The online ad business is throwing away its reputation
The potential of programmatic trading is exciting - but it's fast turning into a toxic mess, writes Brian Jacobs, founder director, Enreach.
Trust and reputation are fragile concepts. You work hard to build your business on solid foundations, and then one bad call destroys both your reputation and your customers' trust, instantly. Ask Volkswagen. Or indeed Henry Ford, who once said "You can't build a reputation on what you're going to do."
There are too many involved in the online advertising business who aren't trusted, too many who have harmed its reputation. Says who? Say the only people whose opinion actually counts for much - the advertisers.
The evidence is all around us. The number of large advertisers deciding either to 'do it themselves' or to use a specialist separated from their mainline media agency is growing; the volume of public statements from both individual advertisers, or from their trade bodies; some would even say the huge number of pitches going on in the US at the moment (around US$25bn worth by some estimates) all connect to a lack of comfort with the online ad business.
The current situation is simply unsustainable. We can all make jokes about drowning in acronyms, about complexity and confusion but the facts are pretty simple.
There are too many middlemen getting in the way between the publisher, who attracts and builds the audience through the variety and quality of the content produced, and the advertiser who wants to reach that audience with his commercial messages.
A recent Ebiquity study on behalf of the World Federation of Advertisers estimates the so-called 'technology tax' at around 60%. So - for every $100 spent by the advertiser, $40 finishes up in the titles selected to carry the message.
Those that exist within that gap between advertiser and audience have to add value, or there is no point them being there.
From the advertiser's perspective: "I'm paying 60% for what exactly?"
From the publisher's perspective: "What am I gaining that justifies me giving up 60% of my revenue?"
A combination of publishers, who are suffering with the cost of creating the content that attracts the audiences advertisers want, and advertisers who may not always be that familiar with the mechanics but know that their budgets aren't ending up where they can do the most good cannot equal a sustainable business model.
Add in consumers whose opinion of online advertising can be measured by the increasingly large numbers flocking to adblockers and you have a toxic mess.
These are the challenges facing those involved in the automated trading debate. On the one hand we have more data than ever before. On the other hand we seem to be intent on proving that there can be such a thing as too much data.
What is needed is informed application of the technology and the data out there. I feel 'informed' needs to mean 'informed by serving the advertiser better', not 'informed by making a greater margin for my holding company without admitting to any such thing to my advertisers'.
The potential afforded by the whole concept of programmatic trading is exciting. All that data can help create better, more informed plans. If the distance between planner and publisher can be shortened then advertisers and publishers will gain.
There's no particular reason why this cannot happen. Enreach in our home markets of the Nordics, as well as in mainland Europe and Latin America, has developed Audiences Guaranteed, a tool that links planners, and their aim to deliver effective and efficient campaigns for their advertisers, with publishers and their audiences.
Of course there will always be a major role for negotiating, for evaluation, reporting and so on, and all are accommodated within Audiences Guaranteed. Our aim is to have the plans fully integrated with the buys as opposed to having either process silo-ed and separated from the other.
We welcome the opportunity (already taken up by one group) to work with agencies as well as with publishers. The best work comes from collaboration, rather than conflict, and so the more that the buy and sell side of the industry can work together to a set of common goals the better.
After all there are any number of examples of agencies and media owners working together in just this way in offline media forms. I'm sure there is excellent planning work going on in the digital space too.
We need to realise that all this technology is a tool to enable creativity. It's not in itself creative. To quote Havas' Andy Sandoz, incoming President of D&AD we should "breathe in technology and breathe out creativity".
On Monday 5 October Mediatel hosts the annual Automated Trading Debate. Click here for details.