The changing face of the online marketing industry

By Editor May 27, 2015

It’s been almost half a decade since the Internet overtook television as the preferred medium for advertising, and with the advent of ever-more sophisticated mobile delivery mechanisms, 2015 promises to be yet another big year for online marketing. Perhaps the only thing getting in the way of this otherwise inexorable momentum, however, is the persistent lack of transparency undermining the industry.

First, the good. Most businesses have already established some sort of online advertising presence–even if that only extends to do-it-yourself social media outreach–and those businesses that haven’t increasingly understand the need to take their advertising arms digital. Spending continues to rise, both in raw terms and in relation to the overall marketing and advertising sector. And given the deepening popularity of e- and mobile commerce, there is no reason to expect demand won’t, also.

The shifting face of the industry itself reflects this dynamic growth. Last year, the number of tech-based advertising acquisitions rose 32%, with total transactions surpassing $7 billion, more than triple the previous year.

But even amid all this progress, confidence in the ability of services to provide reliable returns is wavering–and with good reason, too, in many cases.

A recent Association of National Advertisers Study found that 23% of video ad impressions, 19% of retargeted ad impressions, 17% of programmatic display impressions, and 52% of third-party sourced traffic are only ever seen by computer programs. “Bot fraud,” as its known, can be perpetrated by crooked publications looking to scam their clients or by rival businesses trying to drive up the costs of their competitors. In either case, though, the practice is widespread and pernicious and seriously damaging the credibility of the industry as a whole.

The less dramatic, but probably more pervasive problem, is with visibility. Because of poor loading speeds, disadvantageous placement, or simple user avoidance, many–if not most–ads are never actually processed by the customers they’re meant to target.

Google recently reported that just over 50% of ads served are measured viewable. One prominent German ad firm believes that figure is closer to 40% for programmatic ads. When the International Advertising Bureau announced its intentions to raise standards to 70% viewability, there were as many questions as to whether that less-than-lofty goal was possible as to whether it was sufficient.

Similarly, native advertising has thus far gotten by on promise more than measurable results. As a recent VentureBeat article explained, the value proposition for pricey online content is tenuous at best. Businesses understand the utility of attractive, non-intrusive advertising, but as publications increasingly turn to native content to support their struggling revenue models, buyers will want a clearer ROI.

Advertising, of course, has always had these issues. From buying TV spots to passing out fliers, there’s always been a certain–not unfounded–suspicion among clients that the money they’re spending to propagate a message is either lining someone’s pockets instead or going down the drain entirely.

The difference is that, at the dawn of the information age, all the tools now exist to measure the efficacy of individual campaigns. Deliberately obtuse explanations are no longer sufficient to convince savvy customers that their money is being put to appropriate use. Clients expect, and have every right to, detailed breakdowns of exactly where and to whom their advertisements are being shown, and increasingly, there is no excuse for service providers not to be able to deliver that level of accountability.

Going forward, transparency will be a determining factor in the online advertising market. But providers would do well to embrace that shift rather than avoid it. Apart from the obvious benefits it implies for clients, the emphasis on objective measures will also help services understand what they’re doing right, and why, and replicate it.

For the time being, transparency, or a lack thereof, is a drag on growth. But looking ahead to the future of one of the digital age’s most promising industries, there’s no reason it shouldn’t be the foundation for a new and more intelligent way of doing business.