The Trouble With Online Advertising

Is online advertising any good?

Last week, DigiDay ran the news item titled, The Ad Contrarian’s Reality Check. Bob Hoffman (CEO of Hoffman/Lewis) runs the blog, The Ad Contrarian, and leverages the platform as a place to debunk the over-exuberance that many digital marketing and social media professionals have when they’re chest thumping or declaring the latest online platform that everyone is jumping on as panacea for brands and the future of marketing. Hoffman is direct and to the point. When DigiDay asked him if the digital ad industry was irresponsible, this was his response…

"…First is qualitatively. They initially sold us on ‘banner’ advertising by telling us that display ads would be so much more effective than static print ads because people would interact with them. Then when they found no one was interacting (clicking) they changed their story. Now, according to many in the industry, clicking (interaction) means nothing, and display ads are effective because of their ‘branding’ value. So the thing they were selling against is now what they’re selling. Second is quantitatively. We still have no idea how many clicks are fraudulent or how many are mistakes. But we’re paying for all of them. This has been a problem for years and no one seems to be in a hurry to fix it."

Ouch!

It would be easy to dismiss Hoffman as a traditional ad guy, doing everything in his aging power to hold on to the dream that tomorrow the mass population will wake up and stop using their DVRs to skip television advertising, or that cities all over the world will stop banning billboard advertising as visual pollution. Who knows, maybe if Hoffman has his way, the only way you can get the news will be rolled up on your doorstep each and every morning, or on the television at six and eleven pm (no time-shifting for you!)? Hardly. Hoffman’s insights (while jarring to those of us who have been working in the digital advertising space for close to twenty years) should act as a catalyst for those of us who are trying to establish the next generation of advertising. In fact, you may be surprised to find out that Hoffman is not alone.

We’re doing it wrong.

As if on cue, comScore (self-described as "a global leader in measuring the digital world and the preferred source of digital marketing intelligence") released a white paper last week titled, The Economics of Online Advertising, that looked at the state of online advertising. You would think that the findings would debunk any contrarian perspectives that people like Hoffman and the like may have. You may think that online advertising is the future, and that as media dollars shift to digital (because that’s where the eyeballs are) that online will be able to better serve brands in terms of delivering higher relevancy with better metrics. It turns out, that after close to two decades since the first online ad was served, that our industry still has a ways to go.

It is early… very early days for online advertising.  

MarketingVox covered the release of the comScore white paper with a news items titled, comScore: Unlimited Inventory, Lousy Metrics Cheapen Digital Ads. Here’s the crux of the white paper as described by MarketingVox: "comScore President and CEO Magid Abraham believes that two ‘unfortunate byproducts’ of aggressive innovation in the online ad ecosystem have been 1) to increase in the complexity of campaign delivery and 2) a virtually unlimited supply of inventory, both of which create significant waste in the buying and selling processes. ‘We believe that moving the industry toward a ‘validated impression’ standard introduces an element of digital scarcity that helps match the value flowing to publishers and advertisers with the value being delivered by the impression.’ In short — higher standards makes ads more scarce and valuable. Use more exacting measures (like the ones comScore coincidentally offers with its Validated Campaign Essentials [vCE] offering). This would ‘bring the forces of supply-and-demand in online advertising into greater alignment,’ said Abraham. ‘We introduce value to the ecosystem, accelerate the flow of ad dollars to digital, and foster a win-win environment for all stakeholders.’"

It’s going to take more than the validation of delivered impressions.

Google is already working on different digital advertising models (and, make no mistake about it, they are not the only ones attempting to crack this Da Vinci Code). Look no further than YouTube and their TrueView model (where advertisers pay only if consumers choose to watch the video or when a video ad is played for more than thirty-seconds without being skipped). The challenge with this model is fraud and getting some kind of third-party validation. This doesn’t – in any way – discredit the model (or Google), but it is tied directly to some of the issues that comScore has raised in their paper. 

But wait… there’s more!

Hoffman and others (myself included) are right about the creative, as well. While we do see some diamonds in the rough when it comes to digital advertising creative at the annuals slew of award shows, there is still a vast majority of brands that are either copying their traditional advertising and pasting it into digital media or the adaptation is simply not performing within the new media channel. The macro issue still remains: is it at all possible that these new, digital media channels simply don’t compliment the type of advertising we have traditionally seen in the more traditional media channels? It’s a deep and philosophical question that few brands (and even fewer media companies) are willing to face. Ultimately, if it turns out that new media is not the best fit for advertising (as we have seen to date), this begs the question: now what? Clearly, we have not exhausted all of our creative resources or seen a busted bubble in the online advertising world to call it a day, but what we are seeing is a quickly evolving industry that is trying to keep pace in a world where advertising is no longer based on a scarcity model and the consumers are not clicking with the vigor and enthusiasm that the industry had promised to brands.

What’s your take? Can digital advertising turn a corner or will it simply commoditize the value of advertising even more?

The above posting is my twice-monthly column for The Huffington Post called, Media Hacker. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original version online here:

• The Huffington Post – Online Advertisers Still Don’t Have it Figured Out.