Analysts like Gartner are echoing marketers’ worst fears. They recently published a study that reveals by 2025, 80% of marketers who have invested in personalization will abandon their efforts due to lack of ROI. That must send chills down many marketers’ spine because the promise of a personalize user experience has been a vivid dream spun with the promises of adtech. As of now, this dream remains elusive and continues to deeply disappoint marketers.
These are the top 10 reasons explaining why adtech is a mess and fails advertisers today.
1. The data dilemma
Investors fell all over themselves to fund data ventures that allowed advertiser to target with increasing data sophistication yet they paid scant attention to the provenance or efficacy of all this data. As a result, 3rd party data of questionable origins dominated the ecosystem even as increasingly, new regulatory scrutiny begins to add significant risk to using unvetted third party data.
Virtually all brands bought into the data story as a means to realize their user personalization dream only to be startled to realize that their reliance on 3rd party has undermined their ability to drive conversions and increased brand risks from privacy/ GDPR standards.
Many are left with an unpleasant choice. Either they continue using 3rd party understanding the increased risks or pivot dramatically to a 1st party data strategy which requires significant investment and corporate commitment. The days of easy data are coming to an end and fast.
2. Fraud in digital media buying
Anyone that has ever run a digital campaign knows this truth too well. Lots of clicks are recorded but the percentage of click that convert to a sale defy any reasonable explanation.
As advertisers continued to try and make digital marketing work, they realized that too much of digital impressions and clicks are fraud. Then they started to realize that the supposed traffic verification tech firms do a poor job of detecting fraud because the bad guys easily and regularly defeat the detection protocols.
Estimates vary wildly as to what percentage is fake since it is function of many technical variables but everyone agrees that the least amount of fraud is 30%. Think about, before an advertiser has seen a cent of revenue for their ad investment, fully 30 cents out of every dollar is poof – gone. That alone puts advertisers behind the ROI eight ball even before they’ve begun.
While many believe 30% level of fraud is the floor, other studies suggest fraud represents 90% of impressions. This audit of the programmatic supply chain startled even me. In a two-year, $1 million-plus study, commissioned by U.K. advertiser trade body ISBA and in partnership with the Association of Online Publishers found that, despite the researchers’ best efforts, only 12% of the impressions could actually be traced. Yes, you read that right. Said another way – 88% of impressions come from non-verifiable sources.
The murky and difficult ad supply chain are the dark spaces where adtech fraud continues to thrive defying easy detection or remediation.
3. Adtech fragmentation
Ask any marketer about how effective their adtech stack is and you’re likely to see a rolling of the eyes or the shrug of defeat. Adtech platform creep started innocently enough – one platform to manage social or another platform to power digital ad buys. Then, there was a realization that there was a need to understand analytics better so other data viz platforms were piled on.
By the time anyone knew what happened, a company might be using 15 or ore discrete SaaS platform technologies that are hard to knit together into a cogent understanding of how well digital marketing is working. This fragmentation has taken its toll on advertisers who are exhausted, wrestling to get their adtech investments into a productive engine of business growth.
4. Attribution modeling is just too hard
Related to the point above, trying to thread the attribution needle that reveals the sequence of marketing activities led to a conversion moment has becomes virtually impossible within the maze of tech platforms and data.
Indeed, advertisers are desperate to understand attribution better but their choices are achingly limited. There’s Google analytics are cleverly design to motivate more spending on its ad products or they take on expensive and complex attribution modules baked into CRM platforms. Either way, advertisers are left on their own to answer basic attribution questions.
5. Acquisition marketing is even harder
Amidst impressions and automated platforms, there is a strong disconnect between a digital impression and a real-world conversion.
As described in an AdAge article called, “The Problem with Impressions”, I noted; “impressions don’t buy — real people do.”
Yet few adtech platforms really want to be measured based on actual results and prefer to be measured with vague impressions. This is why impressions have become the currency of adtech – if a platform delivers “impressions” then they are relieved of encountering the messy, real world of acquisition marketing.
6. Google and Facebook are innovation killers
The dominance of these platforms leaves scant room for genuine innovation. Worse, as they look to solidify their position, the room for new entrants seems to diminish day by day.
For its part, Google killing the cookie in Chrome is another end run to make the ad market play by Google rules. If the only way to really target “contextually” is through Google Search advertising and they have a lock on the market. Game over.
Facebook, for its part, promises micro targeting at a “scale” level. That is all fine until one realizes that for all the targeting ability, the road to conversion from Facebook traffic is, consistently, weak.
Here is an excerpt from a music publisher on its Facebook ad/ conversion experiment:
If the label wanted a good click-through rate (CTR) then this campaign was a huge success. The industry average click-through rate is 0.05%, and social media CTR is only marginally better at 0.89%. This campaign achieved a 6.3% CTR.
However, if the label’s goal was to drive revenue via streaming, well that ROI looks pretty awful.
51k people that saw the ad. We targeted people who had read articles about the band in the past 12 months across all our sites + followed the band on social. Interestingly, only 3.2k people clicked the ad. Do the math on what 3.2k streams means for revenue.
Seems crazy right?
If Facebook’s targeting is so good, why is the click-through rate still only 6.3% (even if it is a great CTR)? With the kind of audience set we ran, logically, CTR promoting a new song to a bands most engaged fans should be 30-50%?
The reason CTR is still so low is that when you pay Zuckerberg money, you are paying for people’s passive scrolling thumb. That’s why Facebook ads are being jammed in all parts of the app now; From Messenger, to Marketplace to Instant Articles etc. Anywhere Zucks can squeeze an ad impression in, he will, whether people will notice it or not. (Source)
‘Nuf said.
7. Cross channel marketing
This challenge involves attracting and retaining customers within a multi- step and multi-channel activity chain.
For example, an advertiser will initiate an email exchange to a new potential prospect which leads that recipient to click through to the website. Once the user lands on a website, the advertiser can reengage in a multitude of way from retargeting and social ads to post web site visit email with a promo offer.
There are as many technologically models to manage a cross channel campaigns as there are campaigns to be managed.
The challenge for advertisers is how to extract the data from these various channel specific channels into a cogent story that drives specific action.
There many new platforms that claim to hoover up all the data from these various channels but their effectiveness is diminished by the many data glitches that pervade these platforms.
This presents another black hole in the data supply chain of marketing.
8. Lack of disruptive innovation
Investors have been conditioned to look for adtech ventures that are SaaS platforms given the reliable recurring revenue. So its no wonder this created an overabundance of SaaS platforms that perform a single task but are incapable of creating the nuanced balance between technology and the human element to create compelling campaigns. SaaS platforms can scale binary deliverables, like impressions, but they can’t “scale” quality within the context of acquisition revenue goals. More and more, advertisers are trying to get back to better crafted campaigns that can be contextually delivered and able to be measured in terms of revenue realization.
9. AI gone rogue
Adtech is littered with firms touting their version of AI that drives efficiency, optimization and accountability.
The glittery promises belie the underlying truth that it’s almost impossible to vet whether AI is truly productive. It is even harder to compare competing adtech platform each with their own AI technology.
This leaves a lot to the imagination creating a situation where the cooler sales deck or a smooth salesperson trumps real revenue producing benefits. Never has the expression caveat emptor have more meaning than in the business of buying adtech AI.
10. Systemic adtech trust gaps
Plenty of digital ink has been spilled lamenting the trust gaps in digital marketing around privacy, transparency and accountability. There is even a GDPR fine tracker such as the GDPR Fine Tracker to expose companies that violate consumer privacy standards. A sad testmamont to the state of adtech in and of itself.
There are many reasons adtech fails advertisers which accounts for the pitiable state of adtech. The internet is a content serving yet adtech quickly abandoned that fundamental truth once it realized content can’t scale like gameable impressions or even clicks.
This gave license to many firms to create adtech venture that were better at gaming investors to believe they had innovation or marketers that they could reach real people then creating genuinely useful adtech.
The gig is up and not a moment too soon.
