The problem with programmatic ads
It all started when The Times ran a story highlighting a mid-roll ad for L’Oréal smack dab in the middle of a “hate-filled sermon” a couple weeks ago.
Then Alphabet stock took a 3% tumble, as they and other big brands started pulling their ads off YouTube after finding their logo next to “unsavory” content.
This year, internet advertising around the world is set to pass TV ads for the first time ever and Google has built a massive business on the back of metrics like “reach” and “impressions.”
But apparently, everyone was so obsessed with these metrics, they never asked the basic question,“Where are you actually showing my stuff?”
So now it’s all coming under question
JPMorgan Chase, one of the companies rethinking their ad strategy, narrowed down their whitelist (approved websites) from 400k websites to around 5k.
And if you were picturing a fancy algorithm instantly narrowing the list, think again. They started with the 12k sites (of 400k) that ever recorded a click. Then, an intern manually visited each of them one by one and cut another 7k.
Apart from realizing they should give that intern a raise, Chase also saw almost zero change in overall ad performance.
What? How is that possible?
The claim is that ad tech companies use garbage impressions to artificially adjust the conversion rate to a point where it’s clearly better than the alternatives (print, radio, TV) but still low enough to exhaust ad budgets.
Google gets paid more the more ads are shown — even if only 1% of the placements actually convert. So even though you’re looking for 1,000 people to buy your product, they’re still going to show your ads to 99,000.
But things could be changing
If this unrest continues, we may see a digital enlightenment period, where brands manually control their spend without reliance on programmatic (e.g., algorithms and stuff).
The result? No shampoo ads next to hate speech, more money for the “good” part of the internet, less money for the long tail (the “bad” internet), and fewer days of fresh, line-caught Alaskan salmon at Google’s cafeteria.