advertising, which are already heating up in 2014. Each new channel requires heavy loads of research, creative resources, and money, slowing down the time it takes for advertisers to create their campaigns.

3. Third-party cookies don’t fit our multi-device, multi-channel world. Third-party tracking cookies used to “stalk”, or follow, consumers around the Internet are admittedly flawed for ad value measurement in an increasingly multi-device, multi-channel world. In the past few months, industry leaders such as Google and Microsoft have offered potential “cookie replacements.” While the very introduction of “replacements” validates the need to look beyond third-party cookies, channel-specific tracking still doesn’t solve the problem of multi-channel, multi-device measurement, and in fact introduces new issues such as a myriad measurement “standards” across channels.

4. Lack of standard measurement across channels. As channel fragmentation continues to mount, the lack of standards in measuring value across multi-channel campaigns becomes an increasingly critical problem. Each channel has its own way of measuring, but there is no way of knowing how many retweets equals a Facebook “like” and, therefore, no way of comparing the value of one channel to the others. This lack of standardization results in ill-measured values, misallocated ad spend and, ultimately, lower financial performance.

Furthermore, ad sellers are not objective third parties and should not be relied on exclusively to determine the value of an ad purchased from them.  Advertisers are trying to solve numerous problems using the stalking paradigm, and continue to patch the broken cookie system instead of looking at each problem separately with fresh eyes to identify effective solutions. Once a solution is presented, advertisers will be able to deliver relevant measurement statistics and create much more effective and efficient campaigns.

5. Advertisers are overwhelmed by the influx of Big Data. The amount of available data coming from various channels and Internet-connected devices is growing at record speed, but most advertisers do not know how best to utilize it in a time and cost-efficient manner. There is a natural urge to blindly pursue “all of the data,” which may start as a means to an end but in many cases has become the end itself. This blind pursuit has costs in terms of financial and resource investments. The focus needs to shift from quantity of data collected to collecting the right data to answer critical advertiser questions. In some cases, advertisers simply need to take a fresh look at existing data that is already readily available, complete and universal across channels (think impression data) to solve some of the problems they’re currently trying to solve by pursuing “all the data.” The right data can drive ad value measurement and targeting if used correctly, but advertisers are still learning what to weed out and what solutions can turn data into insights.

Given this climate, what can we do to get on the right track? The start of a New Year means a fresh opportunity for advertisers to improve their reputation by regaining the trust of consumers through more tracking transparency and consumer education. It also means considering objective, third-party standards based on data common to all channels in order to understand the value of ads in the post-cookie, multi-screen and diverse-channel world. Adopting these new measurement standards requires being brave enough to re-evaluate (and discard where necessary) old paradigms in the context of today’s advertising realities, and having the discipline to identify, collect and analyze only the data that will help solve those problems.





Jim Moar is the CEO at OptiMine Software, a provider of paid search keyword bid management software that helps digital advertisers dramatically increase financial performance. The company is based in St. Paul, MN.

Jim has more than 25 years experience at the CEO/COO/President level, with a strong record of dramatic revenue and earnings achievement through organic growth and operating excellence. He led a major turnaround of Identix, doubling revenue to $90M and transforming from $25M EBITDA loss to EBITDA profit in 3 years. The company sold for $775M, over 70 times forward EBITDA and 8 times revenue. He also spearheaded dramatic growth at DataCard, Tennant, and Reshare.

Reader Comments.

Fraud and bots should be added to the list. Programmatic buying allows rampant fraud. The $$$ spent on digital are going to bot nets and mark-ups.

If Digital is to recover … a move to quality contextual buying will need to develop. Back to the future.

Posted by john simpson | 5:03 pm on February 3, 2014.

Leave a Comment

Add a comment

Tags: , , , , , , , , , , , , , , , , , , , and
Article Sponsor

More Features