Did JPMorgan Chase Just Start A Digital Advertising Revolution?

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Credit: Scott McIntyre/Bloomberg

JPMorgan Chase had a bold idea: Spurred by word that one of its ads had appeared on a website called Hillary 4 Prison, it would slash the number of sites where it advertises to 5,000 from some 400,000. To its surprise, the early going has brought no significant hit to effectiveness and no hike in prices.

Its experiment, first reported Thursday by the New York Times, intensifies the spotlight on what many marketers consider a defective system for buying and selling digital advertising. Procter & Gamble, the world's biggest advertiser, has been threatening to stop spending money with ad tech firms and publishers that don't live up to its standards. Marketers are in revolt against YouTube after finding out that their ads were underwriting offensive video.

Now the experience of JPMorgan Chase suggests that advertisers can find consumers at a good price even without using ad tech to pull together the farthest, and sometimes least known, reaches of the web.

"They accidentally opened Pandora's box," said Jon Bond, co-chairman at full service digital agency The Shipyard, about JP Morgan Chase's recent experiment. "They were looking at brand safety and boom -- the performance box pops out."

If enough other big advertisers follow its example, revenue could dry up for the countless small websites that use ad tech to send budgets their way. An industry buying ads from fewer websites would also, however, undoubtedly put an end to JPMorgan Chase's good fortune holding the line on prices.

"I don't want to speculate," said Lauren Fisher, principal analyst at eMarketer. "But I can tell you it will come down to supply and demand."

That in turn makes it less likely that advertisers boil down their ad buys en masse. Some would likely use entrenched ad tech systems to pursue the increasingly cheap inventory just abandoned by others -- precisely the sort of machinations that ad tech exists to enable.

In an emailed statement, a Chase spokesman said it's early days, but confirmed that it hasn't seen any deterioration in performance.

The financial institution said it believes in its newfound approach, adding that even if the company saw a dip in performance it "would still pursue a whitelist strategy because we believe it's the right thing to do."

There's a "general consensus that something has to change in digital advertising," said Andrew Altersohn, CEO at Ad/Fin, a data company that aims to give marketers an index of prices across the digital spectrum. "The problem is it's hard to change something on a very fast moving tractor trailer."

Programmatic ad tech "started out as a little tiny go kart but now it has taken off," he added.

Digital advertising sales surpassed linear TV ad sales in the U.S. for the first time in 2016, pulling in $70 billion compared with $67 billion for national and local TV, according to a recent report by IPG Mediabrands' Magna.

The problem with programmatic advertising is that "everybody grades their own homework," Mr. Altersohn said. "A lot of people in the supply chain have earned their money even though they placed an ad in the entirely wrong place."

"This is now part of the marketing ecosystem and it is growing rapidly without any obvious benchmarks to judge," he added.

Ben Clarke, president at The Shipyard, pumped the brakes a bit on the implications of JPMorgan Chase's recent move. "You have to be careful with someone like Chase," he said. "They have a very broad customer base and my counterintuitive notion has always been that the larger your audience, the fewer domains you actually need to be on."

The Shipyard has performed numerous studies that measure the impact of sales when marketers make significant tweaks to their digital ad strategy. "It can take weeks to see results," Mr. Clarke said. "The changes Chase made aren't as dramatic as if they went completely dark for weeks because there's just some momentum with bigger brands that can carry forward for at least a period."

What JPMorgan Chase does demonstrate is marketers' suddenly fast-growing willingness to take some control over their ad buys back from tech platforms.

"I think a lot of the blowup has been about how the technology has failed," said Ms. Fisher, the eMarketer analyst. "But it is important for everyone to remember that even when we're using technology there needs to be some sort of human review and involvement to make sure the tech is working correctly and if it's not, to pivot and adjust appropriately."

Contributing: Adrianne Pasquarelli

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