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Advertisers can fix digital ad industry

In the old analogue days, a newspaper or a magazine knew what it was running and where. Mix-ups still happened; 16 years ago, an airline boycotted a paper I edited because its ad had run next to a story about that same airline's pilots flying under the influence.

Today, the massive digital platforms filled with user-generated content don't even know what's out there, let alone whether it should be paired with specific ad campaigns. Trying to control the content would be prohibitively expensive.

That, of course, is the root of the problem with online advertising, and why it's unlikely to be solved by the companies that led the industry to this sorry state of affairs. But advertisers can start levelling the playing field by making specific demands of the tech giants.

Google's continuing problems with an advertiser boycott of YouTube should spark the beginning of a major shake-up of the digital ad market. If Google, Facebook, Twitter and Snap are smart, they will act pre-emptively and start proving to clients that what they're selling is legit.

Unfortunately, Google's first response, offered as it's threatened with hundreds of millions of dollars in losses, was inadequate. While promising stronger content censorship and better tools for advertisers to control their campaigns could represent a partial solution, maybe, it's hardly enough to overcome the fact that Google and other platforms have little idea who actually sees them and in what context. Everybody in the industry understands that, but the platforms won't admit it officially.

Unless the industry drastically increases its transparency, it will be eaten by three monsters that are already gnawing away at it: the randomness of ad placement that can lead to boycotts such as the one threatening YouTube; fraud, which, according to a recent study, reaches 20 per cent of the market volume now; and ad-blocking software which, according to eMarketer, a third of US Internet users will resort to this year.

The UK website Digiday has a running series on "confessions" from digital marketing insiders - a good source of frank and cynical, though anonymous, descriptions of a deeply dysfunctional business.

One particularly snarky piece contains an interview with a long-time ad tech developer who calls a lot of online advertising a "con". If the user deletes the cookies tracking their behaviour - something that can be done with a couple of clicks - the platforms lose all the targeting data they sell at a premium. Even worse, there are extremely sophisticated and lucrative schemes to roll ads so that nobody sees them, such as opening an invisible window in the background of which the user isn't even aware.

And then there are the industry standards for ad viewability. These standards are adopted by the Interactive Advertising Bureau (IAB), an organisation funded by "more than 650 leading media and technology companies" - that is, firms that sell, not buy, ads.

So no wonder IAB's guidelines for digital video ads, for example, consider an ad "viewed" the moment it begins to play in a user's browser - that is, about two seconds before a user curses and closes it.

In the rare cases where an ad turns out to be precisely targeted, it can be disturbing. That can reduce the ad's effectiveness, especially when the advertiser involved doesn't enjoy a high level of audience trust.

In a world dominated by Google, Facebook and programmatic advertising exchanges that anonymise the ad-selling process - which, in the pre-digital era, was intensely personal - advertisers have got accustomed to pouring money into a black box.

There, they've been told, smart algorithms work hard-to-pinpoint magic to connect the advertisers with customers. Facebook and Google don't allow external auditing of ad campaigns; they provide their own data. That's mostly fine for an advertising manager inside a large corporation but it can be traumatic for a small or medium-sized business that suddenly discovers that the fans who "like" its page are fake.

Big advertisers were complacent about online ads' problems for a long time. It took an investigation by The Times of London, which showed ads were running along- side inflammatory content, to spur companies such as Verizon, Star- bucks and Wal-Mart into action.

If they really want to fix the problem, they would put a few items on the table.

The first one is to allow outside auditing. Transparency was at the heart of the digital advertising offering, the reason why the digital industry has been beating traditional media in the race for ad dollars. Companies should be able to prove to the client that their targeting works, and that requires outsiders to scrutinise the data.

The second one is to rewrite the viewability standards to reflect actual human consumption. A video ad has not been seen if it is played for only a second or two.

Thirdly, platforms should take the time and effort to craft more specific offerings for advertisers, the way old-school newspapers and magazines did. It's not enough to allow a client to exclude specific channels from a package - the package YouTube sells to a specific advertiser should include a set of appropriate, well-annotated, demonstrably effective channels. Only if the advertiser wants broader access should the platform be able to place ads the way it does now, with no guarantees.

Unless the industry drastically increases its transparency, it will be eaten by three monsters that are already gnawing away at it: the randomness of ad placement that can lead to boycotts such as the one threatening YouTube; fraud, which, according to a recent study, reaches 20 per cent of the market volume now; and ad-blocking software which, according to eMarketer, a third of US Internet users will resort to this year.

Technological disruption is exciting but it should lead to improvements on the status quo, not just to upheavals.

Advertising spending is growing faster than the global economy: It increased 5.7 per cent last year while global economic output went up 3.1 per cent, and it's expected to overtake economic growth again this year.

To advertisers, this means diminishing returns on their spending. To change that, they shouldn't be in awe of the high-tech firms that have seized a large share of the advertising pie. Instead, they should demand their money's worth more insistently.

WASHINGTON POST

  • Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
A version of this article appeared in the print edition of The Straits Times on April 01, 2017, with the headline 'Advertisers can fix digital ad industry'. Print Edition | Subscribe