Commentary

Ad Tech Poses A 'Grave Threat'

Last week, long-time MediaPost columnist Bob Garfield offered his “swan song.”  In his final column for MediaPost, Bob, ever the provocateur, discussed “grave threats” to the business MediaPost covers.

The top one? Ad tech. No surprise there. The sector is imploding. Its less than transparent practices are catching up with it. One might go so far as to characterize ad tech as a “cesspool.”

But Bob put it this way: “This is a force in the media economy that is something like Wall Street in the general economy. It takes money, but adds little value. It is instead a middleman, consuming ever-larger percentages of media spend (with astonishing lack of accountability) at the expense of marketers and media alike. But after 15 years, has it boosted the underlying consumer businesses? The answer is plainly no.”

While that sentiment hits with a kind of blunt-force trauma, is there anyone who would take issue with it?

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Moving on. The second threat? “Native." It’s interesting that Bob didn’t mention content marketing as a whole, of which native advertising is a subset. What he did say is that “native” is a “conspiracy of deception."

Bluntly put: “Whether the ‘content’ is good or bad is irrelevant. What is relevant is that it can win engagement only if it camouflages itself as editorial matter. Anyone who tells you differently is lying. It also doesn't scale. So the best it will ever do -- while it steadily, inexorably barters away the dearly won trust of audiences to media brands -- is a labor-intensive, low-margin adjunct source of revenue. It's like turning tricks to help make ends meet….but still not covering the light bill.”

There’s no place to take cover from that statement. And whether you agree with that view or not, it cuts to the heart of the matter, which is consumer trust. But is native really only a “low-margin adjunct source of revenue”? Perhaps Bob didn’t see the eMarketer forecast on native ad spending released in late March. The research firm points out that the majority of U.S. native display ad spending is allocated to social networks like Facebook. In 2017, eMarketer projected that native social network display ad spending will reach $18.59 billion, or 84.2% of all U.S. native display.

In addition, eMarketer projects that native mobile display ad spending will reach $19.50 billion this year, representing 88.3% of all native advertising. The research firm points out that nearly all U.S. native display ads are purchased programmatically; in that vein, it projects that native programmatic will represent 84.0% of all native digital display ad spending, or $18.55 billion. Those numbers, if borne out, don’t really seem like “adjunct” revenue.

Finally, the third threat Bob calls out is the Facebook and Google duopoly, which is hoovering up of all the advertising cash. However, Amazon and others are quickly ramping up and may pose mini threats to the duopoly.  Bob writes about Facebook and Google: “They are simply too big, and increasingly too dominant both vertically and horizontally. Simply on economic-power terms, they need to be broken up, like Standard Oil of Ohio and the old AT&T.”

Between fake news, brand safety, digital ad measurement snafus, transparency, and data security issues, the duopoly is on everyone's radar.

3 comments about "Ad Tech Poses A 'Grave Threat'".
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  1. Ed Papazian from Media Dynamics Inc, May 31, 2017 at 9:25 a.m.

    Good one, Tobi and also, Bob, of course. Regarding the "duopoly" I wonder how long it will be before the feds recognize the problems  caused by these two giants monopolizing the digital ad market and moves in to break them up into smaller pieces---as was done with "Ma Bell" some years ago, and the NBC radio networks in the early 1940s? I haven't studied the legal implications but it seems to me that the assumption that competition can restore the needed balance may not work in this case.

  2. Leonard Zachary from T___n__ replied, June 1, 2017 at 3:36 p.m.

    People pay $0 to access Google and Facebook. AT&T charged big$$$ for skinny copper lines. Does not meet the legal requirement to define monopoly, anyone can set up a top level domain on the Internet to access the world, no road blocks there. Come up with a better mouse trap if one wants to compete with duopoly. It's called Free Market Competition. 

  3. Ed Papazian from Media Dynamics Inc, June 1, 2017 at 5:03 p.m.

    When one huge company interferes with and/or punishes a smaller one that is dependent on the larger entity for much of its income for not obeying the giant's rules, this is the kind of thing that the feds will eventually want to break up. The same thing applied to the broadcast TV networks who were monopolizing original program development in the 1955-1970 period, to the point where an independent producer who wanted to get a show on national TV either dealt with one of the three networks or was simply out of luck. Competition from the very weak independent stations of that era wasn't going to break this monopoly so the FCC created the Prime Time Accesss Riule which removed the networks from half an hour of primetime nightly and spurred a revival of new syndicated and, for a time, advertiser-sponsored shows.

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