UPDATE: INTERNET STATISTICS & TRENDS IN 2019 – Click here
The digital ad business is in a bad place. Let’s call it what it is, a crisis. Am I a voice in the wilderness crying wolf? Not really. Here is how Bob Liodice, the President of the Association of National Advertisers sees things: “The level of criminal, non-human activity literally robbing marketers’ brand-building investments is a travesty. It also underscores the need for the entire marketing ecosystem to manage their media investments with far greater discipline and control against a backdrop of increasingly sophisticated fraudsters.”
Advertising has always been a bit of a “casino royale”. You can go back hundreds, even thousands of years to trace the evolution of the ad business. In the early 1900’s a Philadelphia businessman, John Wanamaker, said it well as follows: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Fast forward to 1994. Internet usage was growing quickly. By the end of 1994 there were 35 million users worldwide with 60 percent of those users in the USA. Internet penetration was 0.6 percent of the world population. The wild wild west of the internet was born. Mary Meeker’s 2015 Internet Trends report says by the end of 2014 there were 2.8 billion internet users on devices of all kinds; 39 percent penetration of the world’s population.
The digital advertising business was born on the desktop with the first clickable banners. Sears, IBM, Coors and ATT led the way. Finally, we had hard data to tell us how many impressions were delivered and how many people actually clicked on the banners. Advertising was quickly becoming a predictable and trackable science. So what happened along the way to this new advertising world order? Money happened and the digital robber barons emerged. And if you go beyond the world of digital ad fraud and look at the ad tech landscape, Adam Kleinberg, CEO of Traction in San Francisco offers his unique perspective. No question, growing pains for this 22 year old whippersnapper we call digital advertising are upon us.
By 2014 the worldwide internet ad spend was pegged at $137 billion according by eMarketer. Ad Age reports that for every $3 spent on digital advertising, the thieves will take their $1 share. Fraud dollar totals for 2016 range from $7 billion to $18 billion to $43 billion depending on which industry source you use. The industry term digital fraud is leakage. There is one constant in all of this, leakage is growing rapidly.
When you talk to marketers many shrug their shoulders and just accept fraud / leakage as part of the “game”. Really? This was not how it was supposed to be. As the growth of digital ad fraud accelerates, up to 20 percent per year, it’s quickly become one big worldwide hackathon to see how the digital robber barons can outdo one another in gaming the system to their advantage. The hard science we had all hoped for with the advent of digital marketing 20 years ago now has the distinct potential of turning into a completely fraudulent system of doing business.
Ad tech’s focus on data, media, real time bidding and programmatic for the last 15 years has not helped the situation. It’s been the march of the machines. While fraud and theft have grown exponentially, the quality and types of online marketing have fallen way short of what could have been possible. Leo Burnett, David Ogilvy, Hal Riney and the old guard that saw advertising as a business, but a uniquely human one where human emotion was key ingredient in any ad campaign, would be deeply saddened to see what their business has turned into.
Is there hope? I think so. The IAB, ANA and others are doing their best to address the the Big Leak, but they can’t go it alone. There needs to be an international consortium to deal with this level of illegal activity. Integrity, truth and trust, which may sound boring, need to be at the forefront for digital marketing leaders moving forward.
The potential “white knight” in all of this is the emergence of the Creative Management Platform (CMP). I think the CMP has the opportunity to save this business from itself. Among most CMP’s there is a tacit admission that digital advertising sucks and we can do so much better. That is a great start. The mission of the CMP is all about what this business was built on—building smart, beautiful, inspiring creative that real people will want to engage with, in the same way they would engage with content they consume. And of course tying in that uniquely human component, human emotion, to what has become a business of cold steel on ice that is data and machine driven.
The CMP’s are playing catch-up, but they are coming on fast. They are building new ad tech platforms that tie together content, design and data producing highly personalized ground-breaking creative that brings brands closer to their digital audiences. Isn’t that what this business is all about?
The CMP’s will likely need to join together with the rest of the industry to get us out from under the Big Leak before it becomes a tsunami. A simple integration of code into their platforms that catches those “make believe” impressions (and other fraudulent schemes in development) and sourcing, tagging and blocking them and then moving that great creative on to its intended destination. Easier said than done, but definitely doable.
In closing, a quote from Marc Baum (Steve Carell) from the film “The Big Short” resonates:
“We live in an era of fraud. Not just in banking, but in government, education, religion, food, water, even baseball… What bothers me isn’t that fraud is not nice. Or that fraud is mean. For fifteen thousand years, fraud and short sighted thinking have never, ever worked. Not once. Eventually you get caught, things go south. When the hell did we forget all that? I thought we were better than this, I really did.”
May the Creative Management Platforms save the advertising business from itself.