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Aug 14, 2017

The Multi-Billion Dollar Impact of Bad Ads. What Publishers Need to Know

The rise of programmatic advertising has spurred a significant decline in user experience for consumers who visit ad-supported websites. For publishers, that’s become a serious ROI problem.

In the first half of 2017, we published two Ad Quality Reports that dove into the details and ramifications of bad ads for publishers. The first focused on the nature and scope of five top quality issues. The second took a closer look at the potential cost of those issues in terms of actual revenue loss. Our upcoming reports will dive into different, but related issues. Before we move on to those, we thought it might be helpful to summarize and bring some color to the findings in the first two reports.

This year, roughly four out of five of all US display ad dollars (an est. $32.56 billion) are forecasted to transact programmatically[1]. There’s no question that programmatic has become the industry standard for digital display. Through its rapid rise, the tech that makes it work has hit hurdle after hurdle, but it has overcome many of those challenges through sheer market determination and demand for rapid improvements.

      ~80%

Percentage of US display ad dollars forecasted to transact programmatically in 2017.

      ~$32.5 Billion

Estimated US programmatic display ad spend for 2017.

Hurdles, like viewability, brand safety and fraud, are symptoms of the overarching absence of control and transparency that still persist in (and even define) the programmatic model. Now, another symptom has emerged for publishers. And this one is very expensive. Bad ads are costing publishers billions in lost ad revenue. Here are the key points publishers should know.

Programmatic Advertising Has Created a Torrent of Ad Quality Issues

Bad ads are ads that don’t meet reasonable/IAB specifications for formatting, size or other guidelines. There are a variety of ad quality issues that occur with a surprising degree of frequency and non-compliance.

      28%

Percentage of display ads that have at least one significant quality issue

           

            Average File Size:

       1.1MB

            vs. IAB guideline of 300KB

           

            SSL Non-Compliance:

       51%

            of network calls don’t meet IAB security recommendations

           

            Network Calls:

       56

            network requests per ad (avg) vs. the IAB-prescribed maximum of 15

           

            Video Formatting:

       19%

            of in-banner video ads are auto-play

           

            CPU Usage:

       32%

            of ads exceed the maximum 300ms CPU utilization guideline.

The AQ Index: A Measure of Industry-Wide Ad Wellness

To gauge and track the overall scope of the ad quality problem, industry-wide, we roll up the frequency and scope of these issues into an industry ad quality score called the AQ Index. The index is an average. Many websites score higher. Many score lower. Most fluctuate above and below.

            AQ Index for Q2, 2017:

      76%

        

The Stealthy Nature of Bad Ads

These particular issues are especially difficult for Ad Ops teams to identify, quantify and address. When ads are delivered programmatically, the publisher cedes control of the ad creative to third-party programmatic partners. On the surface, the ads that get delivered programmatically look like regular ads, often from big, reputable brands. So, Ad Ops personnel are often unaware of the specific ads, let alone the problems the ads may be creating.

Blame the Programmatic Advertising Process

Display ads often start their journey from agency to audience with one or more quality issue. However, those issues are often compounded and new issues are introduced as the ad bounces around in the programmatic machine. And there are no quality checks along the way.

Ad Quality Issues Slow Website Page Loads

Bad ads cause page-load latency. When ad issues stack up, page loads slow down. As programmatic advertising becomes more prevalent, ad-related page latency becomes more threatening. Cumulatively, ad quality issues delay page loads and interrupt user experiences on even the most reputable ad-supported websites.

      34.4%

            Average page load latency across the industry due to ad quality issues.

      4.3 Seconds

            The average ad-related page load delay in terms of time.

The Financial Impact of Bad Ads

Website visitors often abandon sites when pages take too long to load. Numerous third-party studies show a direct relationship between each second of page-load latency and user abandon rates. One of the most conservative studies estimates an 11% abandon rate for each second of delay. Even if you apply an abandon rate of 5%, the cost of lost page views and ad impressions adds up quickly:

      $33,000

            Average estimated monthly revenue loss for an ad-supported website

            as a result of ad-related page load latency (5% abandon rate).

      $400,000

            Average annual revenue loss for an ad-supported website,
            due to ad-related page load latency (est.)

      $8 Billion

            Annual loss, industry-wide, as a result of ad-related page load latency (est.)

Resolving Ad Quality Issues

These costly ad quality issues exist because the programmatic model lacks built-in quality controls and provides publishers with very little transparency and control of their own. So, the best way to resolve the issues is to inject transparency and control into the programmatic process. From a transparency standpoint, Ad Ops personnel need to have visibility into the presence, severity and potential impact of the threat. And, they need to know the specifics of the causes, for example, which ads have issues, the number and type of issues, and which partner is trying to deliver those specific ads. Armed with this information and the right tools, publishers can regain transparency and control and take steps to proactively block, fix or replace problematic ads.

A Quick Note About Ad Lightning

At Ad Lightning, we continually collect ad quality and website performance data from millions of ads and web pages as part our daily course of business. We believe that, in aggregate, the industry insights and trends that emerge from that data should be available to all publishers to help them protect their business in the new programmatic world. That’s why we publish the Ad Quality Report for Publishers each quarter. You can access the reports here.

 

[1] according to eMarketer’s most recent 2017 forecast

We welcome your feedback on this post or any of our quarterly Ad Quality Reports. Please send us your thoughts: help@adlightning.com

If you’d like to know more about the Ad Lightning platform or give our tools a trial spin, we’d be happy to set you up. Just drop us a note: info@adlightning.com

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Written by Mesa Yee on Monday August 14, 2017



Mar 21, 2017

The Industry Challenge for Programmatic in 2017

On the surface, it looks like the digital publishing industry should be extremely happy. After all, they’re the beneficiaries of an overwhelmingly successful automatic — or programmatic — marketplace for buying and selling ads; a marketplace which reached $22B in 2016. But these same publishers, brands and agencies are suffering from an unintended result — it’s a classic case of the tragedy of the commons and a major downside for publishers and users: a full one-third of digital display ads that make all this content possible are “bad,” meaning, they are too big, too slow or poorly constructed and can cause desktop or mobile sites to slow to a crawl or jump around as ads load. The result? Consumers get frustrated waiting for sites to load (inspiring many of them to install ad blocking software). Brands whose messages are delivered in badly constructed ad units can suffer, and publishers can see page views, revenues and consumer loyalty plummet.

When you think of “ad quality” issues, you may first think of bad creative like those “belly-fat” ads. As a publisher, you may think: “malvertising” or those annoying mobile app redirect ads that are so difficult to quash. Much has been reported on these types of “bad ads.” In fact, earlier this year, Google announced that they took down 1.7 billion ads in 2016 because they violated the company’s creative content policies, contained malware or were self-clicking mobile “redirect” ads. Google’s efforts and numbers illustrate how serious and rampant these types of bad ads have become.

And my company, Ad Lightning, released a report recently (available here) which found that nearly 30% of all display ads created “severe” issues that lead to site performance problems. So as bad as the belly-fat or “malvertising” issues are, the cumulative effect that lots of seemingly innocuous ads are probably having on the user experience and publisher ROI is even worse for publishers, brands and audiences.

The Effect of Bad Ads on Publisher ROI 
The vast majority of bad ads that occur across popular websites are saddled with a different set of issues: they’re often more difficult to detect, address and quantify in production. Bad ads can severely increase page load times and create other ugly experiences for site visitors. They appear on the surface to be normal ad units and they’re often ads for trusted brands. But, the ways in which they’re designed, formatted and delivered negatively affect publisher brands, audiences and revenues. They can be boiled down to five types of ads that, for publishers, can create real ROI problems:

  1. Oversized Ads: Ads that exceed industry standard file size limits and take too long to load
  2. Over-Requested Ads: Ad requests made to networks too many times
  3. Processor-Intensive Ads: Ads that use too much CPU processing time and power
  4. SSL Non-Compliance: Ads that are not HTTPS encrypted.
  5. Intrusive Ad Formats: Ads delivered in unsupported formats

New Ad Quality Study Reveals Scope of Issues

At the end of 2016, my company, Ad Lightning, set out to gain an understanding of the magnitude of bad ads across the industry. Among the key findings that surfaced: 28% of all of the display ads had at least one of these performance issues rated “severe” and many more exceeded recommended industry guidelines. We also confirmed something we had long suspected: that ad-supported web pages generally take twice as long to load as the same pages without ads. Throw in some significant ad quality issues and the ad-supported pages can take seconds longer (and thus, create negative experiences that can drive audiences away). And we saw a widening gulf between accepted industry standards and what’s really going on.

The Gap is Wide Between Industry Guidelines and Reality
Recent studies have found that each second of page delay erodes user engagement and satisfaction significantly. The IAB has established its LEAN ad quality guidelines to help prevent that erosion. However, across the board, the Ad Lightning study revealed sizable gaps between recommended industry practices and actual industry practices. Here’s a glimpse of some of the issues we tracked and the differences between the industry guidelines and reality.
 
Over-sized Ads: IAB guideline: The maximum file size for display ads is 300KB. The Ad Lightning Ad Quality Study: 41% of the ads tracked exceed that size limit. Nearly 10% of the ads were larger than 5MB.
 
Over-Requested Ads and Excessive Tracking Scripts: IAB guideline: a max of 15 network calls for any given ad unit. The Ad Quality Study: The average was 56 network requests per ad.
 
Processor-Intensive Ads: Ads that take more than 300 milliseconds of CPU processing time are generally considered unacceptable. The Ad Quality Study: About one third (32%) of the ads were overly processor-intensive (took longer than 300MS). Roughly 12% of ads took more than 500MS.
 
SSL Non-Compliance: IAB recommendation: The digital ad industry should adopt HTTPS (HTTP/2) encryption across the board. The Ad Quality Study: On average, for each ad, about 51% of network calls were not SSL compliant.

We have a long way to go.
 
The presentation of display advertising plays a critical role in the way users perceive and experience ad-supported websites. When publishers sell inventory programmatically, the process demands that they cede control of those ad units (and the way site visitors experience the ads) to an array of programmatic partners. While it may be the publisher’s responsibility to track and manage these issues when they occur, the responsibility to reduce the high rate of occurrences falls on just about everyone in the digital advertising ecosystem. Everyone has a stake, too. The cumulative impacts of these issues reach well beyond publishers. When ad blockers go up and page views go down, the addressable audience wanes. And that affects the reach and success of even the most pristine ads and campaigns.

Fortunately, the Coalition for Better Ads is working with the IAB to set new standards and establish formal rules for measuring and enforcing them. We strongly support their efforts on behalf of the industry.

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Written by Kate Reinmiller on Tuesday March 21, 2017



Oct 18, 2016

The Past, Present and Future of Ad Quality

If there’s one truism about technology businesses, it is that when you lose sight of the consumer experience, you’re dead. Digital advertising is veering dangerously in this direction.  Digital advertising is the Internet’s economic engine. Everything from Google to Facebook to your favorite news site relies on advertising to pay the bills. In the old days, these ads were bought and sold by hand. Large publisher sales forces called on agencies to sell their inventory. Publishers could carefully, and explicitly, manage the tradeoff between the attention-grabbing qualities advertisers value and the focused, uncluttered environment that users desire (and an experience that drives engagement).

In recent years programmatic advertising has emerged as the industry’s dominant monetization paradigm. With sophisticated algorithms and hyper-focused targeting, programmatic buying automates the ad sale transaction with an unprecedented level of efficiency and control. While this appears to be a marketer’s dream, the unintended consequence is that publishers are no longer in control of the advertisements being served onto their sites. In fact, they are often blind to the quality of ads served to their audience. As a result, publishers are losing control over their own user experiences.

So what’s the problem?

This gap in visibility has created an opportunity for low quality, disruptive and even dangerous ads to enter the ecosystem. Think about ads that auto-play with audio, take too long to load, inject malware or contain offensive content. Ad-induced latency slows down user’s favorite websites and ruin their online experience. Unsecured user syncs and JavaScript calls create privacy concerns. Malware freaks them out. Users are frustrated. So frustrated in fact, they are starting to revolt, putting the entire digital advertising industry at risk. You only have to look at the rapid spread of ad blocking software to see the threat.

As a long time publisher, I can tell you: achieving the balance between attracting eyeballs, driving sales and building loyal communities is the holy grail. Right now the balance is out of whack and users are suffering. Publishers need ways to take back control of their own digital product experience. They need transparent but efficient ways to monitor the programmatic ads being served into their pages and to monitor the quality, performance and safety of ads from the demand partners they do business with.

It’s only going to get more complicated from here. Over the next few years, we’ll see increased adoption of programmatic video, header bidding and identity targeting, each bringing new risks when it comes to ad quality, latency and privacy concerns.

What’s the solution?

There’s no simple fix that will solve all these problems. But there are some steps the industry can take that would help:

  1. Support the rapid adoption of HTTP/2 which was designed to increase speed and improve website data security.
  2. Replace the wild proliferation of client-side user cookies with a consortium-operated sync service and marketplace of tracking data.
  3. Agree on a universal ID methodology for managing creative across the entire value chain, from the agency to the publisher, that can be used for ad quality scoring, and deduplication, and removal.

My new company, Ad Lightning, is aimed at helping publishers monitor and manage ad quality and latency with their demand partners. But monitoring and managing is only one part of the equation. We’re excited to be part of a solution that re-prioritizes the user experience. But we need to see industry-wide leadership and cooperation.

The digital ad industry as a whole, including advertisers, agencies, DSP’s and exchanges needs to clean up its act before it’s too late.

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Written by Kate Reinmiller on Tuesday October 18, 2016

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