Wasted spend is a real problem for digital advertisers everywhere, and one that they will likely grapple with for years to come. According to the IAB, UK marketers spent over £8.6bn on digital advertising in 2015 – a 16.4 per cent rise on the previous year. As this number keeps growing, marketers will be further pressed to prove a return on those investments.
There are four key areas that likely come to mind when marketers hear the term “ad waste.”
- Viewability: Today, many advertisers are shifting toward paying for “viewable” rather than “served” impressions. The Media Rating Council defines a digital display ad as viewable when 50 per cent of the ad’s pixels are in viewon the screen for a minimum of one second. According to Google, the most viewable position for an ad to exist on a page is right above the fold, rather than at the top of the page. Additionally, vertical ads are more viewable because they stay on screen longer as users move around a page.
- Ad Fraud: Ad fraud is the deliberate practice of attempting to serve digital ads that have no potential to be viewed by a human. Ad fraud comes in the form of pixel stuffing, ad stacking, video fraud and bots. According to the Association of National Advertisers, the advertising industry could lose approximately $7.2 billion globally to bots in 2016. While the issue of ad fraud may seem out of marketers’ hands, participation in cross-industry collaborative efforts to stop fraud is both powerful and necessary.
- Poor targeting: Another way advertisers are wasting spend is by serving the wrong messages to the wrong people at the wrong times. In fact, a 2016 Accenture survey of chief marketing officers found that fewer than 20 per cent of the individuals those marketers reach are actually the right customersfor the product or service being offered. Across digital channels in particular, only 18 per cent of customers reached were actually in market. Accenture extrapolates from these figures that hundreds of billions of dollars are misspent each year across the globe.
- Ad Blocking: Ad blocking is a key driver of ad waste, and a problem that is only growing. As eMarketer pointed out, 38 per cent of Internet users worldwide blocked an ad in Q4 2015, up from 28 per cent in Q3 of the same year. While marketers are unlikely to convince users to delete their ad blocking software, the key to consumers’ hearts is context. This is exactly where addressability – the concept of using first-party data to reach real, known people – comes into play.
Addressability: A Route to More Efficient Ad Spending
Tackling the issue of ad waste requires a variety of solutions, but addressability tops the list. This discipline, also referred to as people-based advertising, is rooted in direct response techniques that rely on first-party customer data for known targeting. Addressable media targets real people rather than cookies, which don’t work across all devices or provide a lasting view of the customer. The result is that advertisers reduce wasted spend by ensuring they reach the right person with the right message at the right time, across channels. And better yet, what they do spend is more efficient, since they’re reaching people who are their customers and thus most likely to convert – rather than third-party data sets that look like their customers.
Traditional digital advertising’s reliance on cookies and generic segments based on third-party data has led to inaccurate targeting. Brands don’t actually know who they are reaching, and end up bombarding consumers with disconnected, irrelevant and annoying experiences. But with a people-based approach, advertisers can engage customers within the context of the purchase path. Along with improved relevance, they can accurately measure campaign reach and frequency, and solve for cross-channel attribution. Ultimately, addressability gives advertisers the power to know who they’re reaching, what messages are resonating, and how to optimize campaigns across channels. Customers get the benefits of better experiences, rather than the motivation to download ad blockers or tune out marketing messages. Brands get the benefits of increased conversion, loyalty, and advertising ROI.
Marketers worldwide are catching on to the value of people-based advertising, turning their first-party data into more meaningful and effective advertising campaigns that provide value to customers. According to a study conducted by Signal in partnership with Econsultancy, nearly 50% of marketers have plans to increase addressable media buys quickly. Additionally, 60% of advertisers reported improved click-through rates with people-based advertising.
Digital advertising will only become more data-driven with the continued rise of programmatic advertising – estimated to make up 70% of the overall UK display ad budget this year. A people-based approach provides a way forward for advertisers to become more sophisticated and targeted, while achieving more control over ROI than ever before.