Digital Ad Management – The digital advertising industry continues to grow at a rapid pace as brands seek connections with consumers and publishers look to fill their growing inventory. Despite this growth, however, more and more cracks are beginning to appear in the industry.
A complex value chain transfers dollars with little transparency or accountability. Ads appear next to offensive content, creating brand safety issues. And fraud, whether malicious intent or just a bad measurement, creates trust issues. The industry is facing major changes and successful ad tech companies will need to fully prepare for the changing dynamics of advertising.
Digital Ad Management
Advertising spending in the US continues to recover from the Great Recession, and while spending has not yet returned to pre-2008 levels, total media spending in 2017 reached about $241 billion. That number increased by about 2.4% per year. since bottoming out at less than $200 billion in 2009. Buried within that number, however, is a disparate set of realities: Digital media spending has grown at more than 16% a year. since 2009, while spending on advertising on TV, radio, print and other non-digital media has fallen by about 1% per year over the same period (see Figure 1).
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Going forward, industry analysts expect the trend to continue, with ad spend on digital media expected to grow at about 6% over the next five years, much faster than spending on any other medium.
To help brands get the most out of their ad spend – and to help publishers sell all of their new inventory – a slew of ad technology companies have sprung up, including digital ad agencies, demand platforms (DSPs)/side platform providers (SSPs). and analytics providers. These ad technology companies have certainly moved the industry forward and helped brands and advertisers reach the best populations for their offerings.
The proliferation of ad tech intermediaries is especially evident in the world of programmatic advertising, where ad inventory is sold in real time on a scale beyond the capabilities of all but the most talented and sophisticated brands and publishers (see Figure 2). ).
However, as the ad technology industry has matured and advanced, it has created an incredibly complex and intricate value chain with many players sandwiched between advertiser and publisher. This, in turn, has created numerous issues, most notably transparency – where the ads are placed (brand safety), who actually sees the ads (ad fraud), and what advertisers’ money actually buys them (financial transparency).
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In recent years, advertisers have developed a growing concern about where their ads are placed and what associations this may create for their brands. For example, Verizon and Novartis saw their ads next to hate speech and terrorism-related content on YouTube — a sub-optimal situation that definitely generates false brand associations. Many advertisers, wary of the same scenario, are now taking a more hands-on approach to where to place their ads. For example, Chase recently tweaked its approach to programmatic advertising, creating a “whitelist” of about 5,000 sites approved for its ads, instead of the previously estimated 400,000 sites. Despite the dramatic drop in the number of sites approved for ads, Chase claims it’s seen little or no change in ad results, suggesting the emphasis on quality over quantity was well chosen.
Ad fraud, along with related issues such as low visibility and inaccurate readings, are a second major concern for advertisers and the ad technology companies that serve them. The National Advertisers Association has estimated that while ad fraud has declined over the past year, it still represents a huge cost, costing advertisers worldwide an estimated $6.5 billion in 2017.
To counteract this loss, advertisers are becoming more aggressive in tracking and measuring their ads. For example, Procter & Gamble announced in 2017 that it would require all agencies, ad technology partners and publishers to improve the viewing experience, enable measurement and eliminate fraud. In particular, Procter & Gamble has fully endorsed the Media Rating Council’s viewability standards, which contain a clear set of criteria that can be used by all publishers to determine how many times an ad can be viewed.
Perhaps the worst kept secret in the digital advertising industry is the fact that only a fraction of every dollar an advertiser spends actually ends up in a publisher’s pocket. All the middlemen in the value chain, from the digital ad agency that helps craft the message and campaign to the supply-side tools that help publishers fill inventory, get a slice of the pie. In the end, the publisher pocketed only about half of each ad dollar, with agencies and ad technology companies accounting for the other half (see Figure 3).
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Advertisers are starting to become aware of this dynamic and are demanding more transparency about where their money is going. For example, Diageo has developed a clear set of standards that not only set visibility standards, but also require fully transparent pricing models from all advertising partners.
Going forward, it is clear that the economics of the digital advertising ecosystem must change. We’re heading for a time when advertisers don’t stand by while their ad money is funneled away, used for ads placed next to questionable content, or squandered on outright fraud. Advertisers will continue to demand more transparency and efficiency from their providers. Sellers need to address these concerns or they will soon be replaced by others who are willing to join in.
What does this mean for ad technology companies? Ultimately, the winners will be the intermediaries who can continue to demonstrate excessive value in the most transparent way possible. The results will continue to determine which supplier wins the business, but more analysis will be done on ROI calculations than just expense and income calculations. Generating short-term profit doesn’t matter if you’re destroying a brand’s reputation in the long run.
Ultimately, consolidation is a path many ad tech companies can take. Value chain consolidation is an easy way to reduce advertiser dollar leakage, gain greater control over content placement, and influence negotiations with publishers and advertisers. In particular, some of the strongest players in the space, namely Google and Amazon, control large parts of the value chain. And despite all the talk of working with Google and Amazon, the ad money continues to flow their way.
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However, anyone attempting to consolidate the value chain should do so with caution. Ad technology companies must identify efficiencies and synergies – and develop, research and implement long-term strategies before closing a deal, or else they will suffer the same fate that awaited some previous attempts to connect value chain participants. Given the extensive work to be done to fully address growing customer concerns, ad tech companies should begin the process now; the longer they wait to act, the more dollars and business they can lose to competitors willing to take the necessary leap into the future.
U.S. advertising spending continues to recover from the Great Recession, and while spending has not yet returned to pre-2008 levels, total media spending reached about $241 billion in 2017.
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Steps To Effective Digital Advertising
Executive Insights Retail Do you want to acquire a direct-to-consumer company? Here’s what you need to know Jul 12, 2022 Digital marketing is more important now than ever. Take action today to create, simplify or streamline your digital marketing (aka internet marketing) strategy and protect your business from inflation
Where to start if you want to develop a digital marketing strategy? It is still a common challenge, as many companies know how vital digital and mobile channels are to acquiring and retaining customers today. However, they lack an integrated plan to support digital transformation and business growth and effectively engage their online audience.
If your company doesn’t have a digital marketing (also known as Internet marketing) strategic plan that aligns with your business plan, you’ll suffer from the ten issues I outline later in this article, and you’ll lose out to your more digitally savvy competitors.
For each of the ten digital marketing examples, I will also recommend marketing solutions and next steps to help you optimize your marketing strategy in 2023.
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Inflation levels are skyrocketing worldwide. The US had a four-decade high of 9.1% in June, with July and August rising 8.5% and 8.3%, respectively. The UK saw the BoE key rate rise from 0.25% in early 2022 to 2.25% last week on September 22.
The impact of inflation is also being felt in Europe and East Asia, as the Financial Times tracker shows. In fact, the indirect effects of inflation are felt all over the world.
All companies must therefore think critically about the impact of this international phenomenon on customers, production, services, personnel and more. And a critical aspect of managing and optimizing your business that needs your attention more than ever is your attention
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