Why Addressability is A Necessary Solution to the Ad Waste Problem

July 06, 2016

Wasted spend is a real problem for digital advertisers everywhere, and one that they will likely grapple with for years to come. [tweetable]Marketers will spend $68 billion globally on digital advertising in 2016[/tweetable] and as that number keeps growing, they will be further pressed to prove a return on those investments.

There are four key areas that likely come to mind when marketers hear the term, “ad waste:”

1. Viewability: Today, many advertisers are shifting toward paying for “viewable” rather than “served” impressions. The Media Rating Council defines a digital display ad as viewable when 50% of the ad’s pixels are in view on the screen for a minimum of one second. According to Google, the most viewable position for an ad to exist on a page is right above the fold, rather than at the top of the page. Additionally, vertical ads are more viewable because they stay on screen longer as users move around a page.

2. Ad Fraud: Ad fraud is the deliberate practice of attempting to serve digital ads that have no potential to be viewed by a human. Ad fraud comes in the form of pixel stuffing, ad stacking, video fraud and bots. According to the Association of National Advertisers, the advertising industry could lose approximately $7.2 billion globally to bots in 2016. While the issue of ad fraud may seem out of marketers’ hands, participation in cross-industry collaborative efforts to stop fraud is both powerful and necessary.

3. Ad Blocking: Ad blocking is a key driver of ad waste, and a problem that is only growing. As eMarketer pointed out, 38% of Internet users worldwide blocked an ad in Q4 2015, up from 28% in Q3 of the same year. While marketers are unlikely to convince users to delete their ad blocking software, the key to consumers’ hearts is context, which is exactly where addressability comes into play.

4. Relevance: Another way advertisers are wasting spend is by serving the wrong messages to the wrong people at the wrong times. In fact, a 2016 Accenture survey of chief marketing officers that found fewer than 20% of the individuals those marketers reach are actually the right customers for the product or service being offered. Across digital channels in particular, only 18% of customers reached were actually in market. Accenture extrapolates from these figures that hundreds of billions of dollars are misspent each year across the globe.

Addressability: A Route to More Efficient Ad Spending

Tackling the issue of ad waste requires a variety of solutions, but one tool all advertisers should have in their arsenal is addressability. Addressability means advertisers are able to use first-party customer data to reach consumers who buy their products with marketing that is germane and timely. Addressable media helps advertisers reduce wasted spend by ensuring they reach the right person with the right message at the right time, across channels.

And marketers worldwide are catching on to the value of addressable media, which enables them to turn their first-party data into more meaningful and effective advertising campaigns that provide value to customers in real-time and increase conversions. According to a recent study conducted by Signal in partnership with Econsultancy, nearly 1-in-2 North American and Australian marketers have plans to increase addressable buys quickly. Additionally, 60% of North American and 75% of Australian advertisers reported improved click-through rates with people-based advertising.

Marketers today are operating in complex digital spaces dictated by the preferences and desires of empowered, educated and fickle consumers who have the tools they need to interact only with brands that are relevant to their individual needs and preferences. To earn their loyalty, wallets and attention online, advertisers must make addressability a top priority. The result will be better engagement, increased sales, improves ROAS and less ad waste.

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Kurt Anderson

Kurt was formerly a Senior Solutions Consultant at Signal. In this role, he worked closely with Signal’s clients to ensure they were able to utilize our products to their fullest capabilities. Prior to Signal, Kurt was Director, Analytical Solutions at Centro, where he tested and integrated audience and measurement solutions.

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