For advertisers, even the most brilliant creative and insight-driven strategies can’t alleviate the nagging feeling in the back of their minds. The reality of ad waste is still a top concern, especially in digital media, the fastest growing channel. Advertisers are expected to spend $68 billion on digital ads in 2016, eclipsing the $66 billion that will be spent on TV advertising. And those digital media dollars are being invested in a particularly volatile space fraught with annoyed consumers, ad blocking, fraud and lack of transparency.
So how serious is the ad waste problem, anyway? The following 10 facts shed light on the problem and how the industry is reacting:
1. Ads Are Going Unseen
According to Google, more than 56% of display ad impressions on the platform are never seen by the consumers that advertisers are paying to reach.
2. Low CTRs Mean Wasted Dollars
As SmartInsights pointed out, overall display ad click-through rates across all ad formats and placements is just 0.17% globally. This translates to fewer than two clicks per 1,000 impressions.
3. Consumers Ignore Ads That Aren’t Germane
Lack of relevancy is one major cause of ad waste. Consumers are inundated with too many ads that aren’t pertinent to their interests. According to research conducted by Adlucent, 75% of people prefer to see fewer ads and for those messages to be aligned with their needs and interests.
4. Advertisers Struggle with ROI
Data from Proxima revealed that 60% of digital marketing spend is wasted and $37 billion of worldwide marketing budgets are being squandered on poor marketing performance. As a results, these budgets are failing to deliver the promised return on investment.
5. Marketers See Waste as an Obstacle
According to eMarketer, marketers in North America and the U.K. agree that fraud (58%), viewability (56%) and poorly targeted ads (46%) are among the leading obstacles to programmatic advertising.
6. Ad Blockers Are Growing in Popularity
PageFair reported that ad blocking grew by 41% in the U.S. and 82% in the U.K. during the 12 months leading up to June 2015.
7. Blocked Ads Also Hurt Publisher Revenues
PageFair also pointed out that ad blocking cost global publishers nearly $22 billion in 2015.
8. Advertisers Are Missing Opportunities
Advertisers are also wasting spend by not investing in the right channels, especially mobile. According to data from Mary Meeker’s annual Internet Trends Report, mobile accounted for just 22% of all ad spend in the U.S. in 2016, representing a missed a opportunity for brands to connect with consumers, who spend 25% of their time on mobile devices compared to 22% on desktop.
9. Bots are the Cons of the Digital Ad World
According to research commissioned by the Association of National Advertisers, $7.2 billion globally will be lost to bot fraud this year.
10. People-Based Advertising is a Solution
Signal conducted research in partnership with Econsultancy that found 67% of North American marketers plan to increase their spending on people-based campaigns. As Signal CEO Mike Sands explained, “When advertisers achieve the power of knowing who they are targeting, they can reduce wasted ad spend, show relevant messages to consumers, and ultimately improve return on ad investments.”
The ad waste conundrum is real, but so are the solutions. To date, advertisers have started working to overcome this challenge in a number of ways, from combating fraud through blacklists and certifications to working hard to leverage their first-party data for more effective targeting. To learn more about ad waste and the strategies to tackle this problem, check out Signal’s latest infographic, “How Digital Ad Spend is Wasted”.