Jump to navigation

The invisible pachyderm effect: How many elephants can you fit into one room if you are a tech giant?

David Fenlon
David Fenlon | Jun 21, 2017

Today’s CMO has enough to think about – from navigating the dizzying array of digital services to juggling multiple agency relationships, all while attempting to deliver value to the organization that is constantly asking for more to be done with less. In recent months, the rigors of the job have been compounded by the emergence of significant, pervasive and distributing issues related to advertisers’ relationships with Google and Facebook – the two behemoths of the digital advertising world.

It turns out that neither company seems to have much of an idea as to where, when and alongside what a brand’s ad content will be seen. On top of that, Google also appears unable to ensure that brands paying by-the-click are having their ads clicked by actual human beings. These troubling issues are prompting CMOs to rethink how they deploy their digital advertising spend.

The first of numerous issues began to appear back in March of this year when Havas made the bold decision to stop pushing client budgets to Google’s ad exchange. A number of brands, including Oracle, which had one of its banner ads overlaid on an ISIS video, had been voicing concern after seeing ad content run along objectionable, extremist and fake content. The Havas move generated widespread attention and exposed an inherent weakness in the display business model. A number of high-profile brands, including Johnson & Johnson, AT&T and Verizon, soon followed suit in pulling money.

Google and Facebook have been quick to suggest that they are doing something about the problem. In actuality, they have not provided a suitable response to allay brands’ concerns. The vague statements made attempting to downplay the issue haven’t helped, either. Both have been reticent to accept responsibility for where content on their platforms is placed and have been slow to find an adequate solution for what is, admittedly, a very difficult problem brought on, in part, by the sheer number of transactions that take place on both exchanges. The amount of time, manual labor and investment that would be required to decipher the extent of the problem and devise a solution could potentially destroy both companies’ low overhead model.

While the issues on display are significant and continue to erode trust, they pale in comparison, from an economic perspective, to that which is plaguing paid search.

According to IAB and Ebiquity, it has been estimated that bots make up 25–33% of all internet traffic, ranging from legitimate web crawlers to fraudulent software. Google has made very basic steps to identify bot traffic clicks in AdWords, which clients are not charged for. However, this does not filter out nearly the volume of bot traffic flagged by the IAB and Ebiquity. This means that billions of dollars of ad revenue generated by the pay-per-click model are not generated by human response. It also means that brands are losing significant dollars to empty clicks. Media agencies and their clients are getting tired of fake clicks. They are frustrated that Google has not opened its books despite calls from the industry to become more transparent.

Neither Google nor Facebook is taking appropriate responsibility for the massive ecosystems they’ve fostered. Both are likely to fight hard to maintain something akin to the status quo – understandably so, considering that a discounting of fraudulent clicks could drain 25–30% from Google’s revenue stream.

At what point does a platform become a publisher?

While Facebook doesn’t have the same potential revenue dependence on bot traffic that Google has, it is exposed to the same placement and content issues. This could be the type of problem that dramatically increases costs just as Facebook is trying to monetize their advertising space by squeezing out the organic content. The lack of transparency of what an ad is next to or associated with is something that is extremely concerning to brands. This escalates to out and out fear of drastic brand damage when the rapid rise of extremist content and fake news is taken into consideration. Previously Facebook was trusted by brands, perhaps less so now.

On top of this Facebook has their very own problematic elephant in the room: they are rapidly becoming more exposed to the potential libel rules that apply to newspapers and publishers. Sheryl Sandberg, Facebook’s COO, repeatedly asserted that Facebook was not a publisher in an interview on April 24, 2017. Facebook’s position in this instance is looking more and more precarious especially given that their algorithms push content towards members judged to be more likely to be receptive to that type of content.

How this is different to what newspapers and publishers do remains to be seen although members of the media industry are already putting Facebook under pressure in this regard – Martin Sorrell recently commented that Facebook and Google “cannot masquerade as technology companies, particularly when they place advertisements.” Therefore, brands face a massive conundrum. There’s still a great deal of upside for them to use the platforms, but in continuing to do within the current dynamic, they are bleeding money and risking reputation. So, what to do?

For one thing, brands need to take matters into their own hands and not wait for the platforms to implement a quick fix, such as auditing a sample of their ad placements to get an understanding of where placement is happening, or using anti-bot software to identify what incoming traffic to the website might be originating from fraudulent sources.

Brands also need to more closely align with their media agencies, many of which have taken the brunt of criticism around the pitfalls of digital marketing in the past decade. It’s true that media agencies were once seen as bedfellows of the tech giants, even reluctantly in some cases. But things have shifted, and agencies are now prone to strongly side with their clients after waking up to the harsh reality that, when things go wrong with Facebook and Google, they take the blame for the shortcomings of a platform over which they have limited to no influence.

By forging stronger alliances with their respective agencies, brands can use their collective clout to demand greater transparency, responsibility and honesty from the platforms and get the most out of their investment. Align with your media agencies on how to tackle this now or else you’ll be left behind when this truly starts to unfold. After all, elephants have a tendency charge so letting them all out of the room at once without a plan could be extremely dangerous for you and your brand.

Your suppliers impact your entire business. Catalytics© ensures it's a positive impact.
 

Click here to learn more about Catalytics