It’s Time For Ad Tech To Evolve.

Portrait of Todd Garland
by Todd Garland
Feb 17, 2016

Gradually developing from one form to another is something industry has done since, well, the beginning of industry. Just look at the recent examples of the hotel industry and AirBnB, the taxi industry and Uber, online publishing and Facebook. Heck, even the final frontier has been infiltrated by the “disruption” ethos prevalent throughout industry today as both Space X and Blue Origin look to change the way we tackle space exploration.

Those are just a few modern examples, yet while all of this goes on around us, the ad tech industry – and by association The IAB – continue to plug their ears with their fingers and pretend that the landscape hasn’t changed. For every company within an industry willing to evolve, there are dozens that clutch to the past, but ultimately they die a slow, profitless death.

The IAB and the house it built is a mess, and it’s dangerously close to catching fire and burning to the ground. The IAB still continues to ignore the simple fact that people have voted with their Chrome, Firefox, and Safari plugins.The market reality we’re all facing is something the ad tech industry has created and end-users don’t give two “merdes” about what that means for publishers.

Is it a revelation that 70% of all mobile users now have access to content-blockers on their smartphones? It shouldn’t be. The trendline was set long ago and there’s no bucking it now.

It’s time to wake up. It’s time to realize that the biggest threat to the advertising industry isn’t ad-blockers, but the continued disillusionment of readers online.

Stop That Train, Users Want To Get Off

It’s taken them a while to catch up, but end-users realize now that ad tech has become “predatory” and that there’s a lack of self-control exhibited throughout the industry. Of course, that lack of control isn’t driven by malice, but instead desperation from publishers trying to stay profitable. Sadly, we’ve now entered a new publisher era of inescapable, cyclical dysfunction.

Simply stated, publishers have to sell reader information to advertisers in order to satiate the compulsive data collection needs of “the beast” just to make enough money to continue creating content readers want to consume.

If that’s not selling your soul, what is?

If you start keeping a running log of all the websites and publications you visit on a daily basis, it becomes pretty obvious once that you probably have no idea where your information is being sold, and how far it’s moved between companies looking to compile purchasing and customer profiles on your behalf.

One accidental trip to The Guardian and your information is traded with a dozen companies.

The end-user solution to this problem? Install an ad-blocker

The netizens voted in the “digisphere” long ago, but companies were too blinded by shiny baubles (aka. gold doubloons) to see it. Publishers may have bought into the RTB vision due to a lack of alternatives in the early days, but if there’s anything harder than stuffing Pandora back into a box, it’s stuffing 198-million (Aug. 2015) duck-sized Pandora’s back into a box that doesn’t even exist anymore. That’s where we’re at today, and we should have never opened the box in the first place. Nearsightedness is a dangerous thing. End-users have clearly voted.

Ad-blocking isn’t going away, no matter how hard the industry hallucinates that it will. Instead, the ad-blockers will continue to evolve and grow. People will continue to install them. And unless some serious lobbying is going on at the highest levels, preventing people from installing them won’t be happening anytime in the near future. It is the free and open web after all.

It’s time to remember a basic fact: when publishers are winning, advertisers are winning, and as we’ve seen with the rise of ad-blockers, consumers will win when publishers maintain more control of their ad space. Publishers may power this vehicle ad tech is so fond of marginalizing, but consumers power the publishers. Without their loyalty, this value exchange breaks down quickly. It’s already breaking down into a giant ad-blocker mess. A continued reliance on early 2000s advertising mechanisms may prove catastrophic for publishers.

It’s not all doom and gloom though, that rotten smell in ad tech is finally getting the Febreze treatment.

Someone At The IAB Shout, ‘Eureka!

“Through our pursuit of further automation and maximization of margins during the industrial age of media technology, we built advertising technology to optimize publishers’ yield of marketing budgets that had eroded after the last recession. Looking back now, our scraping of dimes may have cost us dollars in consumer loyalty.”

– Scott Cunningham, senior vice president of technology and ad operations at the Interactive Advertising Bureau (October 15, 2015).

It’s taken awhile (like half a decade), but the IAB, or at the very least Scott Cunningham, has realized that the IAB has lost its way, and in the process eroded ‘customer loyalty.’ People make mistakes. What’s important is we recognize where we are today, and try to fix the problems we’re presented with, right? Now that we know what we’ve done wrong, surely we can fix it?

Nope. AdBlock Plus Is Responsible For This Mess. Get Out The Pitchforks.

Just last month the IAB managed to take Adblock Plus to task. Instead of seizing an opportunity to open a real dialogue about the advertising industry, the IAB decided to take the low road and wax polemical about the state the industry finds itself today. Randall Rothenberg made headlines by tossing up these words during his keynote at the Interactive Advertising Bureau’s Leadership Summit (links and emphasis ours):

“Now, you may be aware of a kerfuffle that began about 10 days ago when an unethical, immoral, mendacious coven of techie wannabes at a for-profit German company called AdBlock-Plus took to the digisphere to complain over and over that IAB had ‘disinvited’ them to this convention… This is what happens when your only motivation, your only metric, is money. For that is what AdBlock Plus is: an old-fashioned extortion racket, gussied up in the flowery but false language of contemporary consumerism.”

– Randall Rothenberg, CEO of IAB. Quoted by AdWeek.

What’s confusing about the comments made by Rothenberg is that Scott Cunningham made his statements (above) back in October of 2015. Now, just a few short months after those clear and inspired comments, Randall Rothenberg took to the stage and blamed Adblock Plus for the quagmire we find ourselves in today.

Instead of focusing on some huge, and very real problems facing the industry, namely the privacy concerns around first-person data sharing, malvertising being driven through exchanges, or any of the other serious security concerns, Rothenberg used the opportunity to pick a fight.

While blaming the poor sods in Germany who saw a market opportunity and ran with it, Rothenberg managed to miss the biggest opportunity of all: talking past Adblock Plus and addressing the concerns of their end-users directly.

The problem isn’t that advertising online is a problem, it’s that the industry has seized the opportunity to squeeze more revenue out of the margins by feeding the glorious data-beast.

Sorry, but the IAB built the world we’re living in, and those running ad-blockers out there are just trying to navigate it safely. Users don’t care what the profit motivations are of those who develop the ad-blockers. What users do care about, however, is being exploited around every corner on the internet. The IAB in general, and Randall Rothenberg in specific, continue to miss the opportunity to address those concerns. Heck, they’ve failed to even provide possible solutions to the problems.

The tale of scale monetizations and the slaying of the data beast.

When it comes to advertising and publishing online things have always been relatively inert, at least on the surface. By most metrics, there’s been exactly one way to make money at scale online for publishers: advertising. Sure, affiliate models and subscription models exist, and while some publishers are starting to take those a bit more seriously, we always come back to advertising revenue streams for publishers. The problem, however, isn’t that advertising online is a problem, it’s that the industry has seized the opportunity to squeeze more revenue out of the margins by feeding the glorious data-beast by selling user data. Since then, advertising models built around RTB exchanges have done nothing but erode both revenue and customer loyalty for publishers. Where we once focused on branding, and direct sales online and the art of building recognition online, we now collect and sell a publisher’s first-party data to anyone willing to shell out cold hard cash.

Since our launch, back when RTB was the solution du jour, our competition was making substantial money by finding arbitrage opportunities and creating efficiencies in the online advertising ecosystem. It didn’t take long (a 2–3 year window) before everyone started looking to purchase our user data. Rubicon Project was easily the most persistent of the bunch.

Our response to this “opportunity” back then (and still today)? End-user data was not our data to sell.

Since then companies have stopped limiting themselves to normal ethical boundaries in the quest for increased profits and greater revenue opportunities. Today, any 3rd party piece of JavaScript you install, as a publisher, is an opportunity for someone to collect and sell your browsing data.

A more acceptable approach to advertising: BuySellAds, Fusion Ads, and Launchbit. None of those platforms collect readership-data, then sell them off to the highest bidder.

For the better part of a decade, the modus operandi of ad tech has been extorting publications, and extracting their value, while actually doing nothing more than advocating for companies and technologies that erode consumer trust. By advocating for tools designed to wrestle control from publishers and place it in the hands of exchanges, companies have created a fault line and disjointed an industry desperately in need of balance to survive. Today, for the majority of publishers online, there are no checks and balances in place to prevent advertisers from taking advantage of their readers. They have no other choice. Publishers can either play along with their end-user data, or they can perish.

Again, according to the IAB, Adblock Plus is the problem in our industry, as they work to position themselves as “friends of those whose livelihoods they would destroy, and allies to those whose freedoms they would subvert.” It’s Adblock Plus, and the 9.26% of ad-blockers online responsible for the demise of online publisher revenue.

Not the failed dreams of Real-Time Bidding (RTB) exchanges. Not the false promises of Header Bidding technologies. It’s certainly not the continued advocacy for tools that focus solely on buyer-side solutions while marginalizing sellers in the equation. Those responsible for the “last-mile” in publishing, and those who are directly responsible for putting the content in front of readers have very little control over what’s being displayed, and what’s being collected by the networks.

The solution isn’t a complicated one. We should strive to remove as many inefficiencies created by middlemen in ad tech as possible. We should aim to help publishers earn a larger portion of every ad dollar being spent online. We can do this by providing both advertisers and publishers sophisticated tools to transact directly, and not through arcane bidding systems. We need to attack this from the top of the ad tech stack with Automated Guaranteed product suites that helps ad sales teams sell more effectively. We also need to build tools that make small-batch campaigns profitable for publishers.

When we talk to publishers today, we’re finding that there’s a renewed emphasis on becoming more self-sufficient and more self-sustaining. The only way a publisher can do this is by no longer relying heavily on ad exchanges and recapturing revenue lost along the way to ad tech companies who care little about publisher growth.

The Matter At Hand Is More Than Ad-Blockers.

Whether Adblock Plus is a “for profit” or not is of very little actual concern here, though bandying it about sure scores a few PR points for the actors involved in this mess, as they look to pit publications against ad-blocking agencies so ad tech exchanges can continue to maintain a stranglehold on the primary transaction mechanism between reader and publisher online.

The greater point which is often missed, but is also going largely undiscussed publicly? Consumers have spoken out rather loudly, and for those savvy enough to know what’s going on today, the trading of private information is no longer acceptable online. Trust us, if they haven’t already, end-users will be telling their friends about the privacy problems in short order. Ad-blocker usage will continue to grow. It’s not changing now. But, it’s not growing because of advertising. It’s growing so quickly because of privacy and security concerns online. Ad-blockers have become the anti-viruses of today’s web generation. It’s become unsafe to navigate the web, and the only way to safeguard against privacy threats is to install an ad-blocker.

At some point advertising online turned into a big-data privacy problem. We’re not sure when it happened, and putting a finger on the moment is pretty difficult. But, it’s also painfully obvious that the industry has failed to strategically recognize the realities and complexities of online advertising, as well as the actors involved in turning it into what it is today. That is the sole responsibility of the IAB.

No matter what we do, or how we phrase our nuanced rebuttals to rhetoric in public, it’s too late. Ad-blockers are here to stay, and they’re more prevalent today than at any time in the past because everyone in the ad tech industry failed to recognize that we’ve reached the tipping point long ago.

Whether we like it, or not, the industry will evolve and those willing to evolve with it stand to gain substantially from the unrealized potential before us. It’s the way it’s always been. There’s no stopping it now.