Targeted Advertising Woefully Missing its Mark

June 28, 2019

By Matthew Schwartz

TarikVision/Shutterstock.com

The content marketing/native LUMAscape, or the online terrain for targeted advertising, is getting increasingly difficult for marketers to negotiate.

A new study reaffirms the significant waste that brands and organizations incur regarding behavioral advertising, which involves presenting targeted ads to consumers based on their browsing behavior and has become de rigueur among brands and organizations in recent years. The study was first reported by the Wall Street Journal.

The study, conducted by researchers at the University of Minnesota, University of California, Irvine, and Carnegie Mellon University, found that publishers generate just 4 percent more for an ad impression that is cookie enabled than for one that doesn't.

It's important to note that the study focused strictly on publishers, or media companies, that sell advertising through several techniques, including open auctions, private auctions, preferred deals or programmatic guaranteed. At the same time, what applies for publishers selling online-ad space generally applies to brands, regardless of the industry in which they reside.

The empirical study is a testament to the increasing complexity of programmatic advertising, as a cluster of intermediaries, including ad exchanges, eat into 60 cents of every dollar spent on programmatic ads, according to WARC (per the Journal).

So much for all the disintermediation promised to marketers for moving their ad dollars online.

Indeed, the study is a reminder for both B2C and B2B companies to be hypervigilant when it comes to hiring agency partners, crafting their behavioral advertising strategies and tracking and measuring the effectiveness of their overall online ad spending.

With that in mind, here are some valuable resources for marketers to keep handy as they look to build a better mousetrap for targeted/behavioral advertising — and enhance their value with the C-suite.

 

Bolster Agency Search

Achieving better outcomes for online ad spending is a function of the relationship between the brand and its agency partners. Agency churn is the nature of the marketing beast, of course. But brand managers are on the hook to sharpen existing relationships with agencies. Longevity leads to better outcomes. Akin to courting, both marketers and agency managers must determine whether the relationship is a good fit and whether the match will be mutually beneficial. And marketers need to be much more prepared to call agencies on the carpet if the ROI for ad buying stays at anemic levels without ever pushing the needle. The ANA has several insights on how to plan a media agency pitch as well as tips to follow when drafting an RFP and trends in agency compensation, among other areas .

 

Strengthen Trust Between Marketers and Agencies

Trust is at the core of any long-term relationship. Unfortunately, trust between marketers and their ad agencies leaves a lot to be desired. Less than 30 percent of respondents feel that the current level of trust between client-side marketers and advertising agencies is high, according to an ANA study of 306 marketers conducted earlier this year. About 55 percent of the respondents identified trust as being "moderate" and about 17 percent identified trust as being "low." In a potential omen that things may get worse before they get better, more than twice as many respondents (28 percent) feel trust has declined versus those (13 percent) who feel trust has improved. To chart a better course, respondents recommended a few ways to bridge the gaping differences between marketers and agencies, including better communication, enhanced transparency, and fair compensation.

The road to online transparency will be a long and hard slog. But until they face the breach CMOs and brand managers will forever wonder where their online ad dollars are flowing. They'll also be at a disadvantage when it comes to argue for bigger budgets from the C-suite. If marketers have a seat at the table, spiking the top and bottom lines is the great equalizer. The full report has some additional tips for improving trust.

 

Clamp Down on Programmatic Media Buying

U.S. advertisers will invest almost $69 billion in programmatic advertising by 2020, compared to $47.37 billion of programmatic spend in 2018, according to eMarketer. But for the all the additional spending, what are marketers getting in return, aside from agita? Concerns about programmatic advertising range from lack of consistent metrics to ad fraud to brand safety. But despite myriad concerns, programmatic advertising is turning into a black hole for marketers. The onus is on marketers to build a better infrastructure to support programmatic advertising and all its various (and growing) tentacles.

What's your business strategy to climb out from what's a terrible ditch for marketers? We'd love to hear from you.


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