Once hailed as the promised land of digital advertising, the open web is proving to be a quagmire for Web3 marketers.
A recent report highlights that 23% of open programmatic ad spend, or about $20 billion of the $88 billion during the reporting period, is wasted on ineffective ad placements on dubious websites.
$20 billion wasted on programmatic ads
The report, released by the Association of National Advertisers (ANA), offers a disturbing insight into the murky digital advertising ecosystem. The focus is on the challenge of shoddy inventory and ambiguous mechanisms that divert funds to questionable sites, causing brands to hemorrhage advertising budgets.
Clickbait websites or “made for advertising” sites funnel a significant 15% of advertising dollars. These platforms often feature low-quality content, including fake news, conspiracy theories, and spammy links.
Often, websites optimize their design to maximize ad revenue. However, they use intrusive tactics such as pop-up ads, autoplay videos or invasive advertisements. A lack of expertise among brands navigating convoluted online advertising supply chains directly causes this alarming waste.
Bill Duggan, group executive vice president at ANA, posits that Web3 marketers, in seeking lower costs, often compromise on quality due to a lack of market knowledge.
“This mismatch between cost and value is problematic because it drives behavior directly contrary to achieving the stated purpose,” Duggan said.
Duggan added that “marketers need to lean on the media,” offering simple solutions to improve quality and eliminate waste. One way to do this is to reduce the number of purchased websites in campaigns.
“Streamlining the number of websites used will reduce the risk of buying invisible and fraudulent inventory. Advertisers can reach a high percentage of target audiences using a few hundred websites,” Duggan asserted.
Lack of transparency in digital advertising
Lack of industry-wide transparency and information asymmetry are pressing concerns. Ad tech intermediaries often withhold granular “log-level” data, preventing brands from tracing the path of their ads. This can hamper any understanding of where the money is going.
This opaque landscape gives sellers a distinct advantage, forcing buyers to overpay for inventory.
“One of the main reasons for the apparent lack of transparency in the programmatic ecosystem is that the incentives that drive advertiser behavior are often misaligned with the goals of their marketing campaigns. When advertisers prioritize cost over value , they do it to their own detriment,” Duggan added.
The advent of Web3 technology and privacy-centric changes, such as the move away from cookies on Chrome, have caused a tectonic shift in programmatic advertising. This dynamic has amplified the power of “walled gardens”, causing apprehension among small publishers and advertisers.
While attracted to the cost-effectiveness of open web ad placements, advertisers struggle with uncertainty about where to advertise and where to allocate their ad spend. Tech giant Google has launched transparency tools to shed light on both sides of the advertising ecosystem. It helps to show how much money is being generated from the advertiser to the publisher.
The ANA report suggests advertisers are demanding more granular data. Tracing data from ad tech vendors is essential to independently verify the path of money.
“If brands don’t have their supply contracts attached to specific data rights, they prevent themselves from turning data into valuable insights to maximize transparency,” the report reads.
Dependence on “Made For Ads” websites
The industry needs to realign and reassess its strategies to maximize efficiency and minimize waste. Private marketplace offerings divert 14% of ad spend to low-quality websites, despite better control over where ads appear.
Environmental concerns, such as high carbon emissions from advertising technology due to demanding computing needs, further complicate the picture.
The report serves as a clear call to marketers to examine their programmatic strategies, tighten their supply chains, and reduce their reliance on “made for advertising” websites. Clarity, transparency and sustainability will define the marketer’s playbook in the digital landscape.
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