A very provocative article in Digiday last week suggested that although ad budgets and ad revenues are up, publishers are not reaping the benefits. Nor are consumers. The writer, Jason Kint, asserts that user tracking is having a negative effect on the quality of content that is being consumed, and an even more negative effect on publishers’ revenues because all the extra money generated by rising ad revenues is going to the services that track and retarget users.
The much-hyped automation of advertising is incredibly promising, but right now, it’s being used almost entirely to collect and bid on data to re-target audience using tracking cookies. This data is driving immaterial growth in ad revenue to publishers small and large. It is also feeding a frothy and endless market for ad tech companies.
The digital pie is rapidly shifting away from sites and services being consumed to the companies that track consumption. As digital continues to gobble up advertising share from its offline ancestors, it does so at the direct expense of brand advertising. The industry touts record ad revenues but ignores that more than 65 cents out of every online ad dollar is being spent on performance media fueled by data tracking.
As we move to mobile devices, more specifically to smart phones, tracking becomes more abhorrent to consumers; they’ve said so in many ways, including installing ad blockers in their browsers, taking advantage of do not track options, and complaining to vendors.
But tracking doesn’t help brands, either. When they buy ads using tracking data, they’re buying performance metrics, not brand lift. And the performance end of the market doesn’t work anymore, because the same users who don’t like being tracked have ceased to click on display ads. We keep looking for the performance metric, and it may shift from CTRs to viewability to something else, but we’re always talking about measuring the individual consumer’s actions and buying on that data.
We’ve got a way to go before we arrive at the “right” way to use data to help the ecosystem. Right now, tracking data may be as harmful as it is useful.
The answer to this is for publishers to focus on ad formats that brands want. These almost always include video, and should include ZINC’s InArticle and InView formats. If publishers ran those, they would get more brand dollars rather than performance dollars online and would therefore increase their revenues.