Murky Digital Ad Data Gives Advertisers Heartburn

Underpinning any bubble is a strain of truth that gets blown out of proportion as market participants, then the public, get caught up in a fever that this time, truly, it's different. But it isn't. It never is. 

In 1999, any company with a "dotcom" at the end of its name was a potential goldmine, no matter how absurd the idea. The Internet itself was transformational, but the bubble burst when investors realized that a suffix alone couldn't guarantee profits. 

In 2005, American banks, politicians and the home buying public were sure that property prices would never go down. Further, localized downturns were believed to be isolated, uncorrelated from other markets. And in the past, those assumptions held true. But when the future deviated from the past, as its apt to do, the housing market collapsed, nearly taking the global economy down with it. Millions of jobs were lost and home ownership currently sits at the lowest level in a generation. 

Now in 2016, cloud computing, SAAS and social media are believed to be the future of the Internet with limitless growth potential. For all the promise if new technologies, much of the ultimate profit potential of these services, especially social media, is rooted in the belief that new ways of delivering advertising are effective at converting eyeballs to purchases. 

For those who remember Internet 1.0, that premise should sound hauntingly familiar. Banner ads, now a borderline laughable online marketing strategy, failed to deliver results, and the spending stream supporting many web-based businesses dried up. The corollary to Web 2.0 could be a canary in the coal mine.

The Wall Street Journal reports that advertisers are becoming increasingly skeptical that video ads and social media campaigns represent money well-spent. In particular, ad sellers like Facebook, Twitter and others are struggling to prove that ads are effective. Facebook even had to issue a mea culpa when news leaked that the company had inflated a particular metric that measured how long users watched online videos. 

The business itself is murky at best. With increasingly less direct click through data to measure ads' effectiveness, advertisers are left guessing at how effective their campaigns are. Startups are even cropping to try and solve the problem -- itself an indication of the opacity the status quo.

Perhaps engineers will devise new ways to measure the hazy impact of new and different ways to get brands in front of consumers. But if they can't, advertisers may pull the plug.