Risks of Digital Advertising and the Value Provided by "People-Based" Measurement

By Satoshi Imada, Nielsen Digital

In 2016, Japanese advertising sales were 112.9% compared to the previous year due to continued growth in Internet ad media, and sales exceeded 1 trillion yen for the first time (from a Dentsu news release). Many American analysts predict that 2017 will be the first year that digital ad sales exceed TV ad sales in the US market, and there is a global trend toward increase in digital ads. However, amid this steady expenditure on digital ads, there is increased attention on problems concerning lack of transparency in ad display methods and measurement of results, including issues such as bot access, ad fraud, and viewability. This article will focus on whether ads are reaching the intended audience, as well as the meaning of digital ad transparency and accountability, and the value they provide to ad sponsors.

Risks in measurement of digital advertising and the value of measurement for ad sponsors

What are the transparencies and fraudulent aspects in the measurement of digital ads?

Accountability means the obligation to explain and report to parties involved. This means more than just a proper explanation given by ad agencies and media to ad sponsors. Ad sponsors are obligated to keep track of how invested funds were used and what effect they had, and are required to explain their stakeholders about the value of ads they paid for. For example, a person in charge of ad expenditure would need to undergo evaluation about how the evaluation of their operations and their ads contributed to the business, and would need to report to their superiors about the effect of the investment, in order to secure the next budget. In such cases, which figures should be measured and tracked to explain this value? A key point is keeping track of accurate figures. Failure to do so results in the following four risks.

1. Possibility that the impressions figures are being generated by robots (ad fraud)

According to the 2015 Q4 (Oct-Dec) Media Quality Report of Integral Ad Science (IAS) Japan, ad fraud in Japanese digital ads (Net access by bots and software programs) makes up 6%. In other words, out 100 million ad impressions, 6 million impressions are not seen by people. It is important to count only the ads that are actually seen by people.

2. Are the ads being displayed in viewable locations? (Viewability)

Even if a person (not a bot) visits a page with an ad displayed, there is a risk that the ad is displayed somewhere that is not viewable. In the IAS report cited above, viewability in Japanese campaigns is reported to average 48%. In other words almost half of ad funds may be used to pay for ads that were not displayed.

* The definition of viewability set by the Media Rating Council (MRC) of the US is that a displayed ad requires at least half of the ad to be shown in a visible location for at least one second.

3. Are the same people being counted multiple times? (People based measurement)

The next risk involves different views across devices. For example, when someone sees an ad on their PC at work, and then again on their smartphone, and then on their PC at home, a cookie-based tabulation using unique browser units would count that as three consumers. It is necessary to calculate reach and frequency on a "people basis" that eliminates cross device overlap. Otherwise, there may not be actual extension in reach, or ads may be excessively displayed to the same people, which can damage the brand.

4. Are the targets actually reached? (On target)

The final risk is about whether ads are actually reaching the targets. For example, if a campaign is targeting women in their 20s and 30s but 50% of the impressions are from other age groups or men, then half of the ad funds are used for unintended groups. The average on target rate calculated from more than 10,000 results in the US using our Nielsen Digital ad view rate was 54% of all impressions. In the results for Asia Pacific, the average was 62%

Data that eliminates all of these risks can be described as accountable figures.

In the US, there is increased attention to accountability and transparency in digital ads

At the Annual Leadership Meeting of the Interactive Advertising Bureau (IAB), Marc Pritchard, Chief Branding Officer at Procter & Gamble (P&G) gave a speech about transparency in digital ad transactions. In this speech, Marc Pritchard criticized the methods of displaying digital ads and the lack of transparency and fraud in the measurement of the same. He stressed the importance of measurement by a certified third-party organization and declared that he will only do business with compliant corporations. This declaration has been praised widely around the advertising and marketing industries. Such a declaration by P&G, the world’s largest ad sponsor, will serve as a role model. Attention to accountability and transparency in digital ads is expected to increase rapidly in the US and around the world.

The value of accurate measurement of digital ads to ad sponsors

Ensuring transparency in digital ads and fulfilling accountability will lead to the accumulation of accurate measurements results. By using this data to select media and make decisions about transmission methods and other aspects of subsequent measures, it will be possible to improve efficiency in communication with target audiences and maximize return on investment.

Ad sponsors can expect that the acquisition of accountable data will become an essential step. They will need to utilize third-party organizations and encourage agencies and media to do the same, to fulfill accountability.

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