I met with people from Google yesterday. Most interesting: how thoroughly freaked out they are by the advertiser backlash against financing extremist content on YouTube. In combination with the rolling avalanche of awareness of rampant fraud in the AdTech industry, this represents perhaps the biggest opportunity for performance marketing to penetrate major brands that we have ever seen.
For those readers just getting up to speed, last week The Times of London revealed that major brands were “unwittingly funding Islamic extremists, white supremacists and pornographers by advertising on their websites”.
Since this revelation came just days before the annual ad industry event Advertising Week Europe, it created an opportunity for brands and agencies to discuss the situation, and by day 2 of the show more than 250 brands – including Audi, HSBS, Audi and L’Oreal – had pulled campaigns from youTube and, in some cases, from Doubleclick Ad Exchange. Google had to issue an apology and promise all kinds of new measures to identify extremist content and flag it as unsuitable to carry advertising. Since then the boycott has crossed the Atlantic with five of the top 20 US advertisers joining in, representing some 7.5% of total US ad spend.
This comes at the same time that AdTech industry commenters are zeroing in on the lack of performance provided by AdTech, and the astonishingly high fees being extracted from advertisers. Some analyses of the Adtech media funnel claim that 20% or less of advertiser budget results in online advertising that is viewable to potential customers. For every dollar of ad spend (this is a fascinating breakdown for anyone unfamiliar with how big brands are assembling their (arTech stacks):
$0.05 – media agency service fees
$0.15 – media agency trading desk
$0.10 – demand side platform fees
$0.25 – targeting, data, verification
$0.05 – ad exchange
This is 60c of every dollar that might go to AdTech intermediaries. Then factor in that perhaps 50% of display ads are not viewable and you end up with only 20c of budget going to the publisher. Even then, we are not at the end of the bad news for advertisers, because ad fraud is rampant – that might reduce effective spend by yet another 50%.
What all this tells me is that big brands are at an inflection point. They have spent the last 10 years being seduced by the promise that ever-improving targeting and scale will deliver advertising nirvana, whereas the reality is that more of their budget is being wasted than ever.
Performance marketing offers a real, effective solution – and it is available and scaleable right now. For a 20% cut, any of the CPA or CPS networks on the BLUE BOOK rankings could take that big brand budget and deliver ROI like crazy. Yet when I speak to Fortune 500 CMOs, too many of them still think that affiliate marketing is a cesspool of fraud, lacking in all brand safety.
Well guess what, Ms CMO? When Google is putting your detergent commercials next to ISIS videos, your brand safety is shot to pieces. Performance marketing works. Give us a small sliver of your budget and we will prove it – just $100 million will do it.
If I was running a performance marketing network, I would hammering the doors down on Madison Avenue right now. It is time for performance marketing to step into the light.