In­ter­net ad­ver­tis­ing: this time it’s per­sonal

Financial Times Middle East - - Lex -

Ad­ver­tis­ing buy­ers have much in com­mon with in­vestors. The op­por­tu­ni­ties on which they de­ploy their bud­gets yield un­cer­tain re­turns. Oc­ca­sion­ally, they are forced to ex­plain em­bar­rass­ing mishaps to their bosses. In the past week some clients froze spend­ing with YouTube, prompt­ing Google to apol­o­gise for plac­ing their con­tent next to extremist videos.

Met­rics at­tract ad­ver­tis­ing spend, just as quan­ti­ta­tive anal­y­sis lends le­git­i­macy in the fi­nan­cial world. Both al­low man­agers to jus­tify decisions. But they do not guar­an­tee decisions are good. Where in­vestors beat ad­ver­tis­ers is in easy ac­cess to data on re­turns.

Face­book and Google aim to op­ti­mise click-through-ra­tios — the per­cent­age of clicks to view­ers of an ad — be­cause each click gen­er­ates rev­enues for them. Video, as re­flected in Face­book’s re­cent push, gen­er­ates lots of clicks. Google’s re­cent 22 per cent year-on-year rev­enue in­crease was in part thanks to sub­sidiary YouTube.

Au­di­ences tar­geted ac­cord­ing to search his­tory or user pro­files can reach sev­eral clicks per hun­dred views, against fewer than one per thousand for generic on­line ads. Auc­tions bid up the price paid per click.

Face­book and Google are ex­pected to at­tract 60 per cent of all dig­i­tal ad spend­ing this year, says eMar­keter. Face­book’s ad rev­enue per user grew a quar­ter in each of the five years to 2016, faster than the 17 per cent per year in­crease in monthly av­er­age users.

Fake traf­fic and extremist videos will do lit­tle to de­ter ad­ver­tis­ers. Google’s Europe chief said dam­age from re­cent con­tro­ver­sies amounted to pen­nies not pounds. What con­cerns ad­ver­tis­ers more is the age-old dif­fi­culty of mea­sur­ing their re­turn on ad­ver­tis­ing spend. To cal­cu­late this, Sil­i­con Val­ley would like greater ac­cess to con­sumers’ pay­ment flows. Link­ing pur­chase data to ad views could trig­ger the next quan­tum leap in tech group prof­its. Given pri­vacy con­cerns, the move could also inspire the next out­burst of hos­til­ity to­ward Sil­i­con Val­ley.

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