Online Ad Viewability Problems Worse Than Reports Suggest

Online Ad Viewability Problems Worse Than Reports Suggest

Should Digital Out-of-Home Media Leverage Online Advertising’s Viewability Problems?

NEW YORK, NY — Online advertising has a major problem—viewability. According to Google, more than 56% of ad impressions served across its network are never seen. This is a remarkable concession from the leading provider of online display advertising, but Google’s news is only a small part of a much larger story. As we start 2015, the bad news for online advertising has only intensified.

According to a recent article in AdAge, Kraft is now rejecting nearly 85% of all ad impressions because the impressions were found to be fraudulent, unsafe, non-viewable, or originating from unknown sources. This news should send chills down the spine of every marketer. Kraft spent $35.9 million on Internet advertising in 2013, according to Statista. But in a truly remarkable turn of events, the advertising agency trade association 4As, has publicly opposed the association that represents online publishers, the Interactive Advertising Bureau (IAB), over viewability standards that have placed each association in polar opposite positions. Both associations recently pledged to work together to solve the rampant fraud and viewability issues that currently plague online advertising; however, on December 19, the 4As sent a letter to its members calling for stricter standards and stating that it won’t endorse the IAB’s latest viewability guidelines.

The IAB’s viewability guidelines state that 70% online ad viewability is “good enough” for now, labeled 2015 a “year of transition” for online advertising, and called on agencies, publishers, marketers, and advertising technology companies to work together. The 4As leadership called on its members to reject the IAB’s recommendations, saying the 70% figure is “unacceptable.”

The IAB is following the recommendation of the Media Rating Council (MRC), the organization charged by the advertising industry with managing the Making Measurement Make Sense (3MS) process. The MRC’s viewability metric defines an impression as an “opportunity to see” based on a percentage of partial visibility and time. For display advertising, the proposed viewability standard calls for 50% of a display advertisement’s pixels to be viewable for a minimum of 1 second. Desktop video ads are considered viewable if 50% of the video’s pixels are viewable for a minimum of 2 seconds. The guidelines were developed to help publishers and advertisers determine which ad impressions are considered valid and therefore billable. But it’s simply unacceptable to expect advertisers to pay for non-viewable advertising in any percentage, and no message, no matter how simple, can be absorbed in under 2 seconds. According to Adweek, the MRC has received many complaints about the 2-second mandate; however, the MRC suggests the metric will evolve as ad-tracking technology improves.

The MRC has said that 100% viewability is currently unreasonable because current technology can’t consistently measure all online impressions. Different ad units, browsers, ad placements, vendors, and measurement methodologies currently yield wildly different viewability statistics.

The IAB has said that advertisers need to adjust expectations to the 70% threshold based on the technology’s current limitations, and that publishers need to “make good” on all advertising campaigns until the 70% threshold is met.

Viewability Is Not Online’s Only Problem

The IAB’s current emphasis on ad viewability has camouflaged online advertising’s overarching problems by sidestepping several big issues that are unlikely to be solved in the near term:

Viewability is irrelevant. The effectiveness of online advertising has nosedived every year since the first banner ad was introduced. In 1994, a banner ad on HotWired reported a clickthrough rate (CTR) of 78%. In 2011, the average CTR for a Facebook ad was dramatically lower at only 0.05%. Effectiveness has also declined for other digital marketing platforms such as email, online search, and in-app mobile advertising. The fact is, once the novelty wears off, engagement drops off too.

Consumers are less receptive to display advertising. Consumers actively filter unwanted content through mental firewalls, banner blindness, and ad-blocking software, rendering most online advertising ineffective. This is especially true of the younger consumers brands seek to connect with. According to Forbes, more than 22% of web surfers actively block advertisements, and it’s projected that the use of ad-blocking software will continue to grow at a rate of 43% per year.

Ad retargeting annoys consumers. According to a study by InSkin Media and Rapp Media, more than 50% of consumers are put off buying an item they have previously expressed an interest in online if they are retargeted with ads multiple times after initially researching it. According to the report, people become “annoyed” and consider the ad intrusive when they see it 5 times. They become “angry” when the same ad is pushed more than 10 times.

Continuing reports of fraud have compounded the problem. According to the Association of National Advertisers (ANA) and an online fraud detection firm White Ops, almost 25% of video ad impressions and more than 50% of third party–sourced traffic are fraudulent.

Moving Ad Dollars to Digital Out-of-Home From Online Media

There is a lot of money at stake in online advertising for publishers, agencies, and ad-tech companies. According to PwC, Internet advertising is rapidly closing in on TV advertising to become the largest advertising category. In 2013, total Internet advertising revenue reached more than $117bn (US), and is projected to increase to more than $194bn by 2018.

The debate among advertisers, publishers, and associations is likely to heat up in 2015 as online goes through its “year of transition.” In the meantime, it’s difficult to imagine any advertiser having full confidence in the medium until all of the issues are resolved, and it’s likely going to take longer than a year.

So with online media buying in disarray, could this moment translate into a larger opportunity for digital out-of-home (DOOH) advertising networks?

The current confusion in the online media ecosystem represents a significant opportunity for DOOH media. Digital out-of-home advertising is in a unique position to wrestle ad dollars from online budgets provided that digital out-of-home ad network data are comparable to other media, such as television and online. Dollars are moving to digital out-of-home, but not as quickly as everyone in the space would like. Most marketing budgets are fairly fixed and flat, and there is no magical pool of new money coming into the marketplace, so emerging media channels such as digital out-of-home media have to pull dollars from more established channels. This takes time and opportunity.

Media planning takes its cues from consumer interactions. We know where digital screens are, we know where people are, and we know what they are doing with their mobile devices. In theory, it should not be difficult to triangulate the data to help move ad dollars to digital out-of-home advertising, and some networks are successfully navigating this path.

When we think about the challenges marketers are currently experiencing navigating their brands through the online ecosystem, it’s not surprising they’re considering shifting ad spending to more reliable, safe alternatives such as digital out-of-home media. In the quest for ROI, it’s time for marketers to stop thinking screens, and instead, start thinking locations.

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