How does the industry waste $20bn marketing budget a year?

“Just 25% of CMOs digital media investment reaches target audiences.

“This atrocity represents more than $20 billion of marketing waste, inefficiency and ineffectiveness”.

ANA CEO, Bob Liodice stated this during his opening talk at the ANA Masters of Marketing conference last year.

Now, arguably this has been a known issue and problem for publishers for a long time, and has taken a long time to get back to CMOs. But aside from the question of why this is, I think it is worth investigating why it happens.

Poor measurement

Quite simply, whatever we measure is what we get. If we measure the wrong things, then we'll get the wrong outcome.

Too often marketers are focussed on marketing proxies rather than true measurement. Fraudsters know which proxies brands focus on, they understand how to use these proxies to their advantage, and they have been doing exactly this for a long time.

Prime examples include 100% viewable impressions, or clicks - proxy metrics which are deliberately targeted by fraudsters.

All of this results in a continual arms race between the fraudsters and the businesses employed to stop them. The mobile CPI market is classic example of this – in a recent podcast we hosted on mobile ad fraud, two of the mobile agencies involved said they typically deal with fraud rates as high as 80% of all installs.

Instead of marketing proxies brands should focus on business objectives - like incremental revenue and incremental profit.

Too many people marking their own homework

There are obvious reasons why we hold suppliers accountable for the work they carry out. Yet when it comes to advertising, why is it that so many suppliers are trusted to report on their own activity?

Too many suppliers within the chain of delivering ads to consumers are guilty of finding ways to mark their own homework. And too many marketers are guilty of trusting them to do this.

And what do these suppliers do when they’re reporting on their ‘successes’? Usually find ways to suggest that budgets should continually increase, even going to the extent of inventing metrics that would justify their models, and finding ways to deliver ads that correlate with existing behaviour to claim an impact.

Media performance should be validated against a brand's own business metrics; and not mediated by attribution models or other third parties.

The programmatic marketplace

I assume best intent, but I think we’ve got an adtech market that is opaque, and in many cases commoditised.

It’s a market where no one owns the final result other than the marketer. And this definitely doesn’t benefit the marketer, nor the brand they represent.

A typical chain would involve a strategist, a measurement firm, DSP (or multiple DSPs), a dynamic creative optimisation business, a device matching firm, a data management platform, and a data on-boarder.

Each of these businesses has limited responsibility for the final outcome, and is in a highly competitive space, driven by commercial deals. Often, they’re motivated to reach an earn-out for a venture capital business that is interested in revenue rather than profit. This creates an inefficient market for brands.

The move to person-first media is a significant step in the right direction. It reduces fraud to negligible levels, and allows for actual measurement. However, until the issues above are addressed by marketers, it is not a solution in itself.

The first step to fixing the issue is awareness, so please do reach out to me directly on LinkedIn if you have any questions about the points I’ve raised. Otherwise, you might be interested in listening to the podcast I mentioned earlier on mobile ad fraud.

Listen to the podcast