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‘Subprime’ Advertising Threatens Online Ad Ecosystem

The online ad industry is making little progress in addressing the problem of non-viewable ads, raising new questions about the value of programmatic advertising that relies on trading and re-packaging of low-quality online ad inventory.

A study released late last month by the video advertising firm BrightRoll shows that an average of 65 percent of video ads across thousands of sites tested went unseen or unheard—the latest in a string of studies showing the pervasiveness of the problem. The Media Ratings Council, an industry group, in March announced a new standard for judging when an ad can be counted as seen, but many in the business say the effort doesn’t go far enough.

Some ad tech executives are alarmed enough about the problem that they’re likening it to the subprime mortgage crisis of 2008. These critics contend that just as banks repackaged risky mortgages in a way that made them look better than they were, some ad networks are bundling and re-selling ads that appear far down on a page or are otherwise hard to see to make them appear to be higher-quality placements.

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Konrad Feldman, CEO of Quantcast, said cleaning up the way ads are rated would be put a stop to the perpetually declining CPM rates, as the premium inventory becomes more distinct from the likely unviewable.