It's hard to find anyone who will talk down online advertising these days. Trust us, we've tried. A study by ComScore in the US – which comes conveniently as it ramps up the push for its viewability metric – has uncovered an “astounding” amount of wastage, with up to 54% of online display ads “never even seen”. Local industry figures have scoffed at the findings.
According to ComScore, as reported in The Wall Street Journal, the wastage is result of technical glitches (such as when an ad is displayed on a part of a browser not open on a computer screen) user habits (users not scrolling below the fold, or clicking away before the ad can load) and even outright fraud based on fake traffic.
The report comes after a study by Adobe, which found only 8% of users paid attention to online ads. Taken together – along with PwC's projection that online advertising in Australia will grow to a whopping $3.425 billion in 2013 – the findings could be used to concoct a sensationalist headline implying more than 95% of online advertising spend is going down the drain.
You must be new here
Of course, that would just be silly. Local industry figures have cast doubt on both the findings of the ComScore study, and the motives driving the commentary. James Hier, chief strategy officer of MEC, says anyone who is surprised by the story "doesn't know much about advertising or online".
"It feels almost like a non-headline," Hier says. "Agency people are fully aware of this. Clients, depending on their level of sophistication, may or may not be. There is always going to be wastage, but in the end, we're all grown-ups here. This has been going on forever."
Hier says ad verification tools already exist that show the exact amount of wastage, and the goal is to continually optimise. The problem with online, he says, is that due to its measurability, the wastage is more visible than other channels.
"If you heard the same thing about TV or radio you'd probably think nothing of it. With radio, my god, think of all the ads that are not being listened to. But it's like Rumsfeld's 'known unknowns'."
Gai Le Roy, director of research at the IAB, is equally unfazed. "There's a certain amount of wastage built into all media offerings and that's really reflected in the amount of revenue in the market and built into the pricing model," she says.
It's the metrics, stupid
Paul Robson, managing director of Adobe Australia and New Zealand, says it's simple – if online wasn't working, marketers wouldn't be putting money into it. The attraction of online, he says, is the amount of data providing marketers with clear and defined ROI.
"There's a certain success rate in all advertising, digital or otherwise, and that depends on the metrics of the campaign," Robson says. "With digital you have better capability to track the detail. That's why marketers like it."
According to Hier, the bottom line is the output, whatever your particular metric, be it sales, downloads or click-throughs. For many clients it's often an opaque process – the bit in the middle is one step further removed, and ultimately irrelevant.
"It will always be a case of, what's your metric for success? Say I want 100 brochures downloaded. If I buy 30,000 versus 1,000 [units], and I get the same output, I'll go with the lower CPM. In the end, clients love it because they love getting results."
But David Burch, communications director of online video ad platform TubeMogul, says reports of wastage can be "troubling" to brand marketers. "There is an increasing realisation from brand advertisers that they need to work harder to ensure any digital wastage is minimised," he says. "Advertisers deserve to know exactly what they are buying."
Don't mention the margins
There has been some suggestion – albeit from those in traditional media – that the rush to shift marketing budgets online has been driven not just by pressure on marketers from above to provide more transparent ROI, but, controversially, also by media agencies keen to wring better margins out of their online trading desks.
Is there a danger that data-obsessed marketers could bias towards digital, ultimately to the detriment of their brands? "I'd agree with that, but say again, what is your KPI?" Hier says. "If it's awareness, then I've got other channels I would definitely choose above [display].
"There's no doubt consumers are on these platforms, but they tend to be less advertising-friendly. For disciplines like response they are fantastic, but to drive awareness, other platforms are much better."
Le Roy, however, disagrees that the fear and loathing of ROI can lead to irrationally dumping money into more measurable channels. "For a marketer, they should be focusing on what's driving their own business ROI, rather than the granular media metrics.
"I think most big marketers are pretty savvy when it comes to working out what's performing for their business. So I don't think that just because digital can provide impression data that marketers are stopping there – the smart ones are obviously looking at a range of performance metrics."
Making it work
Whatever your position on the validity of the research, there's no doubt online advertising could do better. Given there's a good chance that the vast majority of consumers don't pay attention to online ads, provided they even see them in the first place, Robson says it's all the more reason to try harder.
"Again, it all comes down to relevancy. The nirvana for digital marketing is when ads cease to become ads and become relevant content." The key is, once again, the 'D' word. Robson said last week: "With the right data, you can provide a powerful bespoke experience for individuals, rather than a website designed for everyone that relates specifically to no one.
"In doing so you can gather and analyse more finite data to get accurate return on investment, as well as creating an ideal scenario, where advertising actually becomes relevant information."
Le Roy is not blown away by the Adobe report. "I've seen many of these studies in my time, all with slightly different results depending on who's released them," she says. "I'm not a big fan of self-reported consumer surveys. If you ask people, 'Do you find ads annoying?', of course they're going to say yes."
But she agrees with Robson that the the flexibility of online, and the power of data to inform advertising, is its great strength. "Smart media buyers know that if they continue to invest in digital and track all this information, the ability to optimise is so much greater.
"The level of targeting and optimisation with digital advertising outshines other media options. An ad online can be enhanced with myriad targeting layers, whether that's time of day, platform, demographic, behavioural targeting, and then, depending on the site, there can be extra layers of login or consumer information, such as on Facebook."
So, what's all the fuss about? You tell us. Is online advertising the goose that laid the golden egg, or some other thing that's perhaps not as good as an egg-laying goose?
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