After years of unrestrained growth and little liability, the AdTech industry is being confronted with the consequences of its decisions. Between talks of a cookie-less future and the implications of data privacy regulations (GDPR, CCPA and beyond), the cracks in the ecosystem are becoming increasingly obvious.
My career in media, publishing and AdTech, has given me a firsthand view of the exponential growth of our industry and how the complexity of AdTech resulted in infinite revenue streams and subsequent misconduct, as companies race ahead to win.
With growing concerns about data privacy, cookies, measurement, fraud, and antitrust issues surrounding AdTech, one thing is clear: AdTech has grown too big for its own good. Misconduct is hard to understand or track, and to find the best way forward, we as a collective industry need to look inwards and candidly explore how we got here in the first place.
AdTech, the beginning
For a proper diagnosis, let’s go back to when advertising relied on exchange or barter. Websites sold ad space, and advertisers bought ad placements – a model that lasted until ad networks became mediators between advertisers and publishers.
Aggregated ad inventory from the web went on sale, enhancing the opportunity for additional ad networks to start-up. With increasing competition, the challenges for both buyers and sellers in understanding the various placement of ads and their placers also soared.
With the exception of a few premium publisher portfolios, most publishers eventually found it difficult to maintain brand identity, whereas marketers struggled to track their ads and safeguard their brand image. While the process was complicated, everything else remained quite simple, when programmatic advertising entered the market.
By now, the entire scope of the AdTech industry had changed, with ad-buying undergoing automation through auctioning. With limited inventory available for sale in real time, mass competition kicked in. What Programmatic advertising did to the industry is very similar to what online classifieds websites did to newspaper classifieds.
It was beneficial in many ways, making buying and selling more efficient, while measuring real-time effects, but the downside of automation resulted in decreased productivity, and the industry-wide loss of the decision-making process.
Prior to this technological advancement, the entire system embraced transparency, a rationality lost due to automation, in terms of ad placements. It not only increased competition, but placed the burden of competition on software engineers, to deliver the best possible outcomes.
Despite the negative impact, programmatic advertisement had truly arrived. Success could be measured quickly, the availability of ad spots increased, and that too, for a wider audience base. The surge in vendors boosting online auctions to buy inventory and sell ads, resulted in another obstacle – attributing the conversion rate of audiences.
The AdTech layers
With so many players buying and selling ads from the same brands to the same customers, determining who made a better purchase became confusing.
Addressing the challenge of attribution, ad agencies introduced the “last-touch attribution” model as web analytics, giving sale credit to the last touchpoint of the relevant campaign. Although aimed as simplifying the process, this model made vendors compete even more desperately to win that credit and impression. Judgements or targets no longer mattered, as advertisers focused on delivering volume to increase probability of conversion. This led to biased consumer insights, linking up everything together with causation, fallacious optimization, redundant budgets for advertisements, and a clumsy experience for audiences.
To cover up this mess, additional metrics (linear and last-click attribution, first interaction, etc.) were created, as AdTech became ever more entangled, and additional metrics inflating expenses. Today, a third of our industry is not attributed. This highlights how one of the most convoluted systems, which increases competition every single day hides behind our huge high-tech industry, and it needs to end now. Such metrics will not work, unless we come up with something robust to reduce complexity, bring transparency and build everything back up from scratch, all while maintaining the prime necessity of consumer privacy.
Size makes any industry difficult to regulate, and with the AdTech building not cemented properly, a void is created for principles guiding us.
Today, the impact of the COVID-19 pandemic calls for consolidation. We must replace old metrics while infusing laws to safeguard ethics, which do not carry loopholes. A like-minded team capable of addressing fundamental issues, like scamming with real-time bidding, attribution, laundering impressions, etc., would be needed to ensure transparency and consumer privacy.
Small yet dedicated task forces who can deliver intelligent solutions are needed, as opposed to industry mammoths complicating the process. An agile and ethical approach is the key to understanding and solving the industry’s issues. By taking baby steps to decode our problems, we can ensure our survival. Otherwise, browsers will continue to control the operation of AdTech.