The Problem With Ad Tech Isn't The Tech

I’m a guy. And given that, it’s astonishing how many Tampax ads in Spanish I’ve been fed on my laptop over the past few months. 

Now I do happen to speak Spanish. But no matter how many ads you send, and in how many languages, I will never menstruate. I am neither a potential consumer nor influencer in the purchase of Tampax products. Procter & Gamble’s ad dollars are 100 percent lost on me. 

The problem is not bad ad technology. The problem is the astonishingly misaligned incentives between big advertisers and the media buying agencies they employ. 

Many media buying agencies are regularly compensated with a percentage of the dollars they spend on behalf of clients. They recognize that revenue when that budget is spent. Frequency caps? Good-bye. Targeting? Everyone. Spend baby, spend. Dog owners get cat food ads? Yes! Men getting feminine hygiene product ads? Sure! Every dollar not spent means less for the agency, so not-really-close is close enough. 



The weird thing to me is this: The heat that is starting to come down from large advertisers onto the digital advertising ecosystem seems somewhat misplaced.

Tampax parent Procter & Gamble’s Chief Brand Officer Marc Pritchard has ripped the ad tech industry and threatened to stop buying digital ads that can’t provide third-party, accredited, audited measurement. And sure, that’s a legitimate complaint. There are lots of pernicious irritants. Bots and fraud. Facebook’s conveniently misstated video numbers. Metrics so ambiguous they become meaningless. 

But my take is: That’s maybe 10% of the real money-wasting problem. The technology available in the digital ecosystem isn’t crap – there is plenty of remarkable technology sitting on top of lots of remarkable data waiting for highly targeted deployment. Don’t believe me? Check out The Trade Desk’s remarkable tech stack and stock performance. 

And yet someone late last year was spending P&G’s money to make sure I saw that Tampax ad  10 or 12  times. That’s not bad technology. That’s a media buyer who’s decided there was no way to spend the allocated budget within the allocated time frame and instead chose to broaden the defined audience at fractional value. Go back and tell the client they budgeted too much for saturating their target? Say what? The quarter ends in two weeks! 

So what we get is digital targeting that looks an awful lot like traditional media blunt instrument, yes-I-know-I’m-paying-for-eyeballs-I-can’t-use ad buying. We get Vietnam- style carpet-bombing body counts instead of Desert Storm-style cruise missile strikes on tightly defined targets. 

The implications of this lack of agency-advertiser incentive alignment are reverberating through the entire media industry. Rather than pay high CPM’s for direct-hit targeting, the ecosystem is hung half way across the bridge from the traditional media era to the digital one. 

That dynamic rolls all the way downhill on the publisher side, placing way too much value on the useless clicks of an imprecisely targeted consumer, which in turn spawns clickbait headlines, idiotic click-fifty-times-to-read-it garbage from content recommendation engines, ad-blocking, reader-unfriendly experiences, a lack of appreciation of the value publishers bring, and most of the other ills afflicting modern digital media. 

There are no angels here. The Facebooks and Google/YouTubes have played fast and loose with metrics and verification. The digital advertising ecosystem has taken good technology, wrapped it in loose definitions and bad business logic, and built an eight- layer cake of a structure that leaves far too much of an advertiser’s budget in the hands of middlemen. 

And then too many executives at big advertisers have avoided the hard, intellectual work of understanding that whole layer cake by demanding misaligned relationships with their agencies. They end up commoditizing agency expertise instead of deconstructing just what does and does not bring value to their marketing equation. 

So the indignation comes aimed at small problems while the big problems – and the big opportunities solving them would represent – roll on. 

In the end, most media agencies are optimizing for dollars out the door. Ads at the end of the day are only optimized in the very loosest sense of the term, because all of the incentives are wrong. 

That’s the state of the economic and behavioral relationship between brands and agencies, especially large ones. At best, it’s confounding. At worst, it’s a scam. But the system will go right on serving me up those Tampax ads until someone at P&G attacks the root incentives causing it. 

1 comment about "The Problem With Ad Tech Isn't The Tech".
Check to receive email when comments are posted.
  1. Craig Mcdaniel from Sweepstakes Today LLC, July 15, 2017 at 2:41 a.m.

    As a publisher, I work directly with several of the large ad agencies. They have taken the time to understand what I am doing with text link URL ads and they are far superior in results. However nearly the whole industry that a ad cannot be presented professionally other than banners.

    Ask yourself this question. Why do you think Google has refused to create an ad network to sell ads? Why doesn't Google offer to sell text link ads? The answers is about control of the ad market.  This will also answer some of your questions also.

Next story loading loading..