Complications in Digital Advertising
The advertising industry is an enormous market, with companies investing very large sums of money into their advertisements, and websites such as Facebook and Google earning billions of dollars from the ads that they host. However, a recent article from The Washington Post explains that there are multiple complications that arise from digital ads. The example given here is that Facebook gave vast overestimates on the average amount of time that people spent watching video ads in their newsfeeds, but a more general issue at hand is that advertisers and platforms are struggling to negotiate prices that the advertisers always find to be worth paying.
However, the problem of inaccurate video data is not really a valid reason to create complications. For example, YouTube has existed for over 10 years, and since the beginning, it has publicly displayed the number of views for each video. More recently, it has started sharing even more specific data, including the average view duration, the number of shares, and the number of channel subscriptions driven by each video. Therefore, it is clear that the technology is available to obtain this information.
The accuracy of data should not be as much of an issue as it currently is. However, what may be a more viable concern is what we do with this data. Perhaps one root of the problem is that according to this article, ratings in the television world still serve as the standard for ad deals. This standard does not necessarily translate well to the internet, where users have so much more control and variability over what they see and do and how much time they spend on different things. Another issue is how to generate more detailed data— specifically, there is room for better detection of how engaged a user is with an ad, or what their emotional response or level of interest is. All of these factors play into the creation of matching markets when determining the value of ads, and therefore reveal just how complicated price determination can be, even without the added factor of a lack of transparency from ad-hosting websites.
Link to article: http://www.wsj.com/articles/doubts-about-digital-ads-rise-over-new-revelations-1474674323