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Programmatic: The three biggest challenges

Programmatic Hot Topics 2016


Like any burgeoning industry, programmatic is not without its opportunities and, of course, challenges. At the 2016 Programmatic Summit, a representative panel tackled three of the most high-profile issues: adblocking, viewability and ad fraud.

Programmatic Hot Topics 2016

The industry’s biggest threat – ad blocking

According to Tereza Alexandratos, director of digital ad development at Fairfax, there’s no greater challenge than ad blocking. She said: “Ad blocking is the biggest risk if it escalates because it obviously just destroys the industry as a whole.”

With around 200 million consumers worldwide supposedly having installed some form of ad blocking software and the IAB in the US estimating it to be worth about $781 million in lost revenue for the industry globally, Randall Rothenberg, US president and CEO of the Interactive Advertising Bureau’s “poetic” quote no doubt resonates with many in the industry. He said: “Ad blocking is an extortionist scheme that exploits consumer disaffection, and risks distorting the economics of democratic capitalism.”

Given, as Lachlan Brahe, Comscore ANZ vice president pointed out, the industry prides itself on “sophisticated contextual targeting” and delivering “relevant and individualised” ads that are “a great utility”, why do so many people want to block them?

Alexandratos reckons it’s the result of bad ad experiences in the past. She said: “Consumers still view advertising across all publishers in the same way. There are still a lot of poor experiences out there that do affect things like page load. You get those dodgy pop-ups. That stuff still exists.”

While Dan Robins, head of interactive at OMD puts it down to, for want of a better word, greed. Advertisers have “jumped on the drug that is display advertising” with Robins suggesting brands are pushing “more and more message in front of more and more people, and really being intrusive”. Given that, a backlash from consumers was inevitable.

The desire to block ads is likely a combination of these two factors but where does that leave the industry? For media buyers, the data isn’t yet available to plan and spend accounting for the segment of the audience blocking ads although Robins said he knows certain demographics are more prone to block ads than others.

For publishers, Ben Chamlet, head of trading and programmatic at Yahoo7, pointed to three approaches: do nothing, fight back or change the ad model. He said: “Just suck up the fact that you’re going to lose 10 to 15% of your ad revenue because people just don’t want to see it. I don’t think that’s a particularly proactive approach, but for some publishers, that seems to be the way they’re going. We’re seeing a number of brands fighting back, and Axel Springer in Germany is a good example, where they actually started trying to sue the companies that make the ad blockers. It’s quite a controversial way to go about it, but it does highlight the size of the threat they see.”

Chamlet said Yahoo7 isn’t looking at either of these two options. Instead, they’re assessing their offering. He said: “We haven’t gone down the same lines as maybe Forbes has, where they detect the ad blocking and offer an ad-light version. They’ve managed to deliver 15 million impressions to those people that would block all of their ads.”

Ad fraud and the scourge of non-human traffic

According to the US branch of the IAB, non-human traffic, or ad fraud, is estimated to be worth $4.6 billion in wasted, or fraudulent expenditure. Yet Comscore’s Brahe tells us that locally, we’re pretty lucky with around 95% of the top 100 websites seeing display ad fraud under 5%. Still, Brahe said: “About 30% of those sites will have sections where the ad fraud is well above 5%, and they’re the parts that we need to root out and improve the experience – and the value, obviously – from an advertising perspective.”

While OMD’s Robins doesn’t see specific trends in terms of where the most ad fraud is happening, he pointed out that: “You probably do see slightly higher from open exchange-type buys, as well as some of the publishers that use that model of buying on your behalf, on the exchange. And probably a little bit lower from a premium publisher perspective.”

Rhys Williams, head of media technology solutions at Google, has access to most of the major exchanges around the world and before passing a bid off to a demand-side platform (DSP), Google filters out much of the invalid traffic. So while most people on the other side of the DoubleClick relationship never see what Williams calls “the bad stuff”, the company does record what it is filtering out. Based on that, Williams said: “Some of the worst exchanges that were at the top of the list, 60% of their traffic we filtered out. The next worse was 50%. There was a lot around 25 to 30%, and then there was a whole bunch of good guys down at the bottom that had less than 5%.”

Williams added: “I can tell you all the major exchanges you would expect were on that list. I’m not going to tell you who was what, to protect the guilty. You can also say the ones investing on the technology side to identify the invalid traffic and not send it through are the ones where the vast majority of the spend is starting to go.”

While ad fraud is a topic we’ve discussed here before with some in the industry making bold statements it’s no longer an issue, the panel at the Programmatic Summit raised concerns there may be all new ways to game the system. As such, they agreed the focus needs to shift from apportioning blame to working at overcoming the problem. At the heart of this is technology.

“The reason people can buy fraudulent traffic today, mostly, is because the tech hasn’t yet identified enough of it. The tech will get there. I’m confident the tech will catch up,” said Williams. He drew a parallel with the banking industry which has managed to reduce fraud by installing chips in bank cards, introducing two-factor authentication as well as using sophisticated algorithms to spot unusual activity in bank statements.

Until the tech catches up, the publishers on the panel had a reassurance for concerned advertisers. Chamlet said: “When people are seeing their campaign results, it doesn’t include any non-human or fraudulent traffic.”

Alexandratos concurred adding: “We certainly don’t bill customers for anything that comes up.”

The battle for viewability

According to ComScore’s Brahe, average viewability across APAC is sitting at around 53%. This does vary by advertising category. For example, Brahe says FMCG campaigns are 60% viewable. For finance, the figure is 57%. Heath, 54%. Retail, just over 50%. Automotive, 27.1%.

“A lot of ads that are running are not actually getting seen by humans,” said Brahe. This is a fact the programmatic industry is coming to terms with but it’s more nuanced than first meets the eye with Yahoo7’s Chamlet noting 100% viewability isn’t the Holy Grail it may seem. He said: “I’ve done a lot of analysis on this and I’ve got ad positions which may only attract 10 or 11% viewability. But when users actually get to those ad positions, the engagement is significantly higher: two or three times that of a far more viewable position. I don’t necessarily talk about 100% viewability, I talk about understanding what viewability means, and how that affects your buy. So if you want to take a bet on a lower viewable position, when you hit, it plays out.”

Chamlet raises a good point. There’s more to the success of a campaign than everyone seeing it. Even if they do, it doesn’t mean the ad is going to be effective. As such, as Brahe noted, “Viewability isn’t a measurable commercial goal”.

“Were your ads any good? Maybe they were just crap ads. Maybe your product’s no good. Maybe it was a poorly conceived offer. Maybe you didn’t hit your target audience. There’s still so many variables in all this,” said Brahe.

OMD’s Robins added that shooting for 100% viewability comes with other drawbacks. “By focusing purely on viewability, you get placements that are full of fraud, or on crappy sites that aren’t really the context you want the brand to be seen in and safety issues start to raise their head,” he said.

That said, it’s an understandable stance for an advertiser to get what they paid for with Brahe commenting: “Viewability is just that fairly obvious commercial outcome of, ‘If I pay you to run an ad for me, and nobody ever saw it, I can figure out a way where I don’t have to pay for that ad’.”

In order reach a consensus on viewability where all parties are happy, Williams pointed to tech but suggested that may come at a cost. “There’s some kind of technology piece that needs to go down there,” he said. “You could argue that there’d be a cost to that technology or not. Technically, if you don’t charge for viewability … But we do charge for ad service. You get charged an ad serving fee, whether it was viewable or not.”

Whether a tech play is the answer to solving the viewability conundrum, the panel seemed less concerned about this issue than ad blocking and ad fraud with Williams concluding: “Viewability is something that buyers and sellers can solve themselves.”

Mark Abay - Content Director, Ashton Media About Mark Abay - Content Director, Ashton Media
Mark is Content Director at Ashton Media. It's his job to create interesting and engaging conference programs that stretch the thinking of our attendees. Mark works closely with our industry advisors to ensure the conference content is aligned with the needs and interests of our audiences.