Digital Advertising Biz Faces New, Old Challenges In 2023

The Super Bowl – oops, the “Big Game” for you non-official NFL sponsors – is still a few weeks away. But the digital advertising industry just gathered at the Interactive Advertising Bureau’s Annual Leadership Meeting in what some call the “Digital Advertising Super Bowl.” In a gathering that had a feel of the “good old days” of in-person events, the overarching challenge for the industry is not simply reliving old times but re-inventing itself for new ones.

I’m not a doom and gloomer about advertising in general – there is a tendency by some to stray too close to “talking ourselves into a recession” in a business that almost demands an optimistic mindset. But after three days of absorbing a whole lot of industry-speak alongside the rebounding Florida Gulf Coast, there are nonetheless a few prominent reefs that the industry will have to carefully navigate around in 2023 and beyond.

Enough talk – can the industry actually “get sh*t done?”

The theme of IAB’s gathering was “It Starts Here,” which IAB CEO David Cohen translated into the earthier entreaty captured in this subheading. I’ve been attending, speaking at, and writing about ad industry-focused conferences for years, and in 2023 its almost remarkable how many challenges (accepting that some may also be great opportunities) have been around for a very long time.

Alysia Borsa, the incoming IAB Chairman and Chief Business Officer for IAC’s Dotdash Meredith, laid out some of the industry’s major challenges and they all had an air of familiarity. Balancing consumer privacy in targeted advertising has been an omnipresent challenge for years, with Europe adopting its privacy rules nearly seven years ago, and a growing roster of U.S. states adopting their own laws. Trust and transparency are hardly a new thorn in the side of digital advertising world, with a notorious report to the Association of National Advertisers on “pervasive” non-transparent business practices now nearly eight years old. As to next generation media measurement, the first digital ad ran in 1994 – the industry is still looking for an integrated approach here.

When it comes to each of these issues and more, Cohen’s cri de coeur suggests the time for more analysis is well past, and proactive execution is essential. To twist the immortal words from the film classic Treasure of the Sierra Madre, “we don’t need no stinkin’ reports!”

Will the heightened regulatory focus on big tech bring unintended consequences for “small tech”?

Cohen spent significant main stage time raising concerns about how the assault on “big tech” – especially on Alphabet/Google and Meta/Facebook – could ultimately undermine the much broader digital advertising ecosystem. As if on cue, the U.S. Department of Justice announced just yesterday that it was joining with attorneys general in eight states to sue Google under antitrust laws, claiming that that company has used “anticompetitive, exclusionary and unlawful means” to dominate the digital ad tech marketplace. I don’t think the government wants to undermine the ability of direct-to-consumer brands to build their visibility with consumers, or to stifle the creativity of social media creators and influencers (other than concern about the Chinese government’s control of Tik Tok, which is another matter). But the industry’s “good guys” can’t stand on the sidelines in public policy debates and simply hope there is no radioactive fallout that hits them.

With data everywhere, can marketers ever look past it and see with “their own eyes” what consumers might really be showing them?

Bob Pittman, the legendary cofounder of MTV, transformer of early-stage AOL and longtime CEO of iHeartMedia, provided some great insight on the dangers of an overreliance on data formulas. In the 1980s, MTV was the buzziest media property among young adults (“I Want My MTV”). Yet according to already dated agency media metrics, many advertisers stayed away from the network because it lacked the threshold number of cable subscribers and gross rating points. Pepsi stepped into the breach and transformed its competition with Coca-Cola in part by blowing past these formulas and reaching young people where not only their presence, but their passion resided. Coke suffered the consequences, and even resorted to changing its product – remember “New Coke”? – before it readjusted its media strategy.

Pittman’s lesson should resonate with a media business grappling with an almost suffocating crush of new data sources and the attendant analytics, but perhaps in greatest need of believing its “own eyes” when it comes to connecting with illusive audiences.

Has the advertising business awakened in time to address its own role in climate change?

Much of the public focus on slowing climate change and building sustainable business practices has been on the manufacturing and transportation sectors. But it’s been clear for some time that the rise of programmatic advertising and the multiple layers of touchpoints for every ad and even every ad impression create additional power demands. I spent some time at ALM with Anthony Katsur, the CEO of IAB’s Tech Lab, which this week announced its Green Path Supply Initiative in collaboration with Scope3 and the industry’s Ad Net Zero initiative, aimed squarely at harnessing ad industry attention and resources to addressing this.

As Katsur noted, you can’t manage what you can’t measure, and the first step in this journey is to simply measure the incremental and cumulative carbon footprints associated with each step in the digital ad process. No doubt this will take some time, but consistent with David Cohen’s general industry importuning, let’s all hope the effort moves quickly beyond measuring and on to “getting sh*t done” on this vital issue.

Will the exploding buzz around ChatGPT undermine trusted news sources and brands that partner with them?

You know it’s trouble when even Google has gone to its corporate bullpen with a “Code Red” to bring back Larry Page and Sergei Brin to help address the potential existential threat to its search business from ChatGPT. At IAB’s gathering I found the most interesting – and disturbing – conversations around what this technology might mean for the already-growing problem of misinformation in the digital media world. Never mind trusting generic web sources – what do you do when you can get your answers directly without even needing to click on any of the sources that contributed to them? How do established news sources stand out in an AI-driven information sea? And how can advertisers help better support the legitimate news organizations that society depends upon? No brilliant answers here from me, but a whole lot of need for industry attention.