Digital advertising is under fire right now

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October 2, 2016 by Paul Dughi

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Yes, digital advertising is under fire right now.  I know some of my friends that work at traditional media and legacy media companies are enjoying it a bit right now and maybe even piling on.  But what we’re seeing isn’t so much a problem with digital advertising as it is businesses and marketers waking up to the inherent issues in online advertising.

Do you really care how many people so your ad and clicked on it, wrote a comment, or saw it on Facebook?

Or do you just want to sell your stuff and know which advertising drove the sale?

Digital promises transparency and detailed, drill-able metrics.  That’s true.  But the industry has pushed people to embrace meaningless metrics… because they could track them and they sounds good.  It appears a lot of agencies have taken some liberties with its client relationships in chasing the “bright shiny object.”

In traditional media, advertisers have had years to work out the right metrics.  They have more than a century of experience with newspaper ads and decades with every other medium.  In digital, it wasn’t all that long ago we were tracking “pixels” on a web page.

Despite all the digital metrics you can get – and there are so many ways to track things it can make your eyes blur – the industry has been often focused on the wrong things.  Don’t get me wrong, digital advertising – when used properly – can be a powerful tool.  But too many people are chasing the elusive “next big thing” and forgetting the underlying task:  growing your business.

 

The digital metrics you’ve been getting may not be accurate at all

Facebook admitting that they have overestimated average time spent watching ads by between 60-80%… for about two years now.

Two years of reporting inflated performance numbers is unacceptable.”Publicis memo to clients, published in The Wall Street Journal.

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As much as 50% of the clicks on the ads may be fake. Yes, fake — done by bots and not humans.

You may have been overcharged and never knew it

The ad agency Dentsu recently had to admit it overcharged 100+ clients for digital ads.  633 cases have been found so far topping $2.3 million dollars, according to the Financial Times.

The big secret is unless you’re buying the media yourself, almost everybody is using a third-party provider to place the buys.  Sometimes, that third-party is taking a cut and passing it on to yet another provider.  Everybody is taking a piece along the way.

The ads may not be working

Toyota is suggesting its digital ads are not working.  Proctor & Gamble (only the world’s largest advertiser) concluded that target digital ads don’t work to move product.  General Electric, JP Morgan Chase, Sears, and Nationwide are reported to be launching audits of the digital agencies.

48% of companies say their agencies don’t give them meaningful KPIs to help them be successful, according to an Advertiser Perceptions study

Your agency may have been taking kickbacks and not passing along the savings

The Association of National Advertisers, a trade group more than a century old, finished up an exhaustive study of the agency business and found persuasive evidence of “non-disclosed rebates, not returned to advertisers, in the forms of cash, free media inventory, and service agreements.”

The biggest concern was the “agency conduct …concealed by principal transactions, resulting in media agencies sometimes acting on their own account and not always in the best interests of advertisers.

Digital agencies demonstrate a lack of transparency

An Advertiser Perceptions study shows 61% of advertisers are ready to review their digital agencies.  48% of those surveyed claimed the agencies they use were not “open and transparent on cost.”  34% said they were losing trust.

“There is trouble in paradise in this industry and anybody that says there is not has their head in the sand” – Chief Marketing Officer  at one of the largest companies in the U.S. speaking anonymously to the Wall Street Journal

It has some asking if digital advertising even works for brands anymore.

The big question marketers are asking is “are we getting real value for what we are buying.” – Grant Leech, US Cellular, VP/Brand Management in WSJ.

All of this had led to a lack of trust

What’s that famous line about half my advertising doesn’t work, but I just don’t know what half?  If the advertiser knew which half wasn’t work, they could just cut that half and save the money, or double up on what’s working.  But they can’t.  That means they have to have a level of trust with the media they invest in to use their money wisely and honestly.

Marketers should require media agencies to be fully transparent to elevate trust and restore confidence in the client/agency partnership – The Association of National Advertisers

I would posit trust is the key to any successful relationship.

So what to do about it

The Association of National Advertisers has put out key recommendations in light of its study results showing many agencies aren’t always working in the customers’ best interests.

Key recommendations

  • Establish overarching agency management principles that can be easily understood and executed. These include requiring media agencies to ensure complete transparency in all transactions with parent companies, subsidiaries, affiliates, and third parties. Agencies should err on the side of communicating everything to marketers, the report said.
  • Establish primacy over the client/agency relationship, and regularly re-evaluate and upgrade internal processes and practices. The report said it is essential that marketers have a thorough understanding of the existing client/agency relationship and know when the agency is acting as an agent on behalf of the client or as a principal representing itself.
  • Create a uniform code of conduct between the advertisers and agencies. The code of conduct between advertiser and its AOR would be mutually agreed to, signed by both parties, and serve as an addendum to the master services agreement.

It’s a start.

Parting thoughts

Look, digital advertising done well works.  We’ve seen it first hand in working with hundreds and hundreds of clients over the year.

We’ve also seen sellers that have no clue what they’re doing, but push the wrong solution down buyer’s throats.  We’ve seen advertisers and sellers quote numbers and metrics that are meaningless and judge campaigns by the wrong metrics.

We’ve also seen some brilliant results from the right creative, in the right medium, shown to the right audience at the right time.  Doing it right will yield results, bring about sales, and grow your business.  And hasn’t advertising, regardless of medium, always been about that?

 

 

 

 

 

One thought on “Digital advertising is under fire right now

  1. […] brands, like Toyota and Procter & Gamble are questioning whether its ads are […]

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