More than ever, the “whole truth and nothing but” is the advertising watchword of the day. Increasingly, the advertising industry is being held accountable by the new boss in charge-consumers. With more demand from consumers for truth in advertising, transparency is becoming more critical. Recently, Michael Katz, President and Founder of interCLICK, Inc., an online ad network that combines advanced behavioral targeting with site by site reporting, spoke to Marketing Matters about what’s driving the need for transparency and how ad networks are responding to this trend.
Marketing Matters: What is driving the transparency issue today?
Michael Katz: Transparency is really a subjective term. We look at transparency as much more important than just making sure you’re staying out of trouble and making sure your ad doesn’t wind up on some porn site. Transparency can help create cost efficiencies and can enable advertisers to maximum their ROI on ad spend. The push for greater transparency can also be tied to consumer demands. Essentially, the onus is on today’s advertisers to make sure they’re not saying one thing and doing another. Privacy watchdog groups are a reality so transparency is becoming critical to any ad campaign.
MM: Does more transparency come at a higher cost?
Katz: Most networks can provide an extremely high degree of transparency; however, as a general rule, more transparency comes at a higher cost. To better understand where the trade-offs related to transparency begin and end, look at how a network structures its relationship with publishers and the value proposition it creates.
MM: What role is behavioral targeting playing in the push for more transparency?
Katz: Part of the natural progression of this industry has been to create the kind of behavioral targeting technology we have today which just didn’t exist back then. Ad networks were just relationship managers, brokering traffic and ads. Today, we’re able to target consumers in much more sophisticated ways. We can view their behavior and use it to target that user on another site.
At interCLICK, we’re built a behaviorally targeted system to show very granular targets amongst a broader audience. We can deliver a very targeted audience who has exhibited certain types of behaviors. In this day and age, it all goes back to the customer.
MM: Recently, Google has introduced new programs which seem to place more control of advertising in the hands of consumers. How will this impact advertising networks moving forward?
Katz: The issue of user privacy is a relevant one but consumers need to be provided with more education about their options. Ads aren’t going to magically go away. The type and quality of ads may change but if a consumer chooses to opt out, that doesn’t mean there will be no ads.
MM: There has been some industry chatter as of late about the impending demise of the traditional banner ad. Where do you see this format headed?
Katz: I don’t think we’ll be seeing ad banners going away anytime soon. There’ll always be a place for ad banners. However, the quality will improve and banners will no doubt include a greater share of rich media in order to attract the interest of consumers. For better response rates, a greater share of banners will shift to mixed media including imbedded video.
MM: Metrics are critical to the success of any campaign. What trends do you see from the standpoint of measurement for online advertising?
Katz: Our goal is to empower advertisers by providing them with the kind of data they need to make informed decisions from click through rates and conversion rates to audience composition and behavioral targeting.
Our solution looks at frequency and recency as two key indicators. We can quantify consumers’ interests in certain categories and how long ago or how often they purchased a product.
Moving forward, we’ll also be seeing a greater ability for advertisers to target their message to consumers. Localized ad targeting will be more in demand but as yet no national brand has been able to effectively accomplish it.
MM: Do you foresee further consolidation of ad networks in the near future?
Katz: A lot of consolidation of ad networks has already occurred. Given current economic conditions, we’ll likely see additional networks fade away. Those networks which were a few years late to the game and rode the bandwagon are going to go away. Those who have successful business models in place will stick around.
As networks evolve, the lower level players will get weeded out, but there is a place for a lot of ad networks. The interesting thing is nobody ever says there are too many ad agencies.
MM: How will ad networks continue to distinguish themselves?
Katz: There is clearly a cross over occurring between ad networks and data analytics. Ad networks are becoming a new ad agency of sorts. They are being asked to provide detailed insight on everything from where advertisements should run and which sites are appropriate to which audiences should be targeted.
More and more advertisers are demanding transparency from networks. The question will become just how transparent are you? How much information are you sharing with the client? The typical mindset has been to share only good data, but not all sites you run on and accompanying metrics fit this pattern. But they still are relevant for future planning.
Even with increased targeting and measurement, the goal remains the same. You still need to produce results from your ad campaign.