In Magnetic’s latest webinar, The Elephants in the Room, CEO James Green discussed the four biggest issues facing both the retail and advertising industries:
James provided an in-depth background of the current state of affairs and, beyond that, offered a clarion call to the industry abroad to both standardize success and operate AdTech business in a more transparent and honest manner.
We’ve heard it all before and can repeat the facts back in our sleep – traditional brick-and-mortar retail stores are closing en masse. One need only to look at shopping malls to see the blight of physical retail operations.
Since 2010, mall visits have declined by 50%. Furthermore, 35 million people were visiting shopping malls in 2010, compared to a projected 17 million in 2017, and it is expected that ⅓ of malls in the US will close in the coming years. More granularly, 3000 retail stores are expected to close this year. Sears alone is expected to close 150 retail locations.
However, and quite paradoxically, retail store counts are going up. Why? Direct-to-consumer retail models have shown great success. What James calls “purpose-built cornucopias” (e.g. shopping malls) have given way to brand-particular showrooms. The Apple Store is a perfect example of this trend in action. Nike has shown a 270% increase in direct-to-consumer purchases from 2009 to 2016.
Face it, retailers – if you sell multiple brands and operate primarily offline, then you are getting beat. Except for a few exceptions, aggregating brands brings deep trouble for retail stores, and it doesn’t look like that will change anytime soon.
In terms of desktop, television, print, and digital advertising, mobile advertising outpaces the rest in share of consumer consumption. In 2016, for the first time ever, digital beat out TV in terms of ad spending. Does this mean TV is dead? Certainly not. However, the trend here is clear.
Net neutrality is hot-button issue, both in the public and private spheres. Beyond the obvious concerns about privacy and information access for the individual consumer, legislation that affirms or erodes net neutrality has the potential to have a huge impact on the advertising and marketing technologies worlds. What net neutrality really boils down to is: can the person who sells your connection to the internet charge you more or less dollars for delivering said information, and is all information treated equally in its delivery and presence?
Laws that repeal the construct of net neutrality could cause advertising to become more expensive, as marketable consumer data becomes subject to pricing increases. James Green sees advertisers as having an inherent interest in maintaining the status quo — net neutrality is good for the industry as a whole.
This topic is the crux of the matter. James Green uses the famous quote from John Wanamaker to illustrate this point, ““Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” The same is true today. Half of paid media impressions fail to reach a marketer’s target audience.
Even worse than marketing into the void, is the unintended consequence of current-day programmatic practices. Brand safety is an important issue, and for good reason, with the rise of fake news and vitriol across an ever-growing publisher base.
Brand safety aside, ad fraud permeates the conversation today. Annually, it’s estimated that ad fraud is responsible for an $8 billion in wasteful spending. Moreover, even though ad fraud is well-known, it is not penalized in anyway in respect to the AdTech vendors.
James Green issues his clarion call here. What the industry needs is one viewability standard. Furthermore, Magnetic aims to lead the industry in what James dubs as advertising’s “lemon law”. It’s well and good that we have services that should prevent an ad from being shown, or an impression from being purchased, however, we need to go one step further. What our industry needs is to recognize our faults and missteps. If a problem slips through, the advertiser should not have to pay for it, nor should the vendor. If the industry comes together to promote transparency and remove the opacity of the ad buying process, then we all win – both morally and economically. James Green’s presentation can serve as Magnetic’s mea culpa.
The webinar below is worth the time to watch and educates both advertisers and retailers on their respective business challenges. It offers a path towards a brighter future where all parties are clear on the motivations and concerns of the other. Enjoy!
Magnetic is a digital marketing and artificial intelligence company. We use machine learning and AI to deliver smarter, faster, and more effective advertising. Our powerful AI platform continuously analyzes the attributes of 320 million live user profiles alongside real-time inventory supply and bid opportunities to deliver highly performant and profitable campaigns for our clients.