The online advertising industry is in clean-up mode.
Marketers are annoyed that many of their ads never have a chance to be seen and that fraudsters are siphoning off dollars from their ad budgets. In response, the industry has developed technologies and processes to help address viewability and fraud issues, and claims the situation is improving.
But is it? There’s evidence to suggest not yet.
According to a recent report from online measurement firm comScore, for example, an estimated 46% of all online ad impressions served during the third quarter of 2014 were not viewable — meaning they were placed on parts of webpages that didn’t actually appear on users’ screens. That’s exactly same portion of ads comScore measured as non-viewable during the third quarter of 2013.
That’s strange considering many publishers say they’re now actively reworking their websites and properties to ensure their ads can be seen. So why the stagnation? According to comScore, progress in viewability is being negated by the continued growth of ad fraud.
“Improvements in inventory placement are being counteracted by an uptick in ad fraud, which generates impressions that are by definition not viewable,” comScore’s report said. In other words, any progress that’s being made in relation to viewability is being negated by the lack of progress being made in tackling ad fraud, at least at an industry-wide level.
Industry analysts estimate marketers waste millions of dollars a year buying Internet ads that aren’t delivered to real humans, but rather to hijacked computers known as “bots.”
Ad execs say they’ve observed a similar trend over the past two years. The industry has made a lot of noise about fixing its fraud problem but not much has actually happened, they say.
Andrew Casale, chief executive officer of programmatic advertising firm Index Exchange, said his company has seen little change in the number of suspicious websites it spots across the online ad ecosystem, for example.
“Has it slowed at all? Not really, and until we see those numbers drop, what it tells us is the ‘bad guys’ are still seeing enough financial incentive to play the game,” Mr. Casale said.
Kraft Foods’ vice president of media and data, Bob Rupczynski, painted a similar picture to Mr. Casale. “The amount of fraud is still the same,” Mr. Rupczynski said. “I do not believe it has declined, but I do think the capabilities to detect and minimize it on our media plans have improved.”
So what’s the holdup? If the entire industry knows fraud exists and plenty of companies claim they have technologies capable of addressing it, why does it persist? Mr. Rupczynski is among those who say members of the online ad supply chain pay lip-service to the problem but ultimately continue to ignore it because it suits their businesses to do so.
“There’s a significant portion of this industry choosing not to address this,” said Mr. Rupczynski. “As long as it’s benefiting them to some level they choose to avoid it.”
“The industry is trying to squash conversation about the topic because it’s not good for business,” Mr. Casale saidd. “Frankly, it’s not good for my business either.”
Some industry executives suggest that even marketers have come to terms with the fact that large portions of their online ad budgets might be wasted because the medium is still cost-effective compared to more expensive ones such as TV. If marketers aren’t calling for the problem to be fixed and holding back their ad dollars, then players in the supply chain may have little incentive to address it.
According to Mr. Rupczynski, that’s a short-sighted view.
“How we buy digital advertising today is how we’ll buy across all mediums in the future, and that’ll happen sooner than people think,” he said. “If we don’t get serious about addressing this now, things could backfire substantially as TV and other mediums come on board.”