Will AdTech Lose in the End?

Rick Webb posted an interesting article theorizing why all the innovations around ad targeting and contextual advertising in ad tech right won't end up meaning squat for TV and OTT advertisers.

The crux of his argument is that the brands that do the big spending are few, and the brands they represent are pervasive. Pervasive enough that they don't care about micro-targeting individuals and therefore won't pay a premium for it.

Instead, he argues, they want to push the same ads to as many people as possible, just like they always have.

He says that the real problem is that AdTech has continuously failed to make any progress in the following areas: attribution and allocation.

When one thinks about these two concurrent goals deeply, a challenge for ad tech quickly makes itself evident. Even if ad tech succeeds at the attribution goal, there is no guarantee that the allocation goal will yield to the internet. Think about it. It’s possible — though, I believe, unlikely — that our ad tech data capabilities will eventually get to the point where we can perfectly tell which ad convinced someone to buy a product. But ask yourself: even if we get there, what is the likelihood that the ad will have been seen on the internet?

Virtually every study confirms what you probably already suspect: that television is more effective than the internet for emotionally inspiring someone to purchase something they weren’t already thinking about purchasing.

There is, then, a scenario where ad tech dominates in the attribution goal, but not the allocation goal. Thus the media money — the real money — would still be spent elsewhere. Of course we can’t predict, now, exactly how ad tech will accomplish this seemingly impossible attribution goal — it’s a holy grail still far off — but if the attribution goal is accomplished, it won’t necessarily predicate the spending of ad money on the internet. It will involve a data spend. A SaaS spend. A fee, like other data providers charge. In this scenario, one or many companies — Google or Facebook, perhaps, or perhaps something with more location chops like Foursquare or Placed (recently acquired by Snapchat) that can tell when you walk into a store — will bill companies a fee for analytics, and once the brand possesses said data they will spend their money elsewhere.

To conquer the other $200 billion of advertising money, ad tech must not just be able to tell us where to spend our ad dollars most efficiently, but also, that the most efficient ad must also run on the internet.

Read his post in full here