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The Digital Advertising World Is Changing, But That Equals Opportunity for Ad Tech Firms

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The first banner ad was launched by AT&T in 1994, heralding the beginning of digital advertising. The industry has gone through many changes since then, the most profound of these being the rise of dominating search engines and social media sites – which among them accounted for the majority of digital advertising spend (excluding China) in 2017, according to research from GroupM. Writing exclusively for ExchangeWire, Craig Tuck, UK MD, RhythmOne, explains why, with the recent public backlash against these vast controllers of data, there is an opportunity for other, independent (more open) platforms to capture some of this media spend, provided they can react in the right way.

Whilst the dominating search engines and social media sites have been in ascendency, point solutions available on the market have been through a process of consolidation, with companies now offering competitive full-stack, end-to-end marketplaces. This consolidation has left some ad-tech firms in a strong position: now able to provide a scalable solution that is an appealing alternative for advertisers, they are placed to respond to the demands of advertisers and offer solutions that are distinct from those of the so called ‘walled garden’ super-majors.

Speaking recently in an interview with Campaign, Stephen Loerke, chief executive of The World Federation of Advertisers (WFA) identified transparency, viewability, brand safety, and ad fraud as being top of the agenda for CMOs. Effectively, they want value for money. If ad-tech firms listen to the market, they can position themselves to take advantage of this potential step change in the distribution of global digital advertising revenue.

Transparency

Brand owners and advertisers want a clear understanding of where their money is going. This is specifically relevant when discussing the cost of the media that is being purchased, and the tolls that intermediaries are exacting on these transactions. They have seen an ecosystem grow that was not accountable and they are clamouring for improvements.

The good news for ad-tech firms is that, through the process of consolidation, they have narrowed the pool of potential partners for advertisers, thus reducing the number of players taking a piece of the pie. This makes the advertisers’ jobs easier, as they are spending money through fewer channels. By selecting a handful of trusted partners, they can be sure that they have a handle on how their clients’ money is being spent.

Viewability

Advertisers naturally want to increase the viewability of their ads. They have come from an age where viewability could be guaranteed, for example by buying a billboard in the middle of Piccadilly Circus, and have arrived in the digital age when they buy inventory through programmatic ad platforms with trillions of potential placements and challenges while measuring when their ads are truly seen. Current IAB standards define a ‘viewable’ ad as one that’s at least 50% visible for at least one second – a standard that advertisers want to see improved.

Ad-tech firms have the chance to address this demand and improve viewability through innovation. Algorithms can understand the correlation between in-view ads and viewable ads over time and predict a viewability threshold with a high degree of confidence. This capability has seen the development of private marketplaces (PMPs) that can guarantee agreed viewability or invalid traffic (IVT) thresholds. Programmatic platforms are already making good headway in the UK, with viewability jumping from 53.9% to 63.7% between 2016 and 2017, according to Integral Ad Science research. Through continued improvements, ad-tech firms can win the trust of advertisers and, in turn, more of their business.

Brand safety

Advertising can cause severe reputational damage if their ad appears next to contentious or inappropriate content. Some brands have moved away from some established platforms already out of such concerns. This is because platforms often don’t have control over the things that are shared and cannot guarantee that advertising won’t appear alongside damaging content. This is especially true within UGC environments, where the sheer volume of content being developed is staggering and the mechanisms for understanding context are still relatively rudimentary.

Here, ad-tech firms have an opportunity. It is key that they build learning algorithms that effectively filter content brands would consider harmful. Proprietary brand-safety filtering technology that can consistently identify questionable content – both text and video – is a must if ad-tech firms are to win advertisers’ trust.

Invalid traffic (IVT)

Advertisers need to be able to trust that their partners are taking steps to mitigate the threat of IVT. Apart from losing money by serving ads to suspicious pages, brands don’t want to be seen funnelling money into the criminal underworld through loose governance of their ad spend.

Ad-tech firms can, with their algorithms, provide guarantees to their clients that nonhuman traffic (NHT) is being effectively filtered out. This involves filtering out general invalid traffic (GIVT) (bots, spiders, invalid IPs, etc.) and sophisticated invalid traffic (SIVT), which, as the name suggests, represents a more challenging threat, as these bots or crawlers try to appear legitimate. Such traffic is hard to completely eradicate. However, by being open with advertisers about the efforts being made, ad-tech firms can allay their fears and provide a differentiated and appealing offering.

What’s next for ad tech?

Only time will tell how much of an impact the recent concerns over the integrity of some key players in the industry will affect the distribution of digital advertising spend. However, if ad-tech firms want to tip the scales in their favour, they need to sit up and listen to what the market is asking for: more transparency, improved viewability, a consistent approach to ensuring brand safety, and a real drive towards combatting invalid traffic. Doing this ultimately creates a more efficient and effective environment for advertising – something that benefits all the actors in the value exchange.

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