More CFOs are looking into how digital advertising dollars are being spent, and whether those budgets are driving measurable business outcomes. Up till now, CFOs have accepted reports from CMOs that their digital campaigns were working well, and there was low fraud (digital ad fraud, where bots view the ads instead of humans). This article is not so much about ad fraud, as it is about wasted budgets or budgets spent on technologies or services that were not delivering what they promised.
The ISBA (trade body representing the largest British advertisers) published a report in May 2020 that showed 50% of advertisers’ dollars went into the pockets of ad tech middlemen instead of towards the showing of ads (“working media” as they call it in TV advertising). This study perfectly corroborates two previous studies that found the same result. The WFA (World Federation of Advertisers) study in 2015 and the ANA (Association of National Advertisers) in 2016 both found that between 40 – 60% of every dollar went to middlemen in the supply chain instead of to showing ads.
These ad tech middlemen were selling all manner of services, from data collection and brokering, audience segmentation and targeting, brand safety and fraud detection, and other special sauce tech that had cool acronyms like AI, ML, RTB, DMP, NLP, etc. But they couldn’t explain to you how it worked, even though they reassured you that it worked. But is all of this programmatic ad tech worth the 50% cut? Of course some vendors are adding value, but others are just selling shiny objects marketers were tricked into buying. These are the ones CFOs should look into more closely.
Minor, sub-optimal things that are just a waste of money
In digital advertising, it’s common to expect “leakage,” sub-optimal characteristics in campaigns that are not malicious, just a waste of money. After all, we are at the bleeding edge of the tech, and sometimes things just mess up. It’s kind of like “breakage,” where retail stores just assume that a certain percentage of their sales will be lost to theft or other forms of fraud.
In digital advertising, leakage includes things like “out-of-geo” ads, where the ads are shown to users not even in the right countries. Other ads went to the wrong target or audience segment — oops, from errors in the set up or due to bad algorithms. Remember ad tech algorithms are buying and selling billions of ads and spending your money for you. Other wasteful ad spend includes “over-frequency” where your ad shows too many times to users and annoys the heck out of them; or day-parting issues, where the entire quantity of ads was blown out between 12 midnight and 4a, leaving none to serve during the rest of the day when humans are actually awake and online.
These are just minor, sub-optimal things in digital advertising that CFOs shouldn’t worry about, right?
You’re not getting what you paid for
Most big marketers…