In 2015, over $52 Billion, was spent on digital advertising 1. Year after year, the market has shown that marketing dollars have increasingly been shifted towards the digital advertising marketplace. The digital marketing spend is growing and new products are emerging, but has it reached its plateau due to lack of results? Companies have continued to pour money into digital channels such as search, social, display, video and others trying to get consumers to buy their product or service at a profitable rate of return. This task has been increasingly difficult to accomplish with digital ad blocking technologies, viewability issues, fraud, and the increase in overall cost inside a fragmented market of distracted and disinterested web surfers. The importance of advertising performance measurement, determining a standard success metric, and holding each channel accountable is more relevant than ever.
Total ad spends for the year of 2015 was estimated to be $187 billion. It is estimated that digital accounts for 30% of spending ($52.8B), television 42% ($79B), and print 15% ($28B). Digital has risen 2.5% in share and remains the fastest-growing of any category.1 It is projected that by 2018, digital will overtake television in total spends.2 While brands and agencies are spending big to catch the attention of consumers and make an impression, the effectiveness of digital ads is in question. A consumer impact and engagement survey conducted by Harris Interactive on behalf of Goo Technologies examined the types of ads that consumers say they are most likely to ignore. Overall, the survey of over 2,000 American adults found that online ads are ignored by the largest majority of those surveyed at 82%, compared to traditional media ads, such as TV commercials (37%) and newspaper ads (35%). The survey also indicated that banner ads are ignored the most overall. Compared to 18-34-year-olds, the survey indicated that the 65+ crowd would be most likely to ignore online ads.3 So when was the last time you clicked on a banner ad? Apparently not recently according to this survey. Studies have shown that people now have the attention span of a goldfish, 8 seconds, which is largely credited to the mobile phone revolution. This is a reason that no one cares to click on the banner ad inside their game of Angry Birds. Displaying targeted advertising that is relevant to the viewer is helping to counteract this issue.
Catching the attention of the consumer isn’t the only problem. The current number of digital users available to advertisements is on a downward trend. Although growth of monthly active users on the internet has reached an all-time high of 45 million, ad blocking has taken a huge portion of those users off the map for advertisers. According to Page Fairs August 2015 report on ad blocking, 16% of US internet users use ad blocking technology taking that 45 million down to 38.25 million web surfers that can be subjected to advertisements online.6 The implementation of Apple’s new software upgrade iOS 9, allows iPhone users to activate a new ad blocking feature which further decreases the number of online users available to digital advertising. Others issues such as “digital detox” have caused some to retreat from being subject to digital content. A recent study by Greenlight highlighted in an article by Netimperative has shown that digital usage will likely change in the future. The study stated that 1 in 4 Brits plans to reduce their use of social media and digital devices blaming their detox intentions on being frustrated by updates and irritated by a constant stream of irrelevant content from brands.7 Other sources indicate that if a consumer is exposed to a product or service too many times it leaves a negative impression on them, even to the point that they would stop using that particular product or service.4 This content overload has created an environment that is inundated with ads that are leaving an overall bad impression on the potential consumer.
On top of ad blocking and consumers ignoring digital ads, fraud is rampant in the digital realm. A recent Wall Street Journal article titled, “Bogus web Traffic Continues to Plague the Ad Business”, outlines the fraudulent activities taking place. “The bad guys creating fraudulent traffic make money in several ways, including by creating their own websites and using the fake audience to attract advertisers or by charging legitimate publishers to direct traffic to their sites.” These so-called bad guys create what are known as “bots”, or computer programs that mimic the mouse movements and click humans make, to give the indication that an actual person is viewing the website, and this is then counted as an impression. The article states that most of the fraudulent traffic is taking place inside automated systems, or what is known as, programmatic buying.8 Programmatic advertising helps automate the decision-making process of media buying by targeting specific audiences and using demographics. Programmatic ads are placed using artificial intelligence and real-time bidding for online display, social media advertising, mobile and video campaigns, and is expanding to traditional TV advertising marketplaces. A programmatic buy works like this: A user visits a website, and that user’s online profile, website history, and browsing history is instantaneously harvested, packaged, and sent to an auction site where a computer bids for that impression based on the specifications given by the advertiser. For example, Ford can target sites that are about cars and specify that they would like males between 25-40. The automated system will use the website name, the user’s online profile, and browsing history to determine if they meet the specifications. The winning bid is given the impression, and the ad is sent to the website that the user was viewing. This all happens within a fraction of a second and sounds like nirvana for Ford, but the question that remains is if that user is actually a human. Websites and publishers thrive off of creating audiences and driving traffic to their site because they need traffic to attract advertisers and create a revenue stream to survive.
The common organic and ethical way to create traffic, much like a newspaper does, is to create enticing and relevant content, promote your page to the appropriate audiences, and get them to visit your site and read your articles. Instead, publishers can take the fast-lane and buy audiences. These publishers, some knowingly and some unknowingly, will purchase fake audiences that create traffic to their website. Fake audiences or users can be created by malware programs that infect computers. These programs can create “botnets” by tapping into multiple computers, hijacking them, and creating a virtual browser inside the computer, and it will be invisible to the owner. This virtual browser can then mimic a real user, and when this happens simultaneously over multiple networks and computers the program can create huge audiences resulting in tantamount losses for advertisers due to fake traffic.5 An Advertising Age article, citing White Ops., an ad fraud detection firm, suggested that an estimated $7.2 billion globally will be lost to ad fraud in 2016. The Association of National Advertisers said that in a 2015 study they found that 3% to 37% of their ad impressions monitored were created by bots.9 Hardly a good indicator of the actual percentage, but the latter number should be alarming. Highlighted in the same article was a study conducted by White Ops. on a digital video for Chrysler that ran in 2014 on Sauver.tv, a website based on a food and travel magazine. The study found that only 2% of the ad views registered as human.9 Needless to say, Chrysler ceased buying ads on that site. Will marketers wise up and pull back from these convoluted fraudulent systems, or will they continue to pour money into the pockets of the online fraudsters? The need for accountability in the digital advertising industry is greater than ever.
An April 2016 article in the Wall Street Journal titled, “Television Ad Spending shows signs of revival,” suggests some companies are starting to wise up, “Some advertisers who have made big bets on digital are coming back to TV because the return on their investment didn’t live up to expectations, according to several ad buyers. Marketers are concerned about digital advertising issues including fake web traffic generated by computerized “bots” and the lack of consensus on how to judge when an ad is “viewable.” Also highlighted is a presumable shift in spending for Proctor and Gamble, the nation’s largest advertiser. The article, which cites Kantar media, suggested that P & G showed an increase in television spending in January and February of 2016.11 (Also note, I received a direct mail product in May 2016 from Gillette, a P & G company, advertising their New Gillette ProFusion razors, and yes, I used the coupon.) Adage reports in the January 2016 issue, in an article titled “The Big Agenda” that companies are catching on and shifting money more specifically to live TV programming, citing GE’s notable move to advertising on NFL and NCAA football games.12 The hype built around football games and live events cause viewers to cling to their seat even during commercials to catch the next big thing and not miss out on the next play. Hence the Super Bowl had nearly 112 million views, which was the third largest TV broadcast in history.13 Viewers need to know things that everyone else knows and be au courant; they fear missing out on what others are enjoying which is known, in modern terms, as FOMO. The FOMO phenomenon, originally defined by Dr. Dan Herman, has led advertisers to niche areas where they know people focus their attention and will be captivated by their program. This isn’t a new idea, but it is a sign that the honeymoon between agencies and digital advertising may be over.
With great uncertainty in the digital advertising space, there are few products and platforms that cut through the smoke and are unavoidable by users and measurable by advertisers. Money is flowing into the “least avoidable” forms of digital advertising which happens to be owned by Google and Facebook. The addiction to social media, particularly Facebook, is both rampant and a creator of huge audiences and is the epitome of the au courant and FOMO phenomenon. From the largest brands in America to small businesses, and candidates for the 2016 election, each is utilizing the large audiences on social media. Donald Trump, the Republican Presidential nominee who has 8 million followers on Twitter and nearly 8 million on Facebook, has showcased his ability to connect with large audiences via social media. Social media used the right way can be effective at getting a message out. Mr. Trump tweets outlandish comments and Fox News, CNN, and all the pundits rant and rave about what he said which amounted to an immense volume of earned media coverage. The networks presented Mr. Trump with a gift of nearly $9 billion in free media exposure during his run for the Republican nominee. Many brands use social media posts in traditional media outlets to harness the power of testimonials and positive word of mouth. Recent television and print advertisements feature testimonials in the form and style of Tweets and Facebook posts, hoping to attract younger generations. As for the platforms themselves, overall click-through rate (CTR) on Facebook has improved, according to a recent study conducted by Martin Software, a company that manages nearly $7 billion in digital advertising spend. Their article suggests that the CTR on Facebook has improved by 0.5% in Quarter 4 of 2015 to 0.8%.14 Facebook has opened up the advertising flood gates and now offers various formats of advertising to their audiences which include their most recent change to their content policy. Facebook now allows branded content, which is content and videos that look and feel like standard editorials but are in fact paid for by advertisers. A video is another area of growth on Facebook; the news feed algorithm is now more responsive to a video which gives video preeminence. Video has proven to be one of the fastest growing categories, and Facebook has been adapting to this change. With this swarm of various ad formats, the credibility of the posts and articles are in question. What is an ad and what is an editorial? Only time will tell if Facebook can get consistent results for their advertisers or if they will lose massive audiences because they have allowed advertising to hijack their news feed.
Ultimately what matters most is the results of an advertising campaign. Each campaign should be measured by various key performance indicators. The key performance indicator that is greater than all the rest is sales. From impressions, viewability, click-through rate, likes, tweets, cost-per-click, and cost-per-lead, cost-per-sale stands firm as the indicator of success in a campaign. Many companies have elected to go with a pay-per-lead system, where an advertising product is credited and then paid for each lead that is generated. The cost-per-lead is important, but the quality of the lead is in question. Digital advertising has proven to provide less than quality leads which result in a lower closing ratio and ultimately a higher cost-per-sale. The cost-per-lead, closing ratio, and ultimately the cost-per-sale should always be established to get a true measurement of the success of an advertising campaign. Some advertising channels, and not just digital, often result in being cost prohibitive. For example, if a home improvement company is profitable at a $500 cost-per-sale, advertising should be refined to achieve that cost per result, but if the company is losing money at $1000 per sale than the advertising products that are generating at that cost should be re-worked creatively, negotiated to a lower price or canceled. These evaluations can be tough to establish, but with the right marketing professional integrated alongside your company, it can be established efficiently. The cost-per-sale provides a level playing field for measurement. This apples-to-apples comparison allows a crystal clear picture of advertising performance in the digital realm. It divulges insights for decision making in the future and often provides leverage in negotiating with media for potential future campaigns.
The task of a marketer is to build a bridge to consumers and lead them back to the company to buy their product resulting in a profit to the company. Increasingly, it is becoming more and more difficult to plan, execute, track, measure, and audit all the varying forms of media inside the marketing realm, especially digital. Today’s marketers are required to have a grasp on all disciplines in the field to accomplish this task. David Paulovich, co-founder and President of dDaniel Advertising Agency said, “There are 15 ways to do the job and 14 do not include digital, but they can [include digital advertising] at the right price.”15 Each product should be proven to be effective with measurable results.
15.dDaniel Advertising Agency Training Seminar Series; 2007.