The Digital Advertising Bubble
And why I’m starting a company
I recently visited New York City, the capital of advertising and media, to meet with a handful of publishers, exchanges, and agencies. Our goal was to build context around an issue that is increasingly looking like digital media’s bubble: advertising experience and quality. In the pursuit of new ad tech partners, increased ad viewability, and short-term revenue gains, UX and ad quality have been neglected. The digital media bubble is dangerously close to bursting, and you need look no further than the rise in ad blocking software and ad fraud over the past couple years.
How we got here
In the past, ad inventory was primarily bought and sold directly. Although this approach still exists (mostly via large publishers), the medium of today is programmatic advertising. More than two-thirds of US digital display ad spending is programmatic, and it’s growing.
Programmatic advertising gives publishers the ability to automate the sales process for ad inventory on their site, allowing them to save money, time, and target ads based on the user. The unintended result is that publishers don’t control the ads that are being served on the site. Publishers lose control of the experience.
One of the most recent advancements in programmatic is header bidding, where publishers offer inventory to multiple ad exchanges simultaneously before they call the ad server (this all happens when a page loads). This can introduce additional latency and complexities. In the table below, you can see that advertising content takes up the majority of the load time on these sites. The same holds true for data usage and cost per page (on a typical data plan).
Viewability: the new currency
In the past few years viewability has become the currency of digital advertising. In order for an ad to be deemed viewable, 50% of the pixels of the ad must be displayed on the screen for at least one second. Google released a study in 2014 that made the claim that only about 44% of ads are actually viewable. This sparked many brands/agencies to demand 100% viewability of their ads, which in turn pushed teams to create ad formats to meet this request. Annoying/intrusive ads often have high viewability rates (think of a pop-up that takes over your screen). Many publishers have turned a blind eye to ad quality/experience in search of higher viewability rates and short term revenue. “Anything for the deal” so to speak…
Where are we now?
Most publisher sites are a mess. Digital ads have never had such a high potential to be annoying, intrusive, slow, janky, alienating, or threatening. Here’s an example:
I don’t want your mobile app (and please don’t redirect me to the app store), I already purchased tickets for the Nutcracker (why are you taking over the screen), I purchased a Nespresso machine a year ago, I hate that I have to wait for 40+ advertising trackers to fire, and all I want to do is see Bieber getting indicted! Most users experience this frustration multiple times a day, especially on mobile. No wonder ad-blocker software led to a loss of an estimated $22 billion in 2015 (which is projected to double in 2016).
Where do we go from here?
As with any issue that’s been building for years through bad habits, there is no easy answer. Some people in the media industry think that innovations like server-to-server auctions or increased bandwidth will improve user experience and solve these problems. Spoiler alert: it won’t. History tells us that as our network improves (e.g. 3g, 4g, LTE, etc.), we just use that as an excuse to put more stuff on the page. History will repeat itself.
The ad ecosystem needs to work together to establish standards for quality and UX. This seems to be taking some shape with The Coalition for Better Ads and the IAB’s LEAN initiative. There needs to be more transparency across all the channels in the ad ecosystem. Ad Ops teams need better tools to test against standards, find bad ads at scale, keep ad tech partners accountable for similar standards, deliver ads, and to collaborate with their increasing number of partners.
This is a problem I’ve been passionate about solving for years. During my time at Rigor (shameless plug for anyone looking for a great web performance monitoring/optimization solution) I had the pleasure of working with hundreds of publishers. Many of our conversations centered around these problems and the lack of control publishers had over the decline in experience and quality. I was inclined to dig deeper into these problems, and to a larger extent, the threat they pose to publishers, free content, and great journalism on the web.
Introducing Ad Reform
I’m excited to announce that I’m co-founding Ad Reform (with Kyle Conarro), an Atlanta-based company that’s building tools to improve the ad experience and the processes for delivering ads. I don’t claim to have the silver bullet for all of these problems, but we’re passionate about building useful technology and advocating for processes that will reform the ad experience, while replenishing deserving publishers with the ad dollars they’re losing.
I believe we have somewhat of a unique perspective, with backgrounds in website performance/optimization.
We spent the end of 2016 becoming more well-versed in the ad tech/ad ops world (thank you to all those that have spent time answering all our questions). As we kick off 2017, we’ll be heads down building the platform and company over the following months and want to continue to make sure we’re on the right path. Please sign up on our landing page if you’re open to chat with us about how you currently solve these issues (or if you’re interested in this topic).
Let’s build a better ad experience together, before the bubble bursts…
