The Rakuten report cited marketers’ desire for cheap audience reach as a factor that leads to wasted spend. The report stated that focusing on reach can become “a poisoned chalice," leading to low-quality ad placements that don’t perform well for marketers. Low-quality inventory has been particularly problematic in programmatic advertising, because brands purchasing cheap inventory through ad exchanges have found themselves embroiled in brand safety scandals when ads wind up against unscrupulous content.
Marketers also spend their money inefficiently because they’re testing out new ad formats and placements that prove to be not as proficient as they anticipated, according to Brendan Gahan, founder of ad agency Epic Signal.
Another contributor to ineffective spending is that marketers can get locked into long-term agreements, meaning they can’t simply pull their spend once they realize it isn’t meeting key performance indicators (KPIs), Gahan added.
But he believes marketers are making progress through frequent their experimentation, and that as a collective group they’re wasting less of their budgets now than they did decades ago.
“Hindsight is 20/20,” Gahan said. “You have to experiment to understand what channels, mediums and strategies are working in order to learn and increase efficiencies.”