In Economics, we learn that in an Oligopoly, the consumer suffers because of potential collusion leading to higher prices and lack of consumer choice.
Google and Facebook Rigged the Ad Market
With a combined share of ~53%, the digital ad space is currently being dominated by Google and Facebook. In such a duopoly (a special form of Oligopoly), collusion is always a possibility, and it turned out to be true when Google colluded with Facebook to favour its own exchange.
Oligopoly Trend is Not Waning
This problem of Oligopoly is definitely not going away anytime soon. It is exacerbated by further consolidation in the ad supply space (Applovin acquiring Mopub & ironSource acquiring Tapjoy) and Facebook/Google withdrawing further behind their walled gardens.
What can be Done?
Brands / Advertisers definitely have their work cut out for them. To stand out and succeed in time to come, I believe advertisers would need to focus on the following:
Grow their product’s core value: Costs of digital advertising will be on the rise, and thus it will be important to provide real value to customers/users.
Increase their users’ lifetime value: With the rising costs, revenues need to go up by either extending your customers’ lifetime or improving the ways you are monetising.
Diversify to market disrupters like TikTok: We need to start diversifying to other digital marketing channels so that we do not continue to feed to their duopoly. It is probably easier said than done, but this is why we need more disruptors like TikTok.
The digital ad space will certainly start to feel tighter but do not mistake that for it being smaller.
We want a fair and just world. A world where all our marketing partners are attributed equally. And, we would like to think that is the case. Sorry to burst your fairy tale bubble, but we are certainly far from the truth.
In 2020, Facebook and Google will continue to rule over Digital Ad Spend land. Estimated by eMarketer, the duo will seize 61% of the US Digital Ad Spend. I guess this should not come as a surprise to many. With copious user data coupled with the smartest AI algorithms, is there any doubt as to why Facebook and Google are leading the race?
Yes, there is no doubt. But it is not only because of their superior technology and user base. Facebook and Google do not play fair.
Source: eMarketer
What is Attribution in Digital Marketing?
Alright, let me set the context straight-up first. What the heck is Attribution? To put it simply, Attribution refers to credit allocation to marketing interactions. In relation, there are two key concepts on Attribution that will be relevant here.
First up is the concept of which marketing interaction gets the credit. On the fundamental level, there are five basic methods (as illustrated below). Relevant to what we are discussing later, we can just refer to the “Last Interaction” model where the last marketing interaction gets all the credit.
The second concept to note is the type of marketing interaction. Broadly speaking, there are only two – Click-through attribution and View-Through attribution. Don’t worry all this mumbo-jumbo is simpler than it sounds. It is the players like Facebook and Google which complicate it.
Click-through simply means the credit is given when the user actually clicks on an ad, whilst View-through means the credit is given when the user views the ad.
Sounds simple enough?
When a View Becomes a Click
What is a view? What is a click?
It may sound simple but when you really think about it, it is going to be borderline philosophical. Take some time and think through the following scenarios:
The ad image has loaded only the top 25% but the user has already scrolled past it.
The web page is loaded and there is a potential banner ad to be shown below-the-fold.
A video ad auto-plays but the user immediately pauses it.
Would any of you consider the above as a view? Here’s the kicker. The answer is yes and no. Yes according to Facebook but not according to Google. According to Appsflyer, a major Mobile Measurement Partner, Facebook considers an ad unit as a view as long as the ad unit is rendered. Even if it is not necessarily in view. And for videos, all it takes is for 1 pixel of which to appear on the screen. In contrast, Google requires at least 50% of the ad unit to be visible. The majority of the rest have pretty stringent rules too. They require 100% of interstitials and banners to be loaded before a view is counted.
At this moment you might think it is mighty of Google to be implementing such strict rules on itself. Don’t be rejoicing too soon. When we move on to a click, which I thought should have way less ambiguity, Google performed magic. For video ads that have been watched for 10 seconds or more, Google will transform that view to a click!
Source: Appsflyer
Impact on my Attribution Game
So what have all these funky definitions got to do with not playing fair?
Because Facebook and Google have risen to such importance to advertisers, all 3rd party partners such as Appsflyer who wish to continue partnering with them have to play by their rules, or risk being left out in the cold. In an ideal world, attribution rules should be the same for all players, and in my opinion, should be decided by an independent 3rd party.
When Facebook is allowed to consider unseen ads to be counted as a view, and Google is allowed to ‘magically’ convert a view to a click, we advertisers will constantly be playing in a world where we can never truly understand what channel works best with our customers.
