Pressure on for clean-up in advertising’s digital Wild West

THERE is a crisis of trust facing the digital advertising industry, and it might just have reached a tipping point. “Time’s up,” Marc Pritchard, the marketing chief of the world’s biggest advertiser Procter & Gamble declared in a recent speech to the US Internet Advertising Bureau.

The man who controls an annual ad budget of $7.2 billion (£5.8 billion) and owns huge brands like Fairy and Gillette described the media supply chain as “murky at best, fraudulent at worst”. He accused agencies and other ad-tech vendors of profiteering from digital by taking excessive commissions and undeclared rebates. And he complained that the industry still does not have common standards to measure online audiences and viewing times — in contrast to trusted, traditional media such as TV and newspapers.

Pritchard vowed that P&G would tighten up its agency contracts to prevent them exploiting loopholes, and every supplier would have to agree to independently verified online standards. Anyone who refuses to comply will be dropped by P&G, he warned. It’s a live issue when the company is in the middle of reviewing its £200 million-plus media-buying account in the UK.

The problems surrounding media transparency and digital advertising have been a growing worry, even as money keeps flooding into online and mobile. Last year, the Association of National Advertisers in the US published a scathing report about media agencies’ “non-transparent” practices — without naming names.

But until P&G spoke out, the agencies could argue that the critics were anonymous. Not any more. Expect other brands, particularly consumer goods giants, to follow its lead. Groups such as Kraft Heinz, which has just made an abortive bid for Unilever, see advertising as a vital way to maintain the premium pricing of their brands but won’t be shy about getting tough with their media suppliers.

Advertisers’ fears have only increased after it emerged earlier this month that ads from a host of household names, including Mercedes-Benz, Jaguar Land

Rover, Waitrose and Sandals Resorts, have been appearing on explicit videos posted by jihadis on YouTube and elsewhere.

Many of these brands temporarily suspended their online ads as they discovered the perils of programmatic advertising, when an ad is targeted and distributed by a computer programme or algorithm on an automated basis in the name of efficiency.

At least one advertiser found out that its own in-house team, rather than its media agency, had bought the ads. This is what happens when marketers focus on reaching “the right audience” without thinking about where the ads might actually appear. They have been buying audiences without context, as TV broadcasters and premium publishers have been keen to remind brands.

Relations between brands and their media agencies remain at a low ebb. Last April, ISBA, the trade body for British advertisers, drew up a tougher framework contract for its members. It included much greater disclosure of how agencies make their money from digital. Yet, 10 months on, none of the Big Six agency groups have agreed to adopt the contract — although the7stars, Britain’s biggest independent agency, did so last week.

While there is no doubt that digital advertising faces a crisis of trust, there is far less certainty about whether it will lead to fundamental change. There have been repeated complaints about digital being a Wild West for years, even decades.

If anything, the problems could cement the position of Google and Facebook, which are seen as relative safe havens despite their blunders over the poor placement of ads and their reluctance to allow the independent verification of their ad metrics.

There has been no sign of a slowdown in ad revenue yet for either of the digital ad giants, although Facebook founder Mark Zuckerberg’s lengthy, handwringing blog post last week did suggest he is worried about his company’s reputation and its slow response to the scandal of fake news.

PRITCHARD admitted in his speech that big brands such as P&G were partly responsible for the mess in which digital advertising finds itself. Advertisers have cut the fees that they pay agencies, failed to update their contracts to keep pace with the more complex eco-system, and not demanded common standards.

But he said advertisers have tremendous “collective power” to change the digital eco-system for the better. If this is to be a tipping-point, words need to become action.

‘Ads from a host of household names have been appearing on explicit videos posted by jihadis’

Gideon Spanier is head of media at Campaign