David Metz is the Founder & CEO of Prizeout, an adtech company based in New York City.
Not so long ago, companies like Meta and Google launched the adtech industry into the stratosphere. In the process, they’ve become almost synonymous with the industry. However, in recent years, it’s possible—and perhaps even likely—they’ve become the very thing bringing it back down to Earth.
When you think about metrics for a successful advertising campaign, you’re probably thinking about aspects like affordable collaborative performance advertising solutions (CPAs), high ROIs and effective targeting. But, if you really think about it, when is the last time you’ve associated any of these characteristics with something like Google Ads or Facebook Ads? Likely not at all recently.
The Downfall Of Modern Adtech
In the beginning, many of these adtech solutions could serve as incredibly useful tools to quickly get your business in front of countless potential customers. And while this can still ring true from time to time, the truth is that for many businesses it has become a nearly insurmountable obstacle.
As the saying goes, the first person to create fire definitely got burned. But then they took a step back. They studied the fire. They learned how to stay warm. They discovered how to cook. And these advancements led to even more important discoveries. I believe that it’s time for the adtech world to take its hands off of this flame, fueled by the search for impressions and other unreliable data—instead focusing on what actually matters: returns.
Think about it this way. Picture your entire marketing budget. How much of that money is wasted on empty impressions? And how much of it actually directly led to a return? According to a recent study, 44% of marketers can’t drive significant traffic through Google Ads due to high costs and competition. This is no surprise as recent data from Hunch confirms that Google and YouTube recently had 108% increases in year-over-year CPM cost, with Facebook also increasing by 89%.
And to make matters worse, one of these platforms’ biggest strengths—the ability to easily target your desired audiences—has taken an enormous hit with Apple’s recent iOS 14 update, making it almost impossible to track cookies.
With all of these things in mind, it’s becoming increasingly clear to me that these platforms are not just showing signs of age, but have begun to completely fail the industry as a whole. Outside of a select few companies with virtually unlimited resources, I don’t think the returns from these outlets justify the cost for many businesses.
The Future Of Online Advertising
Looking at the past few years as a reference, I’ve seen companies continue to put more and more money into Google and Meta with fewer and fewer results. It doesn’t take expert-level analysis to realize that this trend isn’t sustainable. The only way for these same companies to not just survive, but thrive, is to look to the future and find a new adtech platform that can guarantee returns on their marketing investments. Because at the end of the day, you can have all the impressions in the world, but they don’t mean anything without returns. It’s time to steer the industry away from metrics like impressions and clicks that don’t actually matter to a company’s bottom line.
So what does that mean? Well, ideally, it means introducing an adtech platform that literally doesn’t care about these outdated metrics. Sure, they’re tracked to get the whole picture, but they’re definitely not the crux of the economics. Rather, I think you should prioritize measuring conversions and only paying when you make a conversion. This helps ensure that every single campaign is a success with a guaranteed ROI because companies no longer have to pay an arm and a leg for mere window shoppers.
The future of adtech is something where you should see a direct return on your investment that benefits the brand, the customer and the partners. For example, you can take the money typically spent on ads and, instead, apply it in the form of bonus value on something like digital gift cards (full disclosure: my company runs on a model similar to this). This literally gives the customer more for their money, but more importantly, for the brand itself, it allows you to directly control the ROI. In the next few years, I expect more and more companies to turn to models such as this as impressions continue to grow in cost and shrink in opportunity.
Moving Forward
One of the most difficult aspects of moving from one phase into another, whatever it may end up being, is the ability to look past the present. There are so many things in everyday life we’ve become so accustomed to that we don’t question if there might be a better way.
Overall, I predict an increased focus on extracting value through first-party data to drive acquisition, reactivation and loyalty. For the longest time, companies have been relying on third-party data for attribution, but what happens when that goes away? I think more companies will become focused on tracking actual payments and actual conversations. By revolutionizing loyalty through things like digital gift cards and digital wallet experiences, I see companies move into the tangible and focus their efforts on actions that provide more concrete ROI.
For so many years, companies like Google and Meta have been the standard of online advertising, so many companies continue to stick to the status quo despite it actively working against their business. But if you take a step back, and objectively look at your results—particularly in the last few years—I’m willing to bet you see exactly what I see. An industry that is in dire need of change.
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