Why Fewer Ads Will Benefit Our Entire Industry

The most potent opportunity of digital marketing is the ability to access and leverage data about nearly everything.  Data-driven or “programmatic” marketing isn’t just about RTB, exchanges, DSPs, or trading desks – those are means, not results.  It’s about the ability for marketers to understand and make intelligent decisions about where their messages are being placed, to whom they’re being targeted, and with what specific outcomes.  This is an incredible economic opportunity for both marketers and publishers if the two sides come together and get it right.

It’s a false or at best incomplete notion that fraudulent traffic is supply-specific.  It’s equally false to conveniently say that this is a “long-tail” problem.  Proper network hygiene falls into four main categories: 1: content or copyright theft; 2: non-human actions; 3: low or no viewability; 4: laundering / obfuscating URLs.

 If we are to really tamp fraud out of the ecosystem then we (meaning: all legitimate players in the market) must come together as a group and address each issue above, consistently and universally.  The buy side (DSPs, trading desks, brands themselves and ad agencies) must stop relying on easily gamed or spoofed metrics.  Major sources of supply (SSPs/Exchanges, ad networks and publishers) must collaborate on stopping the money flowing to bad traffic (money that often flows intentionally, to game the same metrics and KPIs that make buyers’ agents look good).  And just as importantly, the browser companies have to finally join the fight and act like the utilities that they are.

Ad fraud and poor network hygiene is not isolated to the supply side; it’s an industry problem that has to get resolved or else we’re collectively recreating the tragedy of the commons where individual self-interests will eventually destroy the ecosystem we all depend on.  Punchline: when we collectively address ad fraud in online marketing there will be fewer pageviews, fewer uniques and, of course, fewer ads.

Here’s why that’s a good thing:

First, marketers will spend more.  There is no doubt that the economics are built into the current system.  At a macro level, marketers spend and get positive returns on that spend; otherwise they wouldn’t spend and that spend wouldn’t be growing as dramatically as it is. In fact, the return of placing more good impressions to more real people, where they can view the message, and on a page where it makes sense, will only increase return on the marketer’s investment.

Second, good publishers thrive.  Publishers create the content that attracts the audience.   Good publishers are under extreme economic pressure as they get less and less of the money when it leaks to bad or fraudulent placements.  Unfortunately for the good guys, too many of them respond by adding to the glut of supply by putting more ads in more places all to maintain an RPM that keeps them in business for a while longer.  This is a race to the bottom, and it has to reverse course.  Fewer ads on better pages that earn higher values are the way out.

We need less noise and more signal.  The adtech and programmatic ecosystem is a constant chest-thumping of “speeds and feeds” that makes sense for a super scale business, but it’s the nature of that scale that really matters.  Higher CPMs and better fill rates on good traffic will mean higher RPMs and more revenue for publishers.  Ultimately it also gets a better ROI for marketing campaigns.  It starts with more good and less bad.

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7 comments about "Why Fewer Ads Will Benefit Our Entire Industry ".
  1. Tom Cunniff from Tom Cunniff , April 10, 2014 at 10:59 a.m.
    Brilliant, and important. Will the industry heed the call? Can it, when most of the short-term incentives are aligned against it? A challenge is cultural: most of us started in the business when media was relatively scarce and had relatively greater pricing power. Everyone's training was to negotiate hard and drive media costs as low as possible. Now that media is impossibly abundant, the push for every lower CPMs has become counter-productive: we reward bad behavior and offer limited incentives to do the right things. Getting to fewer ads requires a re-setting of incentives. IMO this can only be accomplished if, as you suggest, the industry's leaders band together to demand it. The swamp ain't going to drain itself.
  2. Ari Rosenberg from Performance Pricing, LLC , April 10, 2014 at 11:01 a.m.
    Walter I am working on my OPI column for next week and when I read yours today, I looked over my shoulder to see if you were here reading my draft. I could not agree more with your thoughts -- they are 100% correct but my fear is that self interest will continue overpower proper behavior. Adopting your points in this column would prepare our industry to thrive for many many years, instead of dying a slow death before our very eyes. Hype is clouding the real story here thanks for shedding light on our problems and how to fix them.
  3. Seth Ulinski from TBR , April 10, 2014 at 11:20 a.m.
    Great points, Walter. Would be curious to know if fraudulent traffic is largely confined to desktop inventory? I touched on the idea of fewer ads in a recent OPI write-up (http://bit.ly/1hUAnry). I'm thinking yield management and algo specialists should dig into long-term benefits of "smarter" ads versus littering the page with ads due to short-term RPM.
  4. Mike Einstein from the Brothers Einstein , April 10, 2014 at 11:46 a.m.
    Thanks for reminding us that less invariably yields more. It's just too bad there's no app for common sense. Good job, Walter!
  5. Jaffer Ali from PulseTV , April 10, 2014 at 12:05 p.m.
    I would also add that publishers who put HUNDREDS of links to additional content or exit links compete with advertiser links. In the attempt to get more page views, publishers relentlessly compete with advertisers...but they do not see it that way.
  6. Bob Gordon from The Auto Channel , April 10, 2014 at 1:42 p.m.
    Sorry this is so long... I have lots to say. As a long time web publisher (20 years) we have seen them come and seen them go, but the one constant is that revenue is controlled by know-nothings. For 19 years we have been trying to convince all who would listen that a web site should be used as an efficient medium to effectively deliver one qualified prospect at a time, priced on a cost per visitor basis like a successful direct mail drop, rather than considered and priced as a mass medium like TV. The unfortunate result is obvious, the know-nothings took advertising on the web down the wrong path...a direction that after twenty years has proved unsustainable and even more detrimental has prevented on-line publishing to reach its true potential. Publishers cannot sustain editorial integrity despite most web pages filled with as many ads as a NASCAR vehicle. The historical wrong path continues to force brands to purchase millions of mostly empty impressions to try to generate meaningful results, and has forced viewers to navigate through ultra cluttered content pages making potential customers blind to the advertiser's message which has made desperate brand marketers a willing target for purveyors another Emperors New Clothes, resurrected advertorials that have been renamed native advertising and embraced by today's "don't get-its", resulting in a generation of advertising "experts" that are not open to a real solution that can eliminate the web's revenue death spiral. To that end to ensure The Auto Channel's future viability we have embraced a new and unique content and advertising delivery solution SERP DIRECT MEDIA, which converts our editorial content into an uncluttered document and integrates it into a single advertiser's relevant and parallel full screen take-over, and sends both directly to an absolutely targeted viewer, at a cost per visitor that works for both the publisher and advertiser. If you wish to see more about our solution go to http://www.theautochannel.com/news/2014/03/27/107508-serp-direct-media-making-auto-channels-content-king-for-all.html
  7. Jaffer Ali from PulseTV , April 10, 2014 at 3:07 p.m.
    Bob, kudos for understanding the publisher's role and knowing what business you are in. Nice post.