Internet advertising is being questioned, and some questions have no clear answers

Just as Internet advertising reached spending parity with television, large advertisers started doubting its effectiveness and cutting back, writes Nicole Sinclair in Yahoo Finance (Digital ads aren't working for big consumer brands). She lists two developments last year: a study that claimed the existence of rebates undisclosed to advertisers (kickbacks under another name) from media operators to advertising and media buying agencies (although not specific to Internet media), and Facebook’s admission that it included video views of under three seconds, exaggerating the overall viewing it reported by potentially as much as 80% (whatever that means). The article cites reductions in Internet spending by large consumer goods advertisers of, at most, 1.3% this year. Not much, perhaps, but the direction should give pause.

Individual advertising delivery cannot be measured by sample, but only by a census. This currently can only be self-administered by the carrier, and that has a credibility problem inherently, not just because of abuses. When chief executives of the half-dozen remaining global ad and media buying agencies, like Martin Sorrell of WPP, say that “the player and referee cannot be the same person” and the media operators should not “mark their own homework” (a phrase heard a lot lately), their companies presumably cannot then initiate the spending of large portions of clients’ budgets on such media. Can targeted digital advertising survive the lack of objective verification, never mind transparency of targeting decisions?

Furthermore, even objective reporting and realistic standards (unlike Facebook’s deeming of a video view any exposure longer than three seconds) might not rescue targeted advertising on the Internet. The current crop of targeting algorithms is rather obviously useless, with much irrelevance and ad nauseum repetitiveness of ads (often from an inappropriate competitor) for purchases already made. This is so despite cookies and tracking by the likes of Facebook. On Facebook itself, the problem is different—the complete irrelevance of most advertising messages—but it still means inappropriate expenditure in which advertisers pay high CPMs for targeting but get, at best, scattershot outdoor billboard delivery. Can targeting be seriously improved in a short time?