Digital advertising 2017: A year of reckoning in review
This year was dominated by controversy, mobile and the duopoly, but there's more to the story.
Digital advertising 2017 by the numbers:
- Poised for a big year: The first quarter of 2017 represented the strongest beginning to any year yet in US digital ad spend: up 23 percent to $19.6 billion — IAB.
- Duopoly domination: Facebook and Google are expected to pull in 63 percent of US digital ad spend in 2017 — eMarketer.
- Mobile majority: 55 percent of digital ads sales is now generated by impressions and clicks on mobile devices globally — Magna
- Outpaced linear TV: Digital advertising sales surpassed television in 2017 for the first time, reaching 41 percent market share compared to 35 percent for linear television — Magna
The year 2017 at once exposed many of the industry’s vulnerabilities and was a year in which groundwork for real progress was laid. Brand safety took on new urgency as the platforms were caught back on their heels as they failed to fully appreciate the impact of bots, fake news, extremist and other objectionable content on their sites. Yet broad industry initiatives like ads.txt and Trustworthy Accountability Group’s (TAG) verification programs launched to provide long-term solutions to weeding fraud out of the supply chain.
The year of reckoning
The year 2017 was also a big wake-up call for platforms, as well as advertisers: YouTube boycotts over unsavory ad placements kicked off a long and ongoing attempt to appease advertisers and improve brand safety on the platform; the potential for government regulation became a reality for the first time; and the industry responded to marketer demands to clean up the system to varying degrees.
Proctor & Gamble garnered attention after reporting it saw little to no negative impact from slashing its programmatic ad budget earlier this year. (By summer, it had begun advertising on more sites.) In August, P&G chief brand officer Marc Pritchard stepped up his vocal frustration with the walled gardens and digital ad ecosystem as a whole, calling on it to “Clean up the crap.”
Facebook, Google and Twitter committed to third-party video viewability audits this year after loud calls from marketers, including Pritchard. In August, GroupM, the world’s largest media buyer, instituted its own set of viewability standards that are more stringent than industry standards, in part to try to bring digital video and TV measurement into closer alignment.
The fear of mobile ad blocking adoption incentivized several efforts this year, but none will have the impact of Google’s. Calling its coming move to block “annoying” ads on Chrome the “ultimate fallback option” at an event for publishers this fall, Google Senior Vice President of Ads & Commerce Sridhar Ramaswamy echoed calls to improve digital ad experiences, including ad load times. Starting next year, Google will block ads that don’t meet the Coalition for Better Ads standards in its browser on mobile and desktop.
Meanwhile, Apple added Intelligent Tracking Prevention in Safari 11 this fall to further kneecap retargeting on its browser by blocking third-party ad trackers on desktop and mobile. The big industry groups were not amused, penning a hyperbolic open letter in September that accused Apple of implementing “opaque and arbitrary standards for cookie handling . . . that will hurt the user experience and sabotage the economic model for the Internet.” (A far cry from the IAB’s “We messed up” mea culpa of just two years ago.) Safari CPMs may take a hit, but it’s not likely we’ll see significant fallout from Apple’s move when Q4 industry spend numbers come out.
The losers will be adtech firms that rely on third-party data and don’t have direct relationships with users.
The publisher perspective
For their part, publishers took steps to differentiate themselves from the duopoly — by teaming up. Thirty major publishers joined the trade group Digital Content Next’s programmatic marketplace, TrustX, which is focused on delivering brand-safe, viewable inventory and transparency around ad-tech fees. In August, the ANA endorsed the project and encouraged its brand marketer members to participate in a pilot.
In a similar team effort, as of June, more than half of the comScore 250 publishers had signed on to ad tech firm Sonobi’s move to provide an alternative to the large addressable audiences that have made Facebook and Google such powerful marketing platforms. The solution creates a pool of more than 150 million addressable US users available in a cookie-less marketplace. Omnicom Media Group was among the agencies that signed on.
AR/VR/XR gain steam
From a creative standpoint, 2017 saw the start of augmented reality, 360 VR and other interactive ad formats coming into the mainstream. The small real estate afforded on mobile devices is forcing a new wave of creativity. Snapchat’s ad business has been slow to take off, but it has to be credited for helping spur creative innovation.
With all the turbulence of 2017, huge challenges will continue to face the digital advertising industry in the coming year, but there is also cause for optimism that the ecosystem can become healthier due to many of the steps taken this year.