In this opinion piece, adtech specialist Simon Larcey (pictured below) explores the murky world of digital measurement, and argues that it is time for the industry to focus on real business results rather than clicks and impressions.
It’s a strange world we live in when digital advertising – the one media channel where accountability and measurement are supposed to be more accurate and exact than anywhere else – is perhaps the murkiest of all when it comes to results. Sure, we can wax lyrical about clicks and impressions until we are blue in the face, but I am talking about genuine results and business outcomes, such as sales, ROI or true engagement.
The perfect example is JP Morgan. They cut their digital advertising from 400,000 sites to 5,000 sites and saw no reduction in their performance metrics as a result. They just did more on less and made the whole digital advertising process more efficient and accountable.
In a digital landscape where ad fraud is running rampant and the digital giants are making it all but impossible for smaller players to get a share of the pie, the need to focus on real business outcomes is more important than ever. A focus on business results will help to level the playing field for digital publishers and brands alike.
In recent times, digital advertising has relied predominately on Google and Facebook, while the introduction of Amazon into the Australian market will no doubt bring a third giant into the local space. This makes it all but impossible for smaller publishers to compete in the current marketplace. However, if the metrics of digital advertising were to change and we solely focused on outcomes and not clicks or views, maybe the publishers could claw back preference?
The duopoly is a universe of unlimited advertising impressions. You could not fill all the space with all the money in the world, and advertisers and their agencies are pouring billions upon billions of dollars into these channels with some pretty average results. Don’t get me wrong, I’ve also seen some outstanding results, but the most impressive were back in the early days when the interface was simpler and the analytics were more directly related to outcomes. When you posted an update, you actually reached your followers. When you bought an Ad Word, you were not competing with the rest of the world. Success for the duopoly has been at the expense of their customers.
Google (YouTube) recently updated its advertising requirements, which it hopes will address problems like ad fraud, transparency and brand safety. Maybe I’m cynical, but I often get the notion that the duopoly is only reactive when addressing these issues. And why would they want to be proactive – it would eat into their revenue. Ad verification company Adloox predicts that last year in the US alone $16.4 billion dollars was spent on fraudulent digital advertising. Now, if we were to use the 80/20 rule and say that Google and Facebook account for 80 per cent (a rough formula, I know), that means the duopoly potentially took revenues of just over $13 billion on advertising not seen by humans. Why would they want to develop systems to address this? Their revenues would substantially be reduced.
In order to move towards an outcome-based model, there are five key areas that can be addressed:
- Culture – the relationships between publisher, advertiser and agency should be opened up. If all could work more collaboratively with a common goal, expectations could be managed, KPIs set and real outcomes achieved.
- Technology – automated and programmatic platforms should be made simpler to use and easier to understand. Platforms that give publishers, advertisers and agencies access to the same information will ensure total transparency and a better understanding of the options available when buying and selling digital advertising
- Education – the industry should develop more training on the automated and programmatic buying and selling tech stacks currently in market, how they work, what they do, and what platform is best for what advertiser. The programmatic world is still very young, and we need all parties involved to understand how it works. It is the future.
- Agency performance – adopt a similar rating system to hotels, and give agencies a star rating based on annual performance. Make their performance transparent and give advertisers the best chance at success.
- Industry consensus – get industry bodies like the IAB and MFA to introduce outcome based metrics, and have them move away from clicks and impressions. These old school metrics have been around since the 1990s and digital advertising has changed substantially in over 20 years.