Publishers May Lower Their Standards on Ad Quality in Search of Revenue

Buyers expect greater impact from COVID-19 than 2008 crisis

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A recession could see an uptick in bad ads.
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Publishers today face a similar challenge as they did during the 2008 financial crisis: the risk of lowering their advertising standards in search for short-term profits as the U.S. economy stares down a likely recession.

In 2008, publishers searching for revenue at a time when advertising fell off a cliff lowered their standards on ads, resulting in promotion for the likes of belly fat burners or get-rich-quick scams. Media companies may once again be forced to turn to the same tactics because of the coronavirus.

“Publishers, in some cases, are really going to be in a fight for revenue,” said Interactive Advertising Bureau president David Cohen. “As such, there could be some looking for demand sources that might not be the sources they would be looking for in a normal cadence.”

Publishers are already in a financial squeeze from both marketers and vendors as buyers pull ad spend or block keywords, while supply partners halt or adjust payment terms as they also brace for financial downturns.

On top of that, a recent study from the IAB found that 74% of buyers think the coronavirus will have a greater impact on U.S. ad spend than the 2008 financial crisis did. The report also found that buyers were, on average, set to cut their digital ad budgets by 33% between March and June.

The drop in demand will likely see publishers that are already struggling open their inventory to lower quality advertisers.

“There are smaller and less well-capitalized content publishers that are going to have tough decisions,” said David Kohl, CEO of programmatic marketplace TrustX.

Ratko Vidakovic, founder of AdProfs, posed this as an existential dilemma for publishers stuck between a rock and hard place: Lower your ad standards or start looking at cutting salaries and laying off employees.

“Anything that’s of questionable acceptability, all of a sudden it gets a pass when it’s an existential question,” said Vidakovic.

Programmatic advertising as we know it today—automated buying of audiences at scale—rose between 2008 and 2010. The early days of programmatic were mostly about monetizing remnant inventory. Now, roughly 85% of all digital display ads are bought programmatically, according to eMarketer.

While programmatic advertising was initially branded as a “race to the bottom,” Kohl said publishers have worked hard to reorient it around selling their unique, engaged audiences, making programmatic another revenue arrow in the seller’s quiver.

Kohl said publishers, at least those that can afford it, should think long term or otherwise risk undermining their push toward differentiation over the last 10 years.

“The smart publishers, who have the means, have an opportunity to hold the line on quality because that’s the haven advertisers will look for when they don’t have a lot of cash to spend,” said Kohl.

Of course, part of the challenge is that publishers aren’t the only game in town anymore. Google and Facebook, which have rapidly snatched up much of the digital ad spend over the last 12 years, have started blocking a deluge of ads looking to capitalize on the coronavirus.

Vidakovic said the maturation of programmatic advertising should help some publishers from dropping their standards to 2008 levels, but the growth of social platforms and other digital media in the years since has opened up an abundance of new inventory for malicious advertisers to abuse.

Vidakovic added that low-quality ads will likely run across mobile app and desktop instead of more premium environments, like connected TV, due to higher CPMs in such media.

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