Head of Marketing & Communications
The stakes for digital advertising are high!
Digital advertising budgets are undoubtedly on the rise. With budgets for offline advertising declining, it doesn’t come as a surprise that digital budgets have grown by 25 percent last year (1). The increase in digital budgets reflects how technology is evolving rapidly. Programmatic buying of digital media inventory to reach specific target audiences has already become a standard with many advertisers and publishers. Running and optimizing digital ad campaigns based on specified audiences, has certainly become simpler and more efficient for some.
The expectations of marketers towards an increasingly advanced automated and data-driven digital media model must be higher. However, programmatic only resembles a tiny fraction of what is really possible in value creation with a transparent and data driven digital advertising model.
It also brings up “small” questions about transparency, measurability or even outright fraud – issues that are coming back to advertisers and publishers. Is it not the case that one of the advantages of digital is, that we can measure down to the very last pixel? And if that is so, why then do some advertisers claim that more than half of their digital ad spend is unaccounted for, and why then is it, that more than half of these budgets are somehow “lost” on their way to the publisher? Many of these questions still remain unanswered but what seems clear, however, is that the digital advertising market today is fragmented, not transparent, in large parts inefficient, and subject to deceptive practices in worst cases. For digital media to grow to its full potential, it needs not only to regain credibility through clear measurement practices and the provision of full transparency for advertisers and publishers, but also leverage its full measure of best-in-class digital technology available today.
Choices offered in the digital advertising ecosystem today are so multifaceted that they may be confusing to many. Any advertiser aiming to run campaigns digitally may choose between media agencies, “Demand Side Platforms” (DSP´s) and Ad Exchanges. Any publisher seeking to sell digital media inventory, has a choice of existing “Supply Side- and Data Management Platforms”, or may even decide to build and run these to exclusively contain the own inventory. That alone makes up for quite some complexity, as an advertiser seeking to optimize media inventory based on target audience will find the supply distributed between these numerous players.
However, DSP´s and SSP´s obviously need to connect to form a transparent marketplace for media demand and supply, which is the point where complexity today is boosted to an unsustainable level in digital media for any marketer, as most of these platforms are being run with different IT- and reporting systems. Consequentially we see different reporting numbers, metrics or formats, more often than not simply caused by disconnected systems. Although it may sound simple, even the most skilled digital media expert cannot optimize the return on digital media without consistent metrics and measurement in such a fragmented market and system landscape. This system disconnection furthermore often causes ad budget and fraud detection inefficiency.
Providing transparency becomes a real challenge for anything above and beyond the rudimentary measurement of views by CPM (Cost-Per-Thousand), or clicks by CPC (Cost-Per-Click) across the different digital media channels consumers may use for their journey from interest to purchase. The implications are severe: reducing the buying and measurement process to views and clicks leads to purchasing media reach at the lowest possible price, which is not what should be focused on. On a deeper level, purchasing of digital media inventory should be based upon results, such as consumer engagement or the reality of actual purchases generated.
An end-to-end platform like SAP XM should be integrating all digital media channels. Whether it is mobile only, or a combination of online, mobile, and digital out-of-home, placing digital advertising along the customer journey is the most effective way to utilize ad budgets for best-in-class results in relevance and revenue.
Fraudulent traffic causes the biggest annoyance for all market players, and “it is remarkably difficult to commit fraud accidentally,” says Erol Soyer, International Managing Director at Fraud Detection and Prevention firm Forensiq. “You have to invest and set up technology to propagate it”. (2)
The market for fraud in digital advertising is attractive, and has become huge. According to the Association of National Advertisers (ANA), advertisers will lose $6.3bn globally to bots in 2015 (3), not including domain spoofing or other fraudulent practices. Even though it may be difficult to create a 100% fraud-free solution in the near future, it can be cut down considerably and to a bearable minimum.
A disintermediated end-to-end platform will decrease fraud to a minimum level while increasing the transparency of available inventory to a maximum. The IAB (International Advertising Bureau) has already addressed transparency as a major topic in its paper “Transparency is the key to programmatic success” (4), in 2013. Astonishingly enough, nothing seems to have changed since ever then. Just recently, “The Business Insider UK” addressed the same topic again within the article “There's a lack of transparency about what marketers at brands pay agencies and what they actually get for their money” (5). It is obvious that the industry is still facing the issue of non-transparency. The demand for more transparency standards is growing constantly, and private and premium marketplaces connecting advertisers and publishers end-to-end seem to be the most feasible solution to solve these challenges. At least SAP XM is set to provide the utmost transparency on available inventory, campaigns, and results above and beyond media metrics for reach.
A burning topic, which has been heavily discussed at this year’s IAB annual leadership meeting in February is the measurement of viewability primarily in the area of video content. The adexchanger reports that the advertisers’ demand for viewability is frustrating for publishers who must contend with new contracts, new billing structures and new ways to value inventory, while ensuring that meeting viewability standards does not erode ad revenues. The IAB and MRC (Media Rating Council) worked on defining standards to measure the viewability of ads.” (6)
By combining the standards of measurement for viewability defined by the IAB and MRC, SAP XM will provide a maximum of transparency to measure and track the viewability of digital advertisements.
Transparency for all market players, advertisers, publishers and consumers is important - especially for consumers as they try to understand why publishers are collecting data about them. When consumers gain a better understanding of why their data is being collected, they will appreciate advertisements to be individually relevant and matching their interests, rather than viewing them as an annoyance. SAP XM will allow consumers to control their data, and will fully support the trend of reinstating the digital advertising ecosystem as being trustworthy and compliant to data privacy laws.
We believe and strive for a better way. An innovative end-to-end platform like SAP XM will be developed together with our customers (advertisers and publishers) in a co-innovation approach. It is a major step forward towards understanding and solving issues that surround digital advertising: disconnected systems and sub-optimal budget allocation due to market fragmentation, lack of transparency, fraud and viewability.