Online advertising enters the ‘fixing phase’

Online advertising has had a pretty bad rap in recent years. From arbitrage and mis-measurement issues, to opaque trading practices and data-misuse, the charge sheet is long and varied.

However, some industry bosses have now argued the case for optimism – suggesting the industry is entering a “fixing phase”.

Speaking at the 2017 Automated Trading Debate – a forum that usually delivers bad news for everyone except shadowy adtech middlemen – Rupert Staines, managing director EMEA for RadiumOne, said the industry has every reason to feel cheerful about the future.

From GDPR and the growth of the ads.txt project, to an upcoming period of consolidation and efficiency, the ‘crisis’ of adtech looks like it is finally under control.

“I fundamentally disagree that the industry is in crisis,” Staines said. “It’s still young and it really only boomed over the last ten years. But I think we’re beginning to come out of that period where it’s all doom and gloom about adtech.

“We have the ability as an industry to now fix a lot of stuff and think we’re in that fixing phase right now.”

Part of that is the recent introduction of the ads.txt project – shorthand for authorised digital sellers – which offers a “simple and secure” method for publishers to publicly declare which companies they have authorised to sell their digital ad inventory.

Supported by the IAB, the project creates a public record of authorised digital sellers, and therefore should create greater transparency in the inventory supply chain. It also gives publishers control over their inventory in the market, making it harder for so-called bad actors to profit from selling counterfeit inventory.

The IAB says just under 20% of the UK market has now started using ads.txt, with the figure closer to 30% in the US.

“You get bad actors in every industry, but the barriers to entry in media have always been very low,” Staines said.

“But fixes are coming and ads.txt is an extremely good way for publishers and the buying community to understand who is authorised to sell that inventory. That will have a massive impact.”

GDPR

For Total Media’s head of broadcast, Liz Duff, the imminent arrival of GDPR is also set to solve some of the issues that have undermined trust in recent years.

General Data Protection Regulation, the biggest disruption to privacy law in two decades, will completely change how brands, agencies and adtech businesses are allowed to use consumers’ personal data and track online behaviour.

While some think it will play havoc with data-driven marketing techniques when it comes into effect in May 2018, Duff argues it will reward the best and punish the bad, thus driving quality in the market.

“What we’re going to see is a reduction in the use of third-party data segments that are of variable quality,” she said.

“We’ll also see advertisers having to take much more responsibility in how they collate and organise data and how they use it; we’re going to see the customer experience go through the roof and for some brands what we’ll see is a drive towards quality, and that quality being rewarded.”

Duff added GDPR should also improve ad retargeting, one of the most loathed tactics in modern marketing.

“We’ll see much less of this chasing people around web that didn’t want to be chased business. It’s going to weed out some of the bad players.”

Meanwhile, Paul Wright, CEO of iotec Global, said: “GDPR will help fix some of the trust issues facing the industry because to some degree it’s a forcing of transparency.”

Wright, whose business offers transparent media buying by using machine learning to identify and understand consumer intent, said he is therefore positive about the future. However, he said negativity around some of the things that have happened over recent years must be dealt with much more quickly.

“Clients are still worried about the way in which their money is spent,” he said. “So start by being clear about how you are using customer data, what price you are paying for the actual media, what margin you are taking, and where you are buying that media from.”

Consolidation

Another reason to feel optimistic about the future, is the likelihood of adtech consolidation, Staines said.

“If you look at every other media channel over the course of history, you start with a lot of players and end up with just a few. We’re going to end up with very few,” he said.

This might come as a relief to publishers, who have used previous Automated Trading Debates to lament the problem of adtech middlemen who provide no tangible value in the supply chain.

Last year Mediatel revealed that in worst case scenarios, for every pound an advertiser spends programmatically on the Guardian, only 30 pence actually goes to the publisher.

At the time, the Guardian’s chief revenue officer, Hamish Nicklin, said: “There are so many different players taking a little cut here, a little cut there – and sometimes a very big cut. A lot of the money that [advertisers] think they are giving to premium publishers is not actually getting to us.”

Staines said part of the problem is that value has not been properly defined in the past, but that is now changing.

“It takes adtech to deliver an ad and that costs money…but I can now only identify two areas of the so called ‘tech tax’ that are genuinely questionable.”

Staines also noted that verification companies, although providing an essential service, were not offering an “end-to-end” solution, and so charging the client, agency and supplier at each point of contact.

“No disrespect to those companies,” he said, “but they are taking probably three bites of the cherry out of each transaction.

“That’s got to stop, and it will stop. I think you’ll see more consolidated, end-to-end solutions in future.”

The counter-views

Of course, not everyone is so confident about adtech’s future and some audience members Newsline spoke with described the generally rosy predictions as too optimistic.

“The debate felt divorced from the industry of advertising,” said Simon Redican, CEO of PAMCo, the audience measurement body for published media.

“This was most stark when a number of contributors gave Panglossian marks out of ten for the industry’s future prospects. This despite the audience hearing the usual litany of issues such as lack of transparency, a murky world of ad fraud and click farms and a decline in the effectiveness of the actual advertising.

“I was left with the distinct impression that the positivity was less about the future prospects of the advertising business and more about the ability of savvy operators to continue squeezing a profit out of an industry where their value remains largely unproven.”

Meanwhile, Bob Wootton, a consultant for Deconstruction and previously the director of media and advertising at ISBA, said: “The perpetrators of the problems are either criminals with high margins and no obligations or costs, opportunists with no long term engagement, or huge corporates with equally huge vested interests.

“So even if everyone commits to cleaning things up, over 80% of the buying and selling markets have yet to declare anything more than corporate affairs puff.”

However, Wootton, who said he was pleased by the openess of the discussion, added: “But I am seriously hopeful that that will change, driven by continuing client interest and challenge.”

The Automated Trading Debate is hosted by Mediatel. For more information on future events, click here.