The recent ISBA/PwC report has served as a timely reminder that, alongside the many opportunities of digital marketing, marketers can only ensure their spend works as hard as possible by addressing the issue of digital waste.
A definition of digital waste could be as complex as the digital landscape. I am going to keep my definition simple: it is the unnecessary and fruitless investment advertisers may make in the course of activating their digital campaigns. It’s the spend that is over and above what would be required to achieve the same outcome by other, less costly routes.
Digital waste takes many forms, but I want to focus on two in particular.
Any advertiser looking to maximise the effect of their digital marketing budget will be alarmed at the discovery that up to half of their programmatic media spend could be lost to various agents and technologies, many of whom are unknown and whose function in delivering media objectives is equally murky.
But the sheer complexity of programmatic media is enough to dissuade many marketers from looking to understand it in any great detail; the focus tends to be on "cost per" metrics that neatly represent both input and output.
The complex bit in the middle is often overlooked. But all advertisers investing in programmatic have opportunities to make their investment work harder. It is possible to use technology to interrogate the "value chain", test different routes to the publisher and establish where spend works harder.
According to Marco Ricci, chief commercial officer at Fenestra, whose technology has been delivering end-to-end, full-chain transparency for both advertisers and publishers by chaining financial log-level transactions, "brands which adopt a rigorous testing and monitoring of their media buying can expect a 30-45% improvement on their investment".
The drive towards increasing efficiency can only come from brands. Because only brands have a real interest in reducing digital waste and getting more effect for less investment. The simple reality is that every other participant in the digital marketing chain has only a commercial interest in growing their clients’ spend. The commercial model the industry is built around remains the cost-per-mille, where more impressions mean more revenue and more digital spend means more profit.
This commercial model geared around impression volume lies at the heart of a second major issue facing advertisers: inflated volumes of second- and third-party audiences. Advertisers have long been sold the promise of precise targeting of relevant audience groups. But a commercial model that rewards impression volume means that publishers and data providers cast their nets wide when packaging up their impressions under different audience segments. The advertisers that measure actual audience delivery are often surprised by how inaccurate the delivery of media against defined audiences can be.
I first became aware of the issue when measuring a campaign promoting baby products to young mothers. The strategy was focused around targeted digital video, which was the perfect medium to reach them. Alongside regular KPIs including viewability, reach and view-through rates, I was keen to know the proportion of impacts that had been delivered against our target audience.
My expectation was that it should be not far from 100%. The reality was just 30%. And this result is not unusual, according to Joe Hayes of AudienceProject, a technology-based market-research company providing audience measurement by utilising their nationally representative online panel of 380,000 people in the UK to measure in-target reach.
He said: "As an industry, we need to completely re-evaluate what we mean by accurate. If your target audience makes up 15% of the online population and your media indexes at 30%, you will have doubled your hit-rate in-target group. That’s pretty good but, unfortunately, the industry has been led to believe that perfect is possible."
This issue is multifaceted, but quality of data and demand for "precise scale" has created a problem where publishers struggle to prove the quality and therefore justify the price of their data, agencies don’t know how accurate the data used to build audiences is and brands assume the media is reaching their audience precisely, no matter the size.
As with programmatic value erosion, there are ways of addressing this. Different data sources can be used to build audiences and different trading approaches can be tested and measured to find the routes that work most efficiently for a particular brand.
It may take some time for solutions to be found to some of the structural issues the industry is grappling with, but individual advertisers are able to take immediate steps like this themselves. By appointing the right measurement partners and incorporating them into their media governance, it is possible for advertisers to make savings, improve efficiency and enhance marketing performance.
When every penny needs to work harder than ever, no advertiser can afford to ignore their waste any longer.
Sam Gaunt is founder of The Working Fifty and previously head of media at Lidl