Special report: Debating the future of digital advertising
From gaining the creative agency buy-in for a programmatic era, to the lurking threat of brand safety 'black holes', senior experts from around the media industry had a lot to talk about at dmexco 2017. David Pidgeon reports.
Is 'programmatic' still a dirty word in creative agency circles, or have the advancements of adtech, coupled with migrating audiences and increased digital investment from the client side, made them rethink?
Programmatic now has the capabilities to serve rich media in a variety of innovative ad formats, meaning the artistry of more traditional advertising now has a better home online where it can be used in conjunction with sophisticated audience targeting. In short, the industry has moved on from the flashing banner ad.
Programmatic creative opened a debate between senior figures at this year's Dmexco, Cologne, where, amongst the praise of its growing power, there were words of caution about the barriers holding it back.
“To be really honest, [programmatic creative] hasn't been done a lot,” says Amit Kotecha, marketing director, EMEA, Quantcast.
“I think a lot of the data is still used retrospectively. So, a campaign finishes, we then tell the client what happened. We make sure there's an analysis by the creative side, then they may make some changes for the next campaign. That's obviously not ideal, because the campaign's finished. You've spent the money.”
Kotecha says the ideal scenario is to be able to adapt the creative while the campaign is live - using data to modify and fine-tune the campaign for improved effectiveness.
“That's the mission the advertising world has been on. But I believe that with the data that's available, the way it's most useful is when it’s used in the planning process, so that you're actually making decisions before you launch a campaign."
Kotecha adds that using more sophisticated data to understand customers can help the creative process - but there is an ongoing issue of scaling the output.
“If you talk to any creative agency, they don't want to make a thousand different versions of one ad. That's not a scalable solution for them. So, we have to find this kind of happy medium in between.”
But back to data, and Sue Hunt, sales director, Mail Online, says there's still a challenge with what is being used, and its integrity.
“The consumer is increasingly on a mobile device, but the vast majority of businesses are still relying on cookies [which are not used on mobile].
“So, the nature of the data is not matching the execution that's required for the creative,” she says.
For Inskin Media’s chief commercial officer, Steve Doyle, programmatic creative is still a work in progress, but Doyle has a good idea what it takes to improve its adoption.
“A lot of the technology we’re using is relatively new and media people are still grappling with how they marry their creative execution with the data that they want to use. There are a handful of clients that are quite advanced in this, and there are other clients who are not as advanced.
“But marrying up data, in the planning process, for us, is key, because it allows us to say: not only are you able to execute creatively, but you're able to execute data on top of that. I think that's becoming more and more part of the mainstream part of our internal planning process.”
Doyle says that his business talks with creative agencies, and thinks they are starting to buy into the programmatic world to some degree, but there remains a big challenge: “They are still fixated on the thirty-second TV spot.”
Julia Connaughton, head of digital at the7stars, says cutting a TV ad down for the digital creative is very difficult, while noting that creative agencies make no money out of it, so there’s no real incentive to focus on programmatic creative.
“That means the media agency will do it, or the job will be outsourced to the publisher.”
Kotecha says this is worrying.
There's still a challenge with data and data integrity, full stop"
“You don't really want a media agency controlling that. It should be the job of the creative agency because they've spent probably six months planning a great campaign; they've done all of the customer research; they really understand the customer. Then it gets to the digital execution, and it's just a digital cut-up.
“We need to educate the creative agencies," says Doyle, who has employed someone in his own business to do just that.
“Otherwise it's a bit of a self-fulfilling prophecy," he says. "If [creative agencies] don't put the time and effort into the assets, then they'll never get what they want out of it. If their perception of digital is that it has nothing to do with the brand, it will be like that in perpetuity.”
Meanwhile, Jon Mew, CEO of IAB UK, says it’s too easy to blame creative agencies.
“I think we have to take some responsibility on this side of the fence to help them and to educate them and improve.
“There's a value in doing it and I think we’re starting to prove that to them now.”
Can brands be built online?
“Ten years ago, if we'd gone out and said, ‘Hey, digital is a brand-building medium,’ everyone would've laughed,” says Kotecha.
But over the last three years something has changed. Digital formats - including social media in-feed ads, paid content, online video and native advertising - are helping to fuel the growth in global advertising.
According to a recent report from Zenith, between 2016 and 2019 innovative digital ad formats will drive 14% annual growth in total display advertising.
“Historically, we have tended to pigeon-hole what different type of media can do, placing each one in a different sort of bucket," says the IAB's Mew. "And I think the bucket that online got put in from the start was direct response, because there is nothing else; no other media can measure direct response like online can.”
But the online world is different because it has the ability to evolve much quicker than many other types of media. New formats, new applications of data, consumer tracking, and the ability to borrow from other media have all contributed to making online advertising a hugely enticing place to spend client money.
And recently, with improved video formats, it’s been borrowing from TV - arguably the best brand building media out there, with a long history of effectiveness.
“That's the difference now,” says Kotecha. “Three years ago, it would have been very difficult to even assist a brand ad or just run alongside a brand ad because there were no high impact formats or there wasn't that much video.
“But using those video formats now, I do feel like there are a lot of brands that are actually using it alongside their TV buys or their big brand advertising that they have on billboards, and it's helping build brands, because it's part of the consumer journey.”
Yet, as adspend moves towards digital and online formats improve, it is important marketers don't tip all their resources into just one bucket.
“I don't think you can just use digital just to build a brand,” says Connaughton.
“Even if you took some of the big brands, like Amazon or Google, they started online. They were an online brand. Yet to build their brands, they did TV and press and other offline channels.”
“Online should be viewed as part of the media mix,” says Mew. “I think it'd be odd to think you could ever just use digital. For most big brands, it wouldn't be sensible.”
However, citing an on-going research project the IAB is involved with, Mew says the body of evidence that proves digital works is growing - and this means online can help other media become more effective.
Research conducted with AIMIA, I2C and MTM using Nectar card sales data shows the impact that exposure to digital advertising had on offline sales.
On average across five brands - Nescafe, Magnum, Haagen Dazs, Maille Mustard and Persil - each £1 spent on programmatic display generated £1.47 in sales in Sainsbury's, a figure that would be even higher if sales in other supermarkets were also factored in. This is in addition to driving up brand metrics.
However, Doyle argues that - outside of respective marketing and trade bodies - there simply isn't enough research on building brands online to persuade average marketer.
“There is a perception in the average marketing manager and the average small client, that digital is a direct response media and nothing else. So in terms of the brands online, there needs to be more proof points, and they need to come from outside of the marketing and trade bodies.”
With a broader and impartial body of evidence in place, there is still another hurdle the industry must overcome, however.
The fragmentation of online ad formats is making things very difficult for clients.
Tim Hussain, head of digital at Ebiquity, which represents 85 of the top 100 global advertisers, argues that to build a brand you require reach and frequency, but he’s blunt about the online publishing world's problem in supplying this.
“With digital, it's a shit show, to be completely honest.
“All the top publishers have all their big branding formats, but lots of them have different formats in different places and they all work for different vendors.”
Hussain notes that for TV it is very easy and efficient to pull reach and frequency and for press, all the formats are standard.
“I've been talking to publishers recently and just saying, ‘Look, you've got Facebook and Google. It's really easy to go on and buy a single campaign and get big reach, frequency, and manage it.’
“Then you've got all of the independent publishers and they've still got different layouts. The users don't have the same experience that they do in the other platforms.
“Businesses like Inskin and Collective are two of the few companies who are going out in single formats with big impact all across multiple publishers. Otherwise, there's not enough out there.”
Speaking from a publisher’s perspective, Hunt says this is a huge challenge.
“The fragmentation of the industry has got worse and worse and there are still new players coming into the market. It's such a low barrier to entry.
“New vendors are creating solutions for problems we didn't know we had. It's absolutely exhausting...it's not about new-fangled middlemen and slicing those pieces out of the food chain. It is about efficiency.
For Hunt, anything you can buy individually with a website, you should be able to put through programmatic plumbing to automate the process.
"This is the way to achieve scale, and ultimately make life easy for brands to spend money.”
Brand safety black holes
Over the last year the ad industry has witnessed a spate of serious brand safety issues which saw ads placed alongside extremist content.
In response, GroupM, the investment arm of WPP, said advertisers have increased their brand safety and accountability expectations and were taking "a more measured view toward digital." The problem even resulted, back in July, in a downgraded ad forecast, with growth in the pure-play internet category revised down by -4%.
How do senior advertising execs feel about the problem today?
“Things are changing, massively,” says Connaughton. “But I think we could do more. It’s an evolution, but with the viable products that are out there, every client should have [brand safety] built into everything. It should be across every single publisher, every single device, every single format.”
“It needs to be part of every plan," agrees Inskin's Doyle. “It needs to part of all dialogue, too. It's a challenge for advertisers to get that balance right between buying audiences at a low price, and ensuring your brand is safe and that the context is right. But is there enough attention being paid to it? I think there is now - but it's an evolution, and it's still quite early on.”
Quantcast's Kotecha says the debacles, which made front-page news around the world following a Times investigation, hit everyone pretty hard, and he is glad it did.
"It's a hygiene issue," he says. "It's one of those things that we didn't think about, kind of like we've been living in the middle ages for a long time, and people have been eating the scraps that go to the floor. Then, what happened this year was like the Black Death."
What happened this year was like the Black Death"
Things do look better. August 2017 was the most prolific ever for the number of certificates awarded for brand safety. In all, JICWEBS - the Joint Industry Committee for Web Standards - dished out 11 certificates to Teads, Media iQ, YuMe, Amnet, PulsePoint, Fifty Media, Encore, Avocet, Sovrn, IOTEC and Clearstream.
They join 35 other companies who have successfully been reviewed against the good practice principles for protecting where a client's online ads appear.
After so many set-backs, the trust and transparency that buyers demand is, it seems, truly being injected into the digital ad trading supply chain.
Most people also agree that in that in two or three years' time the industry won't have to worry about the brand safety issue, but to ensure that's the case, technology needs to improve and there are some niggling blind spots left untended.
“Brand safety is really nascent in terms of the tech because it doesn't detect video...and it’s a black hole for mobile apps," says Ebiquity's Hussain.
“Brand safety is also a bit of a catch-22. Brands make a fuss about it, and yet they're quite often investing in non-disclosed media inventory through their agency.
“If you can't track brand safety on video, and you can't track it on a lot of mobile apps, you have to have a manual approach. But if you've got a non-disclosed delivery, how do you do a manual approach? And if you go and ask for a report, the agencies turn around and say: ‘Ah, sorry, it's not in your contract, you signed away your right to have transparency.’”
Solve that, and the future will be a safer place for brands - but there's still some hard work left to do.
Lost trust: how does the industry get back on track?
P&G, the world's largest advertiser, is currently poring over every agency contract in an attempt to achieve "full transparency" by the end of 2017 - including terms requiring funds to be used for media payment only, all rebates to be disclosed and returned, and all transactions subject to audit.
That also means adopting basic viewability standards, ditching the adtech middle men, breaking down walled gardens, and getting serious about measurement.
In line with that commitment, in July P&G said - while cutting more than $100 million from its digital marketing spend - it had reduced overhead, agency fee and ad-production costs in the second quarter.
Since P&G's call-to-arms at the start of the year, other global brands have made major changes, or are planning to make extensive changes, to their media governance practices across a wide range of areas, according to the World Federation of Advertisers (WFA).
In the last 12 months, 35 multi-national companies with a total annual marketing spend of more than $30bn globally said they have taken action on issues including transparency, brand safety, viewability and ad fraud.
Transparency remains a top priority for 47% of companies, while 51% say it is rising up the list. However, 14% said it is de-escalating, which the WFA says suggests some companies are seeing progress.
So what needs to change now?
"Education, pure and simple," says Inskin's Doyle.
"DTSG would be a great example of something that's in place. It's a stamp that proves that you're transparent in what you say."
Yet, in the mainstream, DTSG - the Digital Trading Standards Group - is yet to be adopted as an acceptable currency, Doyle says.
The DTSG is comprised of representatives of the entire digital display advertising market, including AOP, ISBA, IPA and the IAB UK.
"It's brilliant, but it's just not being adopted on the buy side at anything like the rate that it should be. If we're going to be taking brand safety and transparency seriously, that needs to change."
Jon Mew agrees and wants to see more collaboration to help overcome the challenges digital faces.
"The future of advertising is really exciting, but we need to make sure that we build a future that's sustainable, and works for everyone."