Confessions of an Ad Tech Man

This article is part of our Confessions series, in which we trade anonymity for candor to get an unvarnished look at the people, processes and problems inside the industry. More from the series →

Jonah Goodhart, a founding investor in Right Media, believes that the 90’s, at least as they pertain to the development of digital media advertising, were one very expensive mistake. The specific mistake was that the entire online ad economy was built on the premise that users would click on Web ads.

“Clicks are the wrong metric for brands,” said Goodhart as part of a wide-ranging, introspective interview with Digiday. “We spent more than a decade helping build this ecosystem but we made a mistake, saying that the click was the right metric. It’s not.”

For years, Goodhart himself proclaimed the benefits of using last-click as a valid metric for display and personally helped funnel millions into a digital advertising ecosystem that he now believes is innately flawed.The display ecosystem and, by extension, the display-analytics industry, are designed to employ a metric that is basically irrelevant according to Goodhart.

Goodhart believes that traditional digital media analytics can’t measure true consumer engagement, and are therefore inherently unfit to provide any useful insight into the full purchase funnel. Thus, major brands are still shying away from the Web.

Essentially, display advertising needs a better barometer if it wants to attract top brands. But the online ad industry’s biggest players, systems, technologies and tools are all built for clicks. “My conclusion, coming out of more than a decade in that world is that there has been a tremendous amount of advancement, but all of it has been focused on clicks,” said Goodhart, citing both Right Media and Google’s core business models.
Goodhart believes that a move towards different metrics — those that focus on engagement and not clicks — will help bring brand dollars online by making online advertising more transparent and more translatable.
But even if that happens, the creative has to get better. “Think about banner ads. They are in general boring,” said Goodhart. “Not all of them–Yahoo’s homepage does some phenomenal stuff, the YouTube page has some phenomenal stuff. But by and large, a lot of the stuff is just boring; it’s not interesting, it’s not engaging. So with click-throughs at effectively zero, does that go away? Does that change? We have real estate on literally billions of sites, a trillion opportunities to reach people. If we know that people don’t want to click, if we know that people aren’t clicking, what if we forget about the click?”
At least in reference to the failure of display, Goodhart’s dogma has some influential believers.
“I wish (last-click analysis) was dead, but it is definitely not dead,” said Brian Lesser, CEO of WPP’s audience-buying platform Xaxis, in a recent interview. “The reason that it is not dead is that not everyone has the technology to provide full cross-channel attribution models. A lot of things need to change before all advertisers insist on a full multichannel attribution model, but I think we are getting much closer to that.”
Others that are echoing Goodhart’s sentiments believe that the problem is with the digital advertising industry itself, not just the display space. “There is a lot of money involved in trying to justify the continued existence of display advertising,” said Ian Schaffer, CEO of Deep Focus. “However, the display side of the business is becoming a little more marginalized.”
Schafer said he has spoken to many large brands which are moving away from static display in social and other areas online. “Still, the large media agencies are still buying that inventory and it behooves them to,” he said. “It’s frictionless and they are going to buy as much as possible because that’s the opportunity that is most readily presenting itself.” Creating strategy focused on consumer engagement isn’t easy to explain or illustrate to advertisers, according to Schafer, and it’s more difficult for marketers to sell. “It is more difficult because there’s a lot more to measure, it just doesn’t fit neatly into the media agency structure.”
Naturally, Goodhart believes he has a solution that would fit in that structure quite nicely. His new startup, Moat, is focused on using the mouse-hover as a measurement of consumer engagement. He cited a campaign that Moat analyzed that showed a .003 percent click-through rate, but a 10 percent mouse-hover rate. “That’s 10 million people who saw that ad,” Goodhart said.
What attracted those users? Hopefully engaging creative, according to Goodhart, something that is often in short supply on the Web. “Sometimes I go to these meetings and I feel like I have to explain why advertising works,” said Goodhart. “We’ve forgotten about branding, we’ve forgotten about stories. I think that’s the elephant in the room. The ecosystem will change, but I don’t think it will be as painful as some may think.”

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