The Multi-Billion Dollar Impact of Bad Ads. What Publishers Need to Know
The rise of programmatic advertising has spurred a significant decline in user experience for consumers who visit ad-supported websites. For publishers, that’s become a serious ROI problem.
In the first half of 2017, we published two Ad Quality Reports that dove into the details and ramifications of bad ads for publishers. The first focused on the nature and scope of five top quality issues. The second took a closer look at the potential cost of those issues in terms of actual revenue loss. Our upcoming reports will dive into different, but related issues. Before we move on to those, we thought it might be helpful to summarize and bring some color to the findings in the first two reports.
This year, roughly four out of five of all US display ad dollars (an est. $32.56 billion) are forecasted to transact programmatically. There’s no question that programmatic has become the industry standard for digital display. Through its rapid rise, the tech that makes it work has hit hurdle after hurdle, but it has overcome many of those challenges through sheer market determination and demand for rapid improvements.
Percentage of US display ad dollars forecasted to transact programmatically in 2017.
Estimated US programmatic display ad spend for 2017.
Hurdles, like viewability, brand safety and fraud, are symptoms of the overarching absence of control and transparency that still persist in (and even define) the programmatic model. Now, another symptom has emerged for publishers. And this one is very expensive. Bad ads are costing publishers billions in lost ad revenue. Here are the key points publishers should know.
Programmatic Advertising Has Created a Torrent of Ad Quality Issues
Bad ads are ads that don’t meet reasonable/IAB specifications for formatting, size or other guidelines. There are a variety of ad quality issues that occur with a surprising degree of frequency and non-compliance.
Percentage of display ads that have at least one significant quality issue
Average File Size:
vs. IAB guideline of 300KB
of network calls don’t meet IAB security recommendations
network requests per ad (avg) vs. the IAB-prescribed maximum of 15
of in-banner video ads are auto-play
of ads exceed the maximum 300ms CPU utilization guideline.
The AQ Index: A Measure of Industry-Wide Ad Wellness
To gauge and track the overall scope of the ad quality problem, industry-wide, we roll up the frequency and scope of these issues into an industry ad quality score called the AQ Index. The index is an average. Many websites score higher. Many score lower. Most fluctuate above and below.
AQ Index for Q2, 2017:
The Stealthy Nature of Bad Ads
These particular issues are especially difficult for Ad Ops teams to identify, quantify and address. When ads are delivered programmatically, the publisher cedes control of the ad creative to third-party programmatic partners. On the surface, the ads that get delivered programmatically look like regular ads, often from big, reputable brands. So, Ad Ops personnel are often unaware of the specific ads, let alone the problems the ads may be creating.
Blame the Programmatic Advertising Process
Display ads often start their journey from agency to audience with one or more quality issue. However, those issues are often compounded and new issues are introduced as the ad bounces around in the programmatic machine. And there are no quality checks along the way.
Ad Quality Issues Slow Website Page Loads
Bad ads cause page-load latency. When ad issues stack up, page loads slow down. As programmatic advertising becomes more prevalent, ad-related page latency becomes more threatening. Cumulatively, ad quality issues delay page loads and interrupt user experiences on even the most reputable ad-supported websites.
Average page load latency across the industry due to ad quality issues.
The average ad-related page load delay in terms of time.
The Financial Impact of Bad Ads
Website visitors often abandon sites when pages take too long to load. Numerous third-party studies show a direct relationship between each second of page-load latency and user abandon rates. One of the most conservative studies estimates an 11% abandon rate for each second of delay. Even if you apply an abandon rate of 5%, the cost of lost page views and ad impressions adds up quickly:
Average estimated monthly revenue loss for an ad-supported website
as a result of ad-related page load latency (5% abandon rate).
Average annual revenue loss for an ad-supported website,
due to ad-related page load latency (est.)
Annual loss, industry-wide, as a result of ad-related page load latency (est.)
Resolving Ad Quality Issues
These costly ad quality issues exist because the programmatic model lacks built-in quality controls and provides publishers with very little transparency and control of their own. So, the best way to resolve the issues is to inject transparency and control into the programmatic process. From a transparency standpoint, Ad Ops personnel need to have visibility into the presence, severity and potential impact of the threat. And, they need to know the specifics of the causes, for example, which ads have issues, the number and type of issues, and which partner is trying to deliver those specific ads. Armed with this information and the right tools, publishers can regain transparency and control and take steps to proactively block, fix or replace problematic ads.
A Quick Note About Ad Lightning
At Ad Lightning, we continually collect ad quality and website performance data from millions of ads and web pages as part our daily course of business. We believe that, in aggregate, the industry insights and trends that emerge from that data should be available to all publishers to help them protect their business in the new programmatic world. That’s why we publish the Ad Quality Report for Publishers each quarter. You can access the reports here.
 according to eMarketer’s most recent 2017 forecast
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