Digital Advertising Is Facing Its Ultimate Moment of Truth, and Billions of Dollars Are at Stake

P&G's Marc Pritchard and CMOs from Bank of America, Unilever and more are demanding transparency

Jeremy Kramer for Adweek
Headshot of Lauren Johnson

What would you do with a $2.4 billion marketing budget?

You could buy 1.2 trillion online ads. Or you could take over 600 Times Square billboards for an entire year. You could even create 34,285 new marketing jobs, each with an annual salary of $70,000.

Those figures explain why it is that every agency, platform and digital media player has been on high alert since Procter & Gamble chief brand officer Marc Pritchard, who holds the strings to the conglomerate’s $2.4 billion annual U.S. advertising purse, threatened to yank his company’s spend if they fail to address the growing mess of issues in digital advertising like fraud, brand safety and transparency.

This past January, Pritchard raised more than a few eyebrows when he laid out an elaborate, five-point mandate during a speech at the Interactive Advertising Bureau’s annual leadership meeting in Hollywood, Fla., essentially giving all of P&G’s digital advertising partners—namely, the duopoly of Google and Facebook and agencies—a one-year ultimatum stipulating that they clean up their practices and play by the megabrand’s rules or risk losing lucrative 2018 money from the country’s largest advertiser.

“Frankly, there’s, we believe, at least 20 to 30 percent of waste in the media supply chain because of lack of viewability, nontransparent contracts, nontransparent measurement of inputs, fraud and now even your ads showing up in unsafe places,” Pritchard says.

Next week, Pritchard will take his message to Cologne, Germany, where he plans to deliver a keynote speech at Dmexco, one of Europe’s premier ad-tech venues. According to sources familiar with Facebook’s plans, it will unveil several new tools and policies for advertisers that address brand safety—a clear sign that the biggest digital players in the world are paying close attention to Pritchard’s message.

Jeremy Kramer for Adweek

One new specification details how Facebook users can make money off of their content, mimicking similar controls that YouTube put into place in the weeks following the backlash when advertisers pulled ads that ran adjacent to racist and terrorist videos. YouTube now requires that channels amass 10,000 views to prove that they are legitimate before they can begin making money off of uploaded clips.

Such developments only move a few steps toward addressing Pritchard’s major beefs, which include shady agency transparency tactics like media rebates, a lack of standard digital measurement metrics, brand safety and fraud. In short, he says, it’s high time that the industry collectively “grows up and adheres to some common standard.”

He isn’t alone in his opinion among brand execs. As concerns about transparency and clear measurement standards from platforms swell, CMOs from a handful of the world’s biggest advertisers, including Unilever, Johnson & Johnson, Chase and Bank of America, are using their collective billions of dollars to take control of where and how they spend digital budgets.

Going into the fourth quarter—mere months from when Pritchard has threatened to pull the rug out from under major players including Facebook, Google, Twitter, agencies and more—the mandate is 50 to 60 percent complete, he says. More granularly, P&G’s goal of agency transparency is 80 percent complete, eradicating fraud is halfway there and getting platforms to open up measurement reporting to include third-party viewability is roughly 60 percent finished in Pritchard’s mind.(Third-party viewability charges advertisers when 50 percent of a display ad is in view for one second and two seconds for video ads, per industry watchdog Media Rating Council.)

At the same time, the maker of household names like Tide, Pampers and Gillette is slashing marketing budgets to offset sluggish sales of packaged goods. During its last earnings, the company said it cut more than $100 million in digital ads that were largely ineffective. P&G reported net sales of $16.08 billion for the quarter, down from $16.10 billion in 2016, but beat analysts’ expectations of $16.02 billion.

“What we’re trying to do is about driving growth and the best way to drive growth is, of course, to get more users and consumers buying things,” Pritchard says. “The best way to drive that is through great and better advertising and innovation.”

The conversation around brand safety reached a boiling point in March when hundreds of marketers either froze or pulled YouTube campaigns after their ads ran next to objectionable content on the video platform.

At the same time, concerns about ads appearing on controversial websites like Breitbart through ad networks powered by Facebook and other big programmatic-advertising companies made matters worse. “Brand safety is the one that still needs a lot of work,” Pritchard says.

In its efforts to address those problems, Facebook deserves credit for logging plenty of overtime. In June, the company began testing a program that provides advertisers with information about which publishers’ sites their ads may appear on through Facebook Audience Network (FAN), Facebook’s ad network that places ads on websites and apps outside of the social network. From there, advertisers can create lists of publishers that they wish to exclude. That program will officially roll out to all media buyers at Dmexco, according to sources.

People familiar with the matter also noted that Facebook plans to unveil two new tools at the conference in Germany. One of them, a post-campaign reporting tool, will show FAN advertisers which specific websites their ads actually appeared on. As a result, brands will be able to see whether their ads did indeed run on a controversial website like Breitbart instead of having to make an educated guess. The post-campaign tool will also reportedly plug into Instant Articles (Facebook’s fast-loading pages) and in-stream videos that users post to the social network.

In addition, Facebook will unveil new requirements detailing which content creators can make money off of Instant Articles and in-stream videos and will outline what types of content are suitable for monetization, although it remains unclear what, specifically, those requirements will entail.

While Facebook declined to comment on both the new requirements for content creators and the post-campaign reporting tool, Facebook vp of global marketing solutions Carolyn Everson says the social network remains steadfast in its commitment to brand safety. “There is nothing more important than marketers trusting and believing that the advertising ecosystem is transparent, accountable and safe,” she says. “At Facebook, that trust is critical to our business, and we’re committed to building products and partnerships that ensure advertisers see strong results in a safe environment.”

Platform debate

As advertisers demand greater insight into Facebook and Google’s so-called walled gardens that limit the amount of data they are privy to when comparing how ads perform on other platforms, both companies are undergoing audits with the MRC to analyze and vet how the data used to measure stats like viewability is collected and reported. The ongoing debate about third-party viewability speaks to a larger issue: marketers’ lingering concerns about Facebook and Google’s dominance in digital advertising. While platforms often tout first-party data, Pritchard argues that third-party validation is essential for brands to have before they commit to invest.

“There’s a conflict of interest when you measure yourself and then transact on that basis,” he argues. “Measurement is one step [and] then the hard part starts. Then we get the transparent data and can see how effective and efficient it is. Then we start making choices on where we’re going to spend money and whether it’s worth investing.”

In another move to open up ad transparency, P&G’s programmatic partner The Trade Desk partnered  with bots-detection company White Ops last week to eliminate ad fraud—before buyers are charged—from inventory offered by supply-side platforms.

Analyzing reach and frequency are paramount to Pritchard’s future investments. “We want to get the ability to reach a large audience but with precision and without waste,” he adds.

Creative cuts

One area in which P&G has made significant progress is the creation of transparent contracts that address media rebates while scaling back on the number of agencies it works with. Rebates that occur at the holding-company level, for example, are passed back to P&G.

Clear contracts are only part of the global conglomerate’s frugally minded efforts, as it has shed more than 50 percent of its various agencies while consolidating shops over the past three years. “We have very few agencies that really do … the vast majority of our work,” Pritchard says. “There’s still some room for a collection of agencies out there—we’re trying to find that right balance—so it’s not too complex.”

Under pressure

Sales of CPG items at brick-and-mortar stores decreased by $2.9 billion during the first quarter of 2017 compared to 2016, according to Nielsen. Moreover, total CPG unit purchases in the U.S. decreased by 2.5 percent during the same time. Within the category, the 20 biggest brands reported flat sales while smaller brands grew 2.4 percent.

Faced with these trends, P&G’s packaged-goods rival Unilever, which spent $818 million in the U.S. last year, per Kantar, also is scaling back across digital, agencies and production costs. In April, the company announced plans to cut its global roster of agencies in half from 3,000 to 1,500 shops and crank out 30 percent fewer ads. During the first half of 2017, it dropped agency spend by 17 percent.

“Brand safety, ad fraud, ad blocking, the three V’s—viewability, verification and value—are all important issues in their own right, but it concerns me that as an industry we seem to see them each with tunnel vision, jumping from one to the next, rather than seeing them as connected and part of a holistic digital landscape,” says Unilever CMO Keith Weed. “Ultimately, it is about seeing one consumer and one budget, not different budgets for different parts of consumers’ [online] and offline lives.”

This story first appeared in the Sept. 4, 2017, issue of Adweek magazine. Click here to subscribe.

@laurenjohnson Lauren Johnson is a senior technology editor for Adweek, where she specializes in covering mobile, social platforms and emerging tech.