Is AdTech too big and too hard to measure? EMarketer predicted that 91 percent of the digital advertising market—a $270 billion-a-year industry—will be completed via programmatic ad buying in 2023.
But even though digital ad spending was up, that doesn’t mean that AdTech is always a surefire channel for brands. AdTech as a genre is under close examination by the Association of National Advertisers, which is auditing the entire sector, calling it “mind-numbingly complex.” Surging vendor kickbacks and an estimated 15 percent of unaccounted for or unattributed programmatic buys are just two examples of how AdTech can be a less-than-ideal situation.
So, is AdTech worth it? Is it an effective media approach?
This article will take a look at how effective ad tech really is in practice, as well as potential alternatives to the hands-off AdTech approach.
Is AdTech the Next Bubble Poised To Burst?
Wired recently shared an interesting comparison between the current state of AdTech and the digital advertising market and the housing bubble of the early 2000s. How similar are the two in the long term? Only time will tell. But the early comparisons are frighteningly similar.
Leading up to the housing bubble and the Great Recession, lenders throughout the U.S. were issuing scores of subprime mortgages that were then packaged into financial securities bundles in an attempt to hide how unstable these assets really were. Investment banks and financial institutions then bought these securities without full transparency of what they contained. Once the housing market stalled and the truth came to light, this sparked a panic that crashed the economy across the globe.
So, how is this like the current digital advertising market? Most revenue gained by large names like Google and Facebook comes from advertising; Google earns over 80 percent of its revenue from ads, and Facebook garners approximately 99 percent of its revenue from advertising. Even Amazon, a widespread eCommerce website, earns a large share of its revenue from advertising.
Wired reports that the global market for digital advertising will read $525 billion by 2024, up from $325 billion in 2019. The issue—and the comparison to the early-aughts housing bubble—is that there is no transparency in this process anymore. It used to be that brands would pay website owners directly for ad space, but now, this process is endlessly complicated with almost no need for human interaction. One study shared by Wired found that ad tech go-between may be taking excessively high cuts of the profits—as much as 50 percent of all online ad spending.
Today, these ads are part of ad “auctions,” which happens via programmatic ad buying in a matter of milliseconds. It requires the use of automated software and as a result, ads are often sold far above their value. Like the unknowing traders in the securities market of the 2000s, ad buyers had no idea that they were pouring money into unstable channels. And, it’s possible that like the housing market, once the truth is known regarding this programmatic ad buying, the bubble is bound to burst.
A Consumer Desire for Privacy and Trust
Another reason brands should be wary of relying solely on ad tech is that many consumers no longer are willing to tolerate ads that rely on third-party data. In fact, TechCrunch reported that 39 percent of U.S. consumers don’t like seeing personal ads that are based on their cookie data. As the publisher shared, “People don’t want to be tracked and targeted as they click around the web. AdTech’s roof is caving in and marketers must adjust.”
Building trust tops data is the most important factor for marketers, not acquiring data.
Consumers knowingly leave a digital footprint anywhere they go online; because of this, ads feel hyper-targeted or too intrusive. It’s like the uneasy feeling consumers share after they see an ad pertaining to a product or service they just discussed in a conversation.
Consumers don’t want to feel like their privacy is being invaded. The concept of data privacy is growing in popularity, and acts like the California Consumer Privacy Act (CCPA) are taking effect to keep consumer data from being exploited. The cry for data privacy isn’t waning at all; in fact, it seems as though it’s here to stay.
AdTech and in-house marketing seem to go hand-in-hand. After all, with AdTech, you can “set it and forget it,” which lends itself well to the needs of in-house marketing. In-house marketing refers to any marketing initiatives that do not go through a third party. It may also sometimes be referred to as guerilla marketing.
But in-house marketing is not for the faint of heart. Marketing is a big and complex task, and so some organizations are looking to ad tech as part of a semi-in-house marketing strategy, or a hybrid in-house strategy, where the organization is taking on some marketing tasks on their own.
The problem is, any time brands take on media buying or marketing in the ad tech space on their own, they must deal with the lack of transparency and professional help.
Other Issues with AdTech
What happens when programmatic ad buying goes according to plan? In many cases, the ads just aren’t seen. They load at the bottom of the page or somewhere where they are never seen—and ad-blocking apps only amplify this issue. Even in 2015, it was estimated that ad blockers were keeping $21.8 billion from online publishers each year.
What’s more, pay-per-click ads may work, but there are also plenty of bots—and people—that merely work to click on these ads for the earned revenue.
Additionally, some of the ad auctions that organizations seek out on their own are actually imposters, posing as more prestigious sites, bidding on ads, and driving up the prices. It’s estimated that as much as 56 percent of display ad dollars are lost to the ether, going to fraudulent services or unviewable locations.
If AdTech and programmatic advertising are so challenging, why do brands continue to use them? It goes back to the lack of transparency. Many organizations have no idea where their ad dollars are going, whether or not ads are running, or how they are performing. In fact, Wired reported on one store owner who learned that 90 percent of his programmatic ad budget was being wasted and never reaching the consumers he was seeking out. His money was going towards fraudulent clicks.
The truth is, after brands make these ad purchases, they often don’t know what happens next. The money is sent out, the ads are displayed, but there’s no way to tell how effective these ads are, or how many impressions they are actually gathering.
A Better Way: Consult with the Experts
Brands spent $129.1 billion on ad tech and programmatic ads in 2020, and an estimated $155 billion in 2021. But imagine if they had more transparency and better guides to help them make the most of these funds and truly get their message seen by their target audience.
At MBI, we’re committed to helping you optimize your media buying dollars. We work to earn your trust, offering real impressions and actual figures to show you how your ads are working for you. Plus, we leverage decades of experience and years of insider industry connections to negotiate platforms that will get you noticed online and off.
Digital media can definitely work for you. But maybe AdTech on its own isn’t the best approach. We’ll show you a better strategy. To learn more about how we’ll use research to pin down the right channels, negotiate great rates, and supply proof of performance to verify your results, connect with our team of media strategists today.