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comScore: Unlimited Inventory, Lousy Metrics Cheapen Digital Ads

To understand the state of the online ad ecosystem, imagine if print worked the same way. Picture one of those half-inch-thick bridal magazines with just 10 pages of articles. Now imagine that it grows to a foot thick, still has just 10 pages of content and takes ads from absolutely anyone. Young brides who are receptive to ads from apparel makers and honeymoon destinations cannot find those ads among absurdly misguided ad placements (maybe for hunting rifles, because an article contained the word "Kentucky" and people hunt in Kentucky). And there you have it. comScore has released a whitepaper about the economics of online advertising, comScore President and CEO Magid Abraham believes that two "unfortunate byproducts" of aggressive innovation in the online ad ecosystem have been 1) to increase in the complexity of campaign delivery and 2) a virtually unlimited supply of inventory, both of which create significant waste in the buying and selling processes. "We believe that moving the industry toward a 'validated impression' standard introduces an element of digital scarcity that helps match the value flowing to publishers and advertisers with the value being delivered by the impression."

In short—higher standards makes ads more scarce and valuable. Use more exacting measures (like the ones comScore coincidentally offers with its Validated Campaign Essentials [vCE] offering). This would "bring the forces of supply-and-demand in online advertising into greater alignment," said Abraham. "We introduce value to the ecosystem, accelerate the flow of ad dollars to digital, and foster a win-win environment for all stakeholders."

Move Past Served Impressions To Validated Ones

Digital supply appears unconstrained when served impressions are used as the unit of counting. However, digital supply is effectively constrained when the unit of counting is viewable impressions.
Served impressions, argues comScore, are pretty purposeless. It equates below-the-fold advertising with a TV ad that is silent and invisible but delivered to millions of households. So what? It may as well have never aired. The short story, TV advertisers are used to far higher standards than internet advertising typically delivers.

The research builds the case for validated impressions (ones which have an opportunity to be seen, are delivered in the correct geography, among brand safe content, and with non-human traffic removed).

Standards for viewability would bring down the volume, certainly. But validated delivery would have three more mechanisms:

  1. Geographic compliance. Ensure that no one in Wyoming sees an ad for a New York City bistro.
  2. Brand safety. Eliminate real-time delivery of ad impressions shown next to undesirable content (perhaps ones which the advertiser or agency views as low quality, ads next to articles that mention competitors, or ads for family-friendly product on the raunchy site collegehumor.com).
  3. Eliminating non-human traffic, including fraud, which artificially inflate impression counts. Fraudsters are pretty clever. They have been known to program servers to robotically create ad impressions.

The advantage to the stakeholders:

  • Publishers win because advertising on their site is more effective and more fairly valued. Specifically, they can use validated impression data to unearth undervalued inventory and re-set pricing accordingly.
  • Agencies win because they are able to demonstrate better results to the client, offer better advice on media plans and spending allocations, and benefit from a clearer indication of which strategies and executions are actually contributing to brand lift.
  • Advertisers win because they have a more accurate picture of online campaign performance and can therefore make better business decisions and allocate spending accordingly.

comScore's white paper is a thought piece and light on data, but it is fairly convincing. It quotes economist Adam Smith (author of the classic The Wealth of Nations) who observed 200 years ago that "Price is regulated by the proportion between the quantity brought to market and the demand of those who are willing to pay." No brand will ignore online ads. But as long as there is too much of it and its value is questionable, then, it will be a cheap commodity.

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