Perfectly Targeted Ads on Web Proving a Rare Feat
30 Sep, 2015By: Doug McPherson
NEW YORK – The idea that digital advertising was going to solve the age-old dilemma of shotgun advertising and offer perfectly targeted ads is being brought into question by new data.
An article last week on Bloomberg.com tells the story of Ron Amram, who’s been in the brand marketing business for about 20 years. Formerly at Sprint and now with Heineken USA, where he oversees an annual ad budget in the $150 million range, Amram comes face to face with stunning news: digital return on investment is at best elusive and, at worst, a fantasy.
In 2013, Heineken replaced its former bottle design with a long-necked version that supposedly keeps the beer cold longer. “We had a healthy investment in TV, local media, and digital,” he says in the story. “We thought digital would come close and compete with television in terms of effectiveness.”
Late that year, he and a half-dozen gathered in a New York conference room for a presentation on the performance of the online ads. They were stunned. Digital’s return on investment was around 2-to-1 – a $2 increase in revenue for every $1 of ad spending, compared with at least 6-to-1 for TV. The most startling finding: only 20 percent of the campaign’s “ad impressions” – ads that appear on a computer or smartphone screen – were even seen by actual people.
Bloomberg reports that the marketing industry is now learning that many digital ad viewers aren’t human. A study in conjunction with the Association of National Advertisers (ANA) embedded billions of digital ads with code designed to determine who or what was seeing them. Eleven percent of display ads and almost a quarter of video ads were “viewed” by software, not people. ANA says fake traffic will cost advertisers $6.3 billion this year.
The article reads: “Fake traffic has become a commodity. There’s malware for generating it and brokers who sell it. Some companies pay for it intentionally, some accidentally, and some prefer not to ask where their traffic comes from. It’s given rise to an industry of countermeasures, which inspire counter-countermeasures.”
Fernando Arriola, vice president for media and integration at ConAgra Foods, tells the article’s authors: “It’s like a game of whack-a-mole.”
Consumers, meanwhile, to the extent they pay attention to targeted ads at all, hate them: The top paid iPhone app on Apple’s App Store is an ad blocker.
The authors conclude by saying ad fraud may eventually turn into a manageable nuisance like shoplifting, something that companies learn to control without ever eradicating. Advertisers generally see lower levels of fraudulent traffic by dealing directly with publishers rather than using programmatic exchanges.
Read the full article at: http://www.bloomberg.com/features/2015-click-fraud/