Fixing a Broken Digital Ecosystem

Brands and Agencies Need to Change Their Approach to Digital Advertising

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The issue the industry faces is more than a broken non-transparent agency business model. The problems extend from publishers to advertisers as well as overlapping access to inventory sources. How consumers are being engaged is fundamentally flawed.

As a result of how digital has changed the way we buy products and consume content, combined with a legacy approach to media KPIs and the lack of insight into the full digital supply chain, the entire ecosystem has become inefficient with too much waste. This is why the industry has issues with ad blocking and transparency -- leaving advertisers with too few of their dollars going to working media.

A key challenge to address this is how advertisers approach efficiency and scale. It's not about cheap CPMs, CPCs and scale alone. It's about outcomes. We have to remember that the web is only as big as each person's interest, because it is task-orientated by nature. Digital is less about passive entertainment and more about active engagement.

So we need to focus on the user experience. Smart publishers should be communicating with their audience and exchanging learning for a better experience. Forbes, for one, is testing options with a small percentage of its audience.

The tradeoff is simple: Turn off ad blocking, give us feedback and we give you fewer ads per page, fewer tags slowing load times and more relevant ads. Facebook has been great at this by allowing its audience to say which brands and ads they like, as well as which ones they don't.

This will foster a culture of better ads that are part entertainment and part utility. Audiences will be less likely to block ads if they don't suck. Most people are OK with being tracked as long as they get something in exchange for it. Amazon is clearly quite good at this and part of the reason why it focused so heavily on intent.

Advertisers will have to accept higher CPMs and CPCs. But they will get better quality and a better ROAS (return on ad spend) with less viewability and fraud issues. This is only a problem for those with pricing models lacking in transparency. There are way too many efficient media charts only countered by declining business results to say there are not misaligned objectives.

Ad solutions and publishers then need to accept the limits of their scale. Accept how much budget you can realistically spend. Agencies have been burned by this for years and since have tried to reduce the volume of partners, only focusing on ones with giant scale. Over-promising yields under-delivery and that leads to back filling with sourced traffic to fulfill spend.

This is one of the major causes of viewability and fraud issues. It also fosters the lack of insight into the overlapping access to inventory down the supply chain. More proactive media planning and optimization will increasingly involve lots of smaller partners at the right scale.

Media agencies, for their part, can't stop at driving "efficient traffic" and not follow through with optimizing the on-site or in-app experience. If I'm only compensated on cheap traffic, why optimize to quality traffic, never mind registration rate, bounce rate and/or conversion rates?

This is partly why there is so little dynamic personalization and programmatic creative in a world of programmatically purchased media. Creative agencies need to step their game up here and push for more dynamic personalization. It's time to break down silos.

If brands want change, they have to take a proactive stance in the market. Stop being passive and allowing the agency to play middleman. Put the agent back in the agency. Take control of technology, data, and media.

Using the agency as the bank in the middle because your company can't handle the billing is an outdated excuse and adding to these problems. Technology can automate and audit that process, as well as provide insight into the supply chain. So man up and do it.

Advertisers also need to start rethinking their approach to data. Data fuels everything we have discussed. A brand should own its data/tech contracts. Of course a brand owns its raw first-party data, but if it doesn't own the contract, it is giving away the refined oil.

If a brand parts ways with its partner, the brand is left with crude oil, because the partner owns what was done with this data. Refined oil is what makes an engine work. Don't give that away. Fixing this will allow us to reverse engineer and address many of the challenges discussed here to create a better digital ecosystem.

Our business is driven by the marketer, the brand, the advertiser -- so change needs to start there. Brands need to focus less on cheap scale. Brands need to own their data and technology. Brands need to change their agency KPIs. Brands need to optimize against quality experiences and outcomes. And that is to the benefit of the brand, the publisher, the agency, and most importantly the audiences we want to target.