Some thoughts on the ‘hot topics’ in digital advertising – January 2016

Industry Preview 2016
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I just came back from the AdExchanger Industry Preview conference here in New York City, and while many of the presentations are still fresh in my mind, I’ve decided to write a few notes and personal considerations on the “hot topics” in the digital advertising industry as of January 2016.

  • Programmatic TV
  • Cross-device targeting, tracking, and measurement
  • Ad-blocking
  • Ad-fraud
  • New ad formats
  • Native Ads

 

Disclaimer 1: due to the ever-evolving, fast-paced nature of this industry, anything stated below may not be true in a few months, or even weeks.

Disclaimer 2: everything on this site is my personal opinion, and it does not represent the point of view of the company I work for etc. … you know the drill.

 

Programmatic TV

As of January 2016, when we talk about Programmatic TV we are really talking about automating the buying process, rather than bidding on an impression-by-impression basis as we do in the digital space.

The future of Programmatic TV doesn’t lie in the increased digitalization of the current TV business model, but in the diffusion of connected TVs and media streaming devices

I believe that the future of Programmatic TV doesn’t lie in the increased digitalization of the current TV business model, but in the diffusion of connected TVs and media streaming devices (e.g. Chromecast, Apple TV, Roku, etc.).  My speculation is that major TV networks will increase the amount of programming made available without a TV subscription (following the HBO NOW model), adding linear programming and live streaming events (like YouTube), and then serve ads tailored to the individual user (like Hulu).

 

Cross-device targeting, tracking, and measurement

There are many probabilistic solutions out there, but none of them are truly convincing, and advertisers are never going to be happy until they are going to get a deterministic solution that does not dramatically sacrifice scale.

We are going to reach the ideal state of cross-device targeting, tracking, and measurement that advertisers desire when the industry agrees on a common technical standard that provides an appropriate level of privacy and security for the user.

Big players like Facebook and Google are able to offer a good scale (thanks to their logged-in user base), but marketers have to then deal with “walled gardens”. Facebook calls it “privacy gardens”, which is partially true, but it can’t be denied that user data constitutes the main competitive advantage, and companies want to keep them proprietary as long as they can.

We are going to reach the ideal state of cross-device targeting, tracking, and measurement that advertisers desire when the industry agrees on a common technical standard that provides an appropriate level of privacy and security for the user. We are not there yet, but it’s clear that many smart people are thinking about it. One thing I know for sure is that it’s not going to be solved through probabilistic models or proprietary platform solutions.

 

Ad-blocking

Ad-blocking should be seen as a wake-up call for online advertising: don’t snooze it if you want to keep your job… but don’t worry, your house is not on fire.

First, let’s just frame the conversation: in spite of very speculative reports from companies that make money from circumventing ad-blocking, the real issue for the industry is ad-fraud, not ad-blocking (more below).

Everyone agrees on the fact that ad-blocking is a symptom of the lack of focus on user experience; the solution is to produce less intrusive, more relevant, better quality ads.

Ad-blocking should be seen as a wake-up call for online advertising: don’t snooze it if you want to keep your job… but don’t worry, your house is not on fire.

 

Ad – fraud

Ad fraud is inevitable: like credit card fraud, wherever there are significant profits to be made, there will be bad actors that are going to try to game the system.  One thing is clear, though: as of January 2016, the industry is more focused than ever in fighting it.

We are only going to solve the problem if we start to focus the conversation on results-based marketing

It’s an issue that the industry will always have keep a vigilant eye on, but we are only going to solve the problem if we start to focus the conversation on results-based marketing: when we are not busy taking down botnets, we should look at the quality of the inventory vs. just the cost and volume (derivatives of the legacy way of doing things in the media space).

Many in the industry will agree with that in principle, but the problem is that few are actually moving the conversation towards the right metrics: if “quality inventory” is critical, and what matter is “lift in {whatever your goal is}”, why are we still making buying decisions based on CPM and avails?

 

New ad formats

These new ad formats are intriguing, but they are at such an early phase that they are still a leap of faith: very few of them can even offer tracking solutions; yet, many marketers and agencies can’t resist them.

As it often happens with new ‘hot’ trends, the conversation is focused on the “sexiness” of the innovation and not enough time is spent discussing the two biggest risks for advertisers: the cost of developing creatives and the high risk of failure.

As it often happens with new ‘hot’ trends, the conversation is focused on the “sexiness” of the innovation (Snapchat leading the pack), and not enough time is spent discussing the two biggest risks for advertisers:

  • The huge (opportunity) cost of developing creatives: creative agencies have to learn how to conceptualize and develop these new ad formats, the marketer needs to go through additional rounds of review and approval, and all of this has a cost in terms of time, focus, and energy.
  • The high risk of failure: when brand managers decide to “test Snapchat” their biggest fear should probably be to come across as your mom trying to talk “hip” when your friends are over to show how “sleek” she is.

I’m still an advocate of experimenting and testing, but marketing decisions shouldn’t be based on the logic “be there or be square”.

 

Native advertising

Speaking about new ad formats and ad-blocking, native advertising tries to offer a better ad experience for the user, more creativity for the advertiser, and new monetization models for publishers. As in the case of new ad formats, everyone seems to forget the cost of developing these ads (time, approvals, reviews, etc.).

Native advertising is like a suit: you can buy it off the rack at a shopping mall, but the real game-changer is bespoke tailoring; the problem is that, as with bespoke suits, not everyone can afford one.

Some publishers and start-ups are trying to offer solutions to create native ads in a scalable manner, but I believe that native advertising is like a suit: you can buy it off the rack at a shopping mall, but the real game-changer is bespoke tailoring (e.g. the Netflix-sponsored Women Inmates NYT article); the problem is that, as with bespoke suits, not everyone can afford one.

And always be on the lookout for that siren that is advertorial.

 

 


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Author: Paolo

Economist by education, digital marketer by profession, coffee roaster by hobby.