The Future of Digital Advertising

The IAB Annual Leadership Meeting is always a fascinating look at what will happen in the industry going forward, and where the digital media industry sees its biggest threats. In previous years, the threats have included the dearth of dollars going to online ads, and the problem of ads that aren’t visible. Time has taken care of the ad dollar problem, and the visibility problem was solved by the Media Ratings Council’s viewability standards. Both of those were easier to solve than this year’s threat: the potential collapse of advertising as a business model for publishers.

You could see it in the choice of topics for the annual Town Halls, at which the members attending the conference traditionally argue about what positions to take toward upcoming trends. This year’s Town Halls dealt with programmatic, mobile, fraud, and ad blocking. How can you respond to four issues that, taken together, represent the near death of a business model?

Programmatic has always been seen as a potential threat , because as the buying and selling of ads becomes automated, taking the relationships out of the sales process, CPMs for publishers have gone down. Nearly every legacy publisher has had to adapt to revenue declines, and many have been escorted out of business already.

Mobile is a problem largely because of the potential privacy invasions that accompany following a consumer into more private aspects of her life. Data limits and screen real estate accommodations further complicate things for the advertiser.

But the focus on fraud is more surprising, because it has been going on for years and it was in no one’s interest to do anything about it until now, when it represents an $8 billion loss to the industry and the people who pay the bills (brands) have begun to catch on. The effort to clean up the digital supply chain began last year with the launch of the Trustworthy Accountability Group, a certifying body that aims to drive fraudulent players out of the marketplace.

And the fourth focus, ad blocking, is one for which the industry really has no solution, because it is controlled by neither advertisers nor publishers– but by consumers who are sick of slow loading web pages, online retargeting, and unwelcome interruptions. The ad blocking genie has left the bottle, because last year was the first year non-geeks began to understand it.

if you take those four problems and shake them up in a bag with the lack of runway left for many venture-backed ad tech companies you get a recipe in which only the strong survive. As a company that long ago became sustainable, we are happy to watch the action from the sidelines and keep developing user-led ad formats for our publisher partners.