Anti-trust lawsuit: How transparent is the digital advertising ecosystem?

Industry leaders tell e4m that while they are concerned about the ‘not-so-transparent’ digital ad tools, the right mechanisms can help in building trust in the overall system

e4m by Kanchan Srivastava
Updated: Jan 18, 2022 8:52 AM  | 5 min read
Digital advertising

A recent anti-trust lawsuit filed in a New York court, claiming Google and Facebook have had an illegal deal in 2018 to dominate the digital advertising market, has raised concerns among advertisers across the world. 

Indian brands, which have been spending billions in digital advertising, are also following the case that claims Google manipulated ad auctions in collaboration with Facebook. 

“We have been keeping a tab on the case filed in the NY court, though we are not sure about its merits at this point of time,” Shashank Srivastava, Director of Sales and Marketing, Maruti Suzuki, told e4m.  

He, however, said marketers have been wondering for a long time about the complex and ‘not-so-transparent’ digital ad tools used by various digital platforms.  

It is to be noted here that Google and Facebook alone control nearly two-thirds of the digital ad market in India at present. Their combined ad revenue touched Rs 23,213 crore in 2021. 

“With massive data at their disposal along with the dominance in the market, these tech giants can make or break brands. After all, they wield a huge influence on consumers. However, I don’t think they would do so because it will hurt their long-term goals,” Srivastava added. 

 The entire digital ecosystem - from the tech giants to data mining companies to supply chain intermediaries - is now under the scanner due to its complexities and inviibleness. 

Such is the trust deficit that most brands, including Maruti, have started using third-party tools to get a clear picture of their ROI. 

Sharing more insights, Srivastava says: “At present, we are spending 27 per cent of our ad spends in digital, compared to the 15 per cent before the pandemic. Hence, we are extremely cautious about the ROI. We conduct third-party audits to check the claims made by the digital platforms. The audits help us to check viewability, impressions, and the reach of our campaigns along with geographical and cohort data. This also helps us to understand whether the impressions, views and shares are organic.”

Rahul Vengalil, Managing Partner of Isobar India, who was previously associated with ad audits, had similar views. “If you deploy the right tools, your trust in the overall digital system will grow. Since these tools increase advertising costs by up to 18 per cent, many brands develop cold feet. You can't measure ad effectiveness without the right and enough ammunition.”

Interestingly, when the advertising ecosystem started witnessing a shift towards digital advertising, transparency was believed to be a key differentiator. 

Is it worth it?

Marketers have been unanimous that today’s media supply chains lack transparency. According to research by Metamarkets, almost half of all brands don’t trust at least 20 per cent of the data they use while taking media-buying decisions. About 74 per cent of marketers would increase their ad spending by as much as 50 per cent if they had access to more transparent data, the research has revealed.  

At the core of the digital advertising revolution is behavioural advertising – the technique by which advertising platforms use thousands of data points to target users, who can be then served hyper-targeted and relevant messages at the right moment. 

Advertiser concerns over transparency are focused on the entire digital media platform, including supply chain intermediaries and firms that collect second and third-party data. 

Highlighting the trouble areas, Srivastava says: “Marketers lack insights about the actual cost of an ad, its viewability and ROI because of several layers and players in the ecosystem.”

According to Lloyd Mathias, business strategist and former marketing head HP Asia-Pacific, “The digital ecosystem deserves further scrutiny – especially as platforms aggressively move to hinder transparency into auctions and their outcomes.”

Sharing insights on ad spending, he further says: “With increasing digital spend, comes a greater amount of digital ad fraud - where a lot of advertising money that is spent on digital media is never seen at all.  According to Juniper Research, $42 billion of ad spending in 2019 across online, mobile and in-app channels were lost to fraud. Advertisers are made to pay for impressions and clicks that never took place, using fake audiences, fake installs and conversions.”

‘Measurement is challenging’

Talking about the feasibility of measurements in this system, industry experts say measuring the causal effects of digital advertising remains a challenge despite the availability of granular data. 

Studies suggest that digital advertising isn’t as effective and transparent as giants like Google, Facebook, Twitter, Microsoft and Amazon claim. 

Scientists at the Kellogg School of Management, Northwestern University, assessed the variation in “ad impact data” and found that the actual data was entirely different. 

“Using data from 15 US advertising experiments at Facebook comprising 500 million user-experiment observations and 1.6 billion ad impressions, we contrast the experimental results to those obtained from multiple observational models. The observational methods often fail to produce the same results as the randomized experiments, even after conditioning on extensive demographic and behavioural variables,” the researchers noted. 

They further said their findings suggest that commonly used observational approaches based on data available in the industry often fail to accurately measure the true effect of advertising.

Sharing the industry perspective, Mathias said: “While marketers have assumed that all audience media metrics have a bit of inaccuracy, the variance in elements of digital advertising can often be alarming. Digital ad fraud is rampant and advertisers and agencies have still to get a hold of the extent of this. Another factor is that there are a few dominant players in the digital ecosystem that make measurement transparency all the more difficult.”

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