If done well, digital display advertising can help a business build its brand awareness and connect to its target audience on an immense scale. Yet, there is an intrinsic issue with the strategies adopted by a number of digital advertising agencies, unproductive spending runs rife in the industry and businesses are seemingly unaware.
Buried deep within the Competition and Markets Authority’s (CMA) 2020 digital advertising market study report (page 48 to be exact) is an infographic that shows UK consumers spent around 83% of their total time online on the top 1000 domains. The remaining 17% is split between an extremely long tail of websites. Take that in for a moment. The report stresses that most of our time is spent online browsing across (in the grand scheme of the internet) a fairly limited number of domains. Even in the unlimited bounds of the online world, we pretty much all gravitate towards the same destinations and content.
What this means for display advertising?
In light of the fact that humans spend the majority of their time on a limited number of websites let’s consider another market study. About a month before to the release of that CMA report, the UK’s advertising trade body – ISBA – released a summary of a nine-month investigation into digital media buying in the UK. The investigation, led by PricewaterhouseCoopers (PwC), examined the waterfall effect of an advertiser’s investment, or in other words the dilution of advertising spend before it reaches a publisher.
The participants in this study were at the premium end of the market, so involved ‘blue chip’ brands such as British Airways, Tesco, Unilever, Vodafone, Shell and HSBC. In addition to identifying an ‘unknown delta’ of 15% of the programmatic spend, which translated to the figure of £2.6 billion, page 11 of the study noted that these participating advertisers appeared on an average of 40,524 websites, most being non-premium. What’s more, the spread was (as the author of the report understood) between 8000 and 100,000 domains.
This leads us to the inevitable question. If UK consumers spend around 83% of their time on the top 1000 domains, why are brands spending the lion’s share of their digital purchasing spend placing adverts on thousands upon thousands of poor quality, niche (or perhaps spoofed) websites where users are spending a fraction of their time? This spend is likely making up the majority of their total display advertising spend, so there needs to be more oversight, accountability and transparency.
This missing trifecta
Reports of brands, like Proctor & Gamble, ceasing their digital advertising spending and witnessing little change in business results illustrate the scope of the issue. It is not as simple as suggesting that marketers are only interested in low cost per thousand impressions (CPMs), irrespective of content, the length of time UK consumers spend on such websites, or the likelihood that the audience will pay attention to an advertisement. The buying chain and capturing the right audience segments for a campaign with the desirable reach and frequency parameters are complex and involve a multiplicity of tech, albeit any outcome that has a campaign being placed across 99,000 non-premium websites, would not, at least on the face of it, appear to be desirable for either direct response or brand awareness.
For too long media buying request for proposals (RFPs) and template media buying agreements have obsessed over brand safety exclusion lists, rather than focusing on where they should appear. Would it not make more sense for brands to insist that their pricing commitments are based on campaigns appearing on a limited number of websites? For example, the comScore 1000 (or no more than, let’s say, 5000) websites. Alternatively, there needs to be a clear rationale and highlighted KPIs in relation to buying the long tail.
Action needed from advertisers
The Association of National Advertisers’ (ANA) ongoing programmatic study with PwC, Kroll, and TAG Trustnet will delve deeper into the lost 15% of programmatic spend, which should help eliminate unproductive spending and drive brand growth.
In the meantime, brands should review their own media buying agreements to ensure supply chain participants are held accountable and delivering consistently against an efficient and perhaps slimmed down publisher pool or at least be clearer in their contracts about the rationale and expected outcomes in relation to targeting viewers accessing the long tail of non-premium sites. These measures will help to ensure the efficacy of their advertising and avoid the mass financial wastage, and in the long run, restore the integrity of digital display advertising.
In light of the deteriorating economic situation in the UK, every penny counts and all opportunities for eliminating financial waste should be sought. Businesses entering the foray of digital advertising need to work in tandem with legal teams to ensure that their contracts protect them, provide them the best chance to attract new business, and boost attention and tangible outcomes.
Article written by Nick Swimer, Entertainment & Media Partner at Reed Smith LLP