Display Ads: My 3¢ Worth

My New Years day Type A Group Newsletter drew some attention. Being a lazy-ass bum, I thought I'd kick-off the blog year with it. Check out the numbers -- as you know, copywriter math is always suspect, but I used sources that are usually reliable. Here we go... 

Turning Ad Dollars Into Pennies
 
First let me wish you a Happy New Year.

If you're any fun at all, you probably have a massive headache right now. But if you don't, don't worry, I'm about to give you one.

Today we're going to "follow the money" and watch as a dollar of your online display advertising budget magically evaporates into 3¢ of value. I'm going to provide a shitload of links to all the sources of this information so you can stuff 'em down your cmo or your agency's throat... not that you're that kind of person.

Kindly step into my lab...

First we start with a dollar. We give it to our media agency to buy some display advertising for us.

According to the World Federation of Advertisers (WFA) here's what happens next:

• First, your media agency takes about 5¢ in service fees.
• Then their trading desk takes about 15¢.
• Then their Demand Side Platform (DSP) takes about 10¢.
• Next, some other ad tech middlemen take about 25¢ for targeting, data, and verification.
• Then an Ad Exchange takes about 5¢. 

This chart which I have excerpted from the WFA sums it up nicely.

So before an ad appears, 60¢ of your dollar has already been spent on...something. I don't know what. I guess "technology" or "process" or something equally vague.

All these middlemen will say that they add value to your media buy by precision targeting your ad at your perfect customer at the perfect time. Right. So maybe instead of 6 clicks per 10,000 ads (yeah, that's about average) you'll get, who knows, maybe 8. Break out the champagne!

On the other hand, Proctor & Gamble, the world's largest advertiser, says that all the precision targeting actually got them fewer customers.

Well, the good news is, you still have 40¢ left.

But the problem is, you can't get 40¢ worth of advertising for your 40¢. You see, according to The New York Times, Digiday and other reliable people, only about 50% of online ads are "viewable." 
 
This is because online ads often don't load in time for a person to see them. Or they appear "below the fold" where they are not visible. Or a fraudster sends a pixel that says it's an ad. Or ads are stacked behind one another where they can't be seen (it's a nasty game, this.)

So sadly, we're now going to have to mark your 40¢ down by 50% to 20¢ to account for the  "viewability" problem.

Now we have 20¢ left. 

But, darn it, other kinds of fraud also have to be taken into account.

You see, some of your ads are very likely to run on make-believe websites that have make-believe traffic and make-believe clicks. Of course, you didn't ask for that, but that's what you get. The one thing you don't get are make-believe invoices. Those things are real.

Your agency will tell you that they have protection against fraud. They have cyber-security this and 100%-guaranteed-ad fraud-protection that. It's all horseshit. Do some reading. You will find there are are NO RELIABLE METRICS on ad fraud.

Ad fraud is estimated to be between 2% and 90%. In other words, no one has a fucking clue. Most knowledgeable people (including the WFA) believe it may easily be 30%. No matter what your "cyber-security team" tells you, nobody knows how much fraud there is in online advertising. But everyone agrees it's massive.

Since we accounted for a little ad fraud in our last step, let's be conservative and say that only 20% of your remaining 20¢ will be eaten by fraud. That leaves us with 16¢.

 Let's recap. So far we've discovered that for our advertising dollar we have probably gotten about 60¢ worth of fees and technology, 20¢ worth of viewability issues, 4¢ worth of additional fraud, and 16¢ worth of "viewable real ads."

But our next problem is that not every ad that can be seen is seen. According to Lumen, a research company that measures this stuff, only 2/3 of viewable impressions are actually looked at by someone. Sorry, that just cost us another  nickel.

Well, we're getting down to the end here and we have 11 cents left. There's  just one more value killer we have to account for - people. According to the above-mentioned Lumen group, 75% of the time people don't even spend a second looking at online ads. Even the clowns, I mean, professionals at the Interactive Advertising Bureau won't accept an ad that isn't in view for a second as an "impresssion." This is not helpful to our value calculation. It takes our 11¢ down to 3¢.

So, at the end if the line, on average, it looks like you are probably getting somewhere about 3¢ worth of actual ads seen by actual people for every dollar you spend on display advertising.

I know you may be feeling a little depressed by all the money you've been pissing away. But it's a new year. Please, look at the big picture. You're on the web. How cool is that!