Ever since marketing pioneer John Wanamaker quipped that half of all the money he spent on advertising was wasted, but he didn't know which half, businesses have been striving to make their advertising spending accountable.
That was in the late 19th century: the department-store king could never have predicted today's $100bn deluge of advertising on PCs, tablets and smartphones. But despite the way data-obsessed marketers flock to the promise of a measurable online world, Wanamaker's conundrum is still with us – $24bn (£14.5bn) of that online spending goes on digital display advertising, and up to half of it is potentially wasted.
According to Anant Joshi, director of digital analytics business Meetrics, currently up to half of all online display ads are never seen by web users.
But in a move Joshi says can only be positive for the industry, Google, which has built an advertising empire on the back of linking ads to its devilishly clever search algorithm, is now turning its attention to bringing some of that same rigour to display advertising.
"A big focus for us is making digital ads work for brand advertisers," said Google executive Andrea Faville. "How do you come up with a measurement for brand advertisers that works like clicks and conversion rates do? How do you tell whether a human being has actually seen an ad?"
The company has introduced technology that can track the "viewability" of ads, to determine whether they are actually potentially visible to a user and not buried at the bottom of a web page.
This means that advertisers who buy campaigns across the 2m websites that make up the Google display network – and includes the New York Times, USA Today and Forbes sites – will only pay for their ad if at least 50% of it is visible for one second or longer.
"There is a big need for more transparency online," said Joshi. "Advertisers are wanting to see more honesty about whether ads are actually being delivered to a site, whether they have been seen, and what content the ad is appearing next to."
While the digital display advertising market has grown rapidly in the past four years, from $14bn to $24bn globally, there is so much ad space available that prices are very low.
Even Mail Online, the largest digital newspaper website in the world, with over 150 million monthly users, is currently only making a few tens of millions of pounds in display advertising.
Google says that its technology could be a game-changer, in that it will create an advertising product that can command a premium.
"Display inventory to date has been limitless," said Faville. "It could be that prices for viewable inventory become higher as advertisers' confidence increases in the system. There is a high likelihood of these ads being seen as valuable to marketers."
Advertisers are, of course, also used to dealing with the problem of viewability when buying and running campaigns in traditional media, such as TV and newspapers. ITV's The X Factor may attract an audience of 10 million but it is not possible to tell how many viewers are watching an ad and how many have taken the opportunity to go and make a cup of tea.
"Whether it is online or television, a client is paying for a message and they need to know they are getting value for money," said Mark Popkiewicz, chief executive of TV advertising technology firm Mirriad. "Google has identified the fact that there is no guarantee online, and the hot pursuit of accountability demands there should be."
However Rob Horler, chief executive of the northern European operations for media agency Aegis, is suspicious of Google's motives. "I think it is a bit oversold," he said. "Google is desperately trying to secure big brand advertisers to switch out of TV and newspapers and want the currency [online] to be seen as the same."
While Google's new service marks an improvement in measurement in the digital display market, it still cannot confirm that someone actually saw an ad, only that the ad was in theory viewable.
Horler, whose agency represents clients including British Airways and General Motors, said that for advertisers, effectiveness will always come down to clicks and sales, not viewability.
"I don't think it is about online ads being honest," he said. "It is more of a PR stunt. Google is the guru of marketing effectiveness: it invented it online. The currency for measuring the effectiveness of advertising continues to be interaction and conversion."
Google maintains that all it is doing is facilitating choice for advertisers.
"This is just one model advertisers can choose," said Faville. "For a standard branding campaign, which is about reach and getting the message to the widest possible audience, this makes a lot of sense. Our goal is to help make digital work as well for brands as it has for performance advertisers."
guardian.co.uk © Guardian News and Media Limited 2010
image: © Aaron Parecki
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