Six Pixels of Separation - The Blog
December 27, 2016 2:49 PM

Display Advertising Is A Failed State

Display advertising has a huge problem. It's all going to come to head in 2017.

There is only so long that this charade can go on. When someone says that the 30-second spot is dead or that television advertising (or newspaper advertising... or radio advertising) is dying because of online advertising, they could not be more incorrect. On one hand, the smart advertisers are finding a tremendous amount of value in certain online/digital advertising channels (think about search engine marketing, affiliate marketing, email marketing, specific targeting capabilities on Facebook, being smart with YouTube pre-rolls, etc...). On the other hand, the idea that any form of traditional advertising is going to be dead because of online advertising (mostly banners... or display advertising) is simply not true. 

Display advertising has failed the advertising industry.

Back in October 2010, I posted an article titled, The Web Has Failed Advertising. Here's my thinking (from way back when)...

"The web has not failed advertising. Advertising has failed the web.

Let's tweak my last turn of the phrase: advertising - as we have known it to date - has failed the web. Bad, boring and interruption-based advertising always struggled to capture mindshare. Traditional marketers beat that reality through frequency and repetition (in layman's terms: shoving more of it, more frequently, down our collective gullets). More modern online advertisers not only followed that tactic, but they also cluttered the pages with multiple messages in multiple sizes in a very primitive way (low quality images and creative to ensure speedier downloads).

We did it to ourselves, really.

When those models began to fail, we switched the name of 'banner advertising' to 'display advertising,' as if that turn of the phrase would make brands (and consumers) forget the big promise of online advertising: that consumers will take action and click on your highly relevant and targeted ads. The truth is that there is a lot more to online advertising than just those little square boxes that surround every piece of content we see online. In fact, search advertising (the kind that Google mastered) hasn't failed the web at all. Email marketing has not failed the web (well, spam has, but that's another story for another post). Affiliate marketing works great too."

Fast forward to today: there is still tons of money being poured into display advertising. More than ever, in fact.

Programmatic was supposed to provide something unique to advertisers: more precise targeting, better inventory, more options, way better pricing... and much more, all through the power of computers, automation and an auction-based system that would give advertisers a level of control, mass inventory and more. In essence, remove the humans, increase the automation, layer in some nascent machine learning, and a whole new world of inventory would be open to more and more brands. The promise was interesting. Many still prescribe to it. Many are still investing in it. The end result? It works for few, fails many more and could be enabling tons of money to the wrong people.

Display advertising is a failed state because brands are losing control of where their advertising is showing up.

We learned some tough lessons very quickly, in the early days of online advertising. I was there. I was selling. It was for one of the top meta-search engines on the Internet. We had a premium banner advertising solution, because we could enable advertisers to buy their banner ads against keywords that were relevant to their industry (long before Google mastered it). Of course, the immediate challenge we faced is that ads began showing up on websites that were gaming the search engine space, and brands did not want their ads aligned with these types of publishers and properties. That seems obvious now, but not back in 1999. Online advertising, as we know it today, was non-existent back then. We were the pioneers.

There is irony in this.

If you look at the current rise in programmatic, fake news sites and other unscrupulous publishers creating sites and pages with the sole intent of driving traffic to generate impressions for advertisers, you will notice that we're back to square one. Same problem as the late nineties. Only now, it's at scale, and there are millions of dollars at play. Think this is over-stating the problem? Read this from The DrumRussian fraudsters divert $5m a day from major publishers in 'biggest ever ad fraud'.

"the criminals... had created 6,000 domains and 250,267 distinct URLs that looked like legitimate websites. This reportedly tricked the algorithms in the exchanges to thinking their placement was best, over the more trusted websites with the audiences that the ad spend was intended to reach. It says a bot farm was used to create traffic, with 570,000 bots used on the ads... Those bots specifically tricked the system into thinking people were watching as many as 300 million video ads a day, averaging $13.04 per thousand faked views." 

You get what you pay for.

Advertisers want one thing: to be where the eyeballs are. What we're now seeing is an advertising format that is so complex that it's hard to know who is the human and who is the bot. So, what's really happening here: advertisers are now the ones who are (unwittingly) being the venture capitalists to sites and organizations that are clearly poisonous to online culture. It's a fact that these fake news sites (and others) are amplifying stories that are not true, or helping to further spread conspiracy theories and other terrible stuff. So, it's one thing when media companies have in their contracts that a brand's advertising cannot appear on gaming or sexual explicit sites, but it's a whole other world when brands are happily paying less, for what they think is more audience at the benefit of automation, when - in reality - they are funding some obviously nefarious organizations. In the end, these brands are now - without question - facing a world of true ethics and scruples. What is the price for all of this automation? Do brands understand these huge ethical questions that are now a true reality? 

It's not all bad.

If brands do the work, they can easily find countless great publishers, with inventory that is targeted and relevant to their audience. It may not come cheap. It may not come through automation, but it exists. This is where the problem continues. The work is more complex, it involves human intervention and negotiation. So, here's the thing that brands must face: do you want a perceived audience at low cost with little-to-no human interactions at the cost of corporate ethics and values, or do you want to do the hard work or finding the right space, the right placement, the right creative and the right result for what the brand needs to accomplish (which will cost significantly more). 

It seems like an easy answer. Still, it does not seem that brands are answering this very obvious call. 

By Mitch Joel

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