For advertisers, even the most brilliant creative and data-driven marketing strategies can’t alleviate the nagging feeling in the back of their minds. The reality of ad waste is still a top concern, especially in digital media, the fastest growing channel. Advertisers are expected to spend over $380 billion on digital ads in 2020 and those digital media dollars are being invested in a particularly volatile space fraught with annoyed consumers, ad blocking, fraud and lack of transparency.
So how serious is the ad waste problem, anyway? The following 10 facts shed light on the problem and how the industry is reacting:
1. Ads Are Going Unseen
According to Google, more than 56% of display ad impressions on the platform are never seen by the consumers that advertisers are paying to reach.
2. Low CTRs Mean Wasted Dollars
As SmartInsights pointed out, overall display ad click-through rates across all ad formats and placements is just 0.17% globally. This translates to fewer than two clicks per 1,000 impressions.
3. Consumers Ignore Ads That Aren’t Germane
Lack of relevancy is one major cause of ad waste. Consumers are inundated with too many ads that aren’t pertinent to their interests. According to research conducted by Adlucent, 75% of people prefer to see fewer ads and for those messages to be aligned with their needs and interests.
4. Advertisers Struggle with ROI
Data from Proxima revealed that between 40%-60% of digital marketing budgets are spent ineffectively. As a result, these budgets are failing to deliver the promised return on investment.
5. Marketers See Waste as an Obstacle
According to eMarketer, marketers in North America and the U.K. agree that fraud (58%), viewability (56%) and poorly targeted ads (46%) are among the leading obstacles to programmatic advertising.
6. Ad Blockers Are Growing in Popularity
Blockthrough reported that ad blocking is now mainstream with adblockers active on 236 million desktops and on 380 million mobile devices.
7. Blocked Ads Also Hurt Publisher Revenues
Ad blocking will cost global publishers nearly $75 billion in 2020.
8. Advertisers Are Missing Opportunities
Advertisers are also wasting spend by not investing in the right channels, especially mobile. According to data from Mary Meeker’s annual Internet Trends Report, mobile accounted for just 22% of all ad spend in the U.S. in 2016, representing a missed a opportunity for brands to connect with consumers, who spend 25% of their time on mobile devices compared to 22% on desktop.
9. Bots are the Cons of the Digital Ad World
According to research commissioned by the Association of National Advertisers, $7.2 billion globally will be lost to bot fraud this year.
10. Intelligent Advertising is a Solution
The ad waste conundrum is real, but so are the solutions. To date, advertisers have started working to overcome this challenge in a number of ways, from combating fraud through blacklists and certifications to working hard to leverage their first-party data for more effective targeting. To learn more about ad waste and the strategies to tackle this problem, talk to us about Signal’s Onboarding and Activation solutions.
Originally published June 23, 2016, updated March 10, 2020