Lack Of Trusted Traffic Data Could Hold Back Online Ad Market

from the numbers dept

One of the supposed benefits of online advertising is that it’s much easier for companies to track the effectiveness of their spending than from ads placed in old media outlets like newspapers, billboards or TV — by virtue of the clickthrough. Advertisers know how many impressions they buy, and can track how many clickthroughs those impressions generated, giving them a pretty good idea of how much they’re spending for each action. Of course, this calculation depends on a few things, like accurate data on a site’s traffic and ad inventory, and a way to detect and account for click fraud. Neither of these are too readily available for advertisers at the moment, and that could be holding back some companies from shifting more of their ad budget to online media. To that end, a number of large consumer goods companies say that by the middle of next year, they’ll demand that online publishers hire outside auditors to vet their traffic statistics and certify they’re accurate. There’s a lot of skepticism about the traffic numbers claimed by some sites, and advertisers don’t want to see an online repeat of the newspaper circulation scandal of a few years ago, where papers were inflating their readership figures with “ghost” subscribers. Part of the problem here is that there’s no universally accepted way of counting web site traffic; the use of auditors could represent something of a solution. And then there’s the matter of click fraud, which search and advertising giants say they’re working on, but a solution remains out of sight. While online ad spending is growing quickly, it still represents just a small percentage of overall ad spending. Unless these issues can be worked out to advertisers’ satisfaction, it won’t maintain its torrid growth.

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Comments on “Lack Of Trusted Traffic Data Could Hold Back Online Ad Market”

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Anonymous Coward says:

Another option is to look at how clicks lead to actual orders and results. This perhaps may lead to pay-for-performance ad models rather than just pay-for-clicks.

As far as click fraud. Businesses also need to investigate television ad fraud–skipping over commercials by viewers, and radio ad fraud–listeners skipping to the next station or ignoring the commercial, and brochure fraud–when advertising brochures (such as for tourism destinations) are used in a restaurant, for example, to prop up a table instead of getting read. In other words, concerns about click fraud are valid, but, in other forms of advertising, the audience does tune out also.

Angus (user link) says:

Advertising has more than one result

The problem with pay-per-performance, is that some advertising is simply intended to raise brand awareness and not generate an immediate action. Advertisers looking to do this would get a free ride, as they would not expect action by viewers, and would thus have lower costs (it also rewards bad ads – something we could all do with less of).

If you intoduce a mixed model, with some ads pay-per-performance, others pay-per-view, and yet others pay-per-click, the problem becomes one of how to prevent pay-per-performance from dominating, and wasting ad inventory.

However, the previous poster is right, this is exactly the sort of issue that existing advertising has. In that sense, pay-per-period ads may offer the surest value, as they link your ad with the publishing site for a certain period of time – no matter how many or how few views/clicks/performances you get.

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