What Happened to $3 Billion in Ad Revenue?

If you are a brand spending your marketing dollars on digital advertising, you really have to wonder what you get for your money.  Much of the recent news has been two trains of thought:  Ad spending is up - Yay!  It’s not doing anything - Boo!

In a blog post curiously timed to hit the same week as the NAB Show, Media Post columnist Tyler Loechner shared that less than half of digital video ads were viewable in 2014.

Wait...one more time?

Yes, for all the money pouring into digital video advertising - estimated at $7.7 billion in 2014 - less than half of the ads were actually viewable.  Marketers collectively wasted about $3.6 billion in advertising dollars last year.

There are a couple of reasons this is happening.

First - mobile is hot.  No one wants to be left out of the mobile ad market so lots of dollars are chasing the views on smartphones.  They’re chasing, but they haven’t yet found what they’re looking for.

Second - no one likes pre-roll, regardless of how ingrained it may be. According to MediaPost, a reported 31% of YouTube users employed an ad blocker last month.  Not only are viewers skipping pre-roll ads as fast as possible, now they’re working to avoid them entirely.

Lastly, and most importantly, digital advertising isn’t adding value to the viewing experience.  Reaching that all important millennial audience is tough. But advertising can work if it brings something to the table beyond a “buy me” message. (See here and here.)

Multipop spent considerable time National Association of Broadcasters Show and Digital Hollywood Conference talking to media companies, production houses, and cable channels about leveraging digital video content to reach consumers.  The message that we shared repeatedly (we were busy) was:  publishers need to offer solutions besides pre-roll and banner ads and brands need to think of how they can enhance the viewing experience.  

We have seen interaction rates as high as 40% from digital video content that has been Multipop’d and received widespread distribution.  Raise your hand if you’re an advertiser who would like a 40% engagement rate with your ad?  Thought so.

The reason Multipop works is that our partners are using Multipop to enhance the viewing experience. Look at this example: in the case of Priority Bicycles, Multipop helped add context to their brand. (Scroll down on their home page to watch the video.) It wasn’t about sales - although viewers could visit their website to buy a bike - it was about taking the viewer deeper into the brand and really understanding what Priority Bicycles stands for.  The result?  Almost 33,000 views on their homepage with a 40% interaction rate.

The added content complemented the video.  It did not try to draw attention away from it. The viewer remained in control of the experience and was not held hostage to an ad. The result: Priority Bicycles gained outstanding interaction on a simple brand video on their homepage.

Take that experience to advertising or branded content.  What do you think will happen when brands add value to the viewers and don’t force advertising on them?

Agencies and brands have a responsibility to eliminate the excessive waste and deliver positive results.  What’s standing in the way?  Fear of failure?  Lack of creativity?   Probably all of that and more.  But the surest way to get CMOs to take a hard look at the digital ad strategy is to have the CEO ask about the $3 billion that was wasted.