E7: The End of Consumer Tolerance

Jake Moskowitz and his guests explore the future impact of 5G on programmatic advertising.

Will the speed and especially the low latency of 5G fix the high-latency effect of programmatic advertising? Or, will it reveal the warts of advertising automation to consumers who expect blazing fast 5G experiences?

Over the years, as programmatic gradually established a foothold and eventually became the norm, it had to weather some serious storms. When issues like viewability, brand safety and fraud became too big to ignore, the ad industry rallied to address them.

Programmatic has another issue that’s been brewing in the background for several years. The programmatic ecosystem has become overly complex. It’s thick with issues that interfere with consumer experiences and slow consumer access to the ad-supported internet.

Some believe 5G will fix it. Others believe 5G will make it untenable. Both can’t be true.

In this episode of FIVE – The 5G Podcast for Marketers, Jake and his guests discuss programmatic latency, oversized stacks of tags and redirects, bad ads, ad blocking, outdated infrastructure, a brighter programmatic future, the edge cloud, 5G consumer expectations and other delightfully geeky topics.

Jake’s Guests:

  • Kate Reinmiller, CRO & Cofounder of Ad Lightning
  • Yves Boudreau, VP of Partnerships and Ecosystem Strategy @ Edge Gravity
  • Jeremy Lockhorn, Mobile Marketing Expert, Emerging Tech and Innovation Consultant 

FIVE, The 5G Podcast for Marketers, is presented by the Emodo Institute and Ericsson Emodo.

Host
Jake Moskowitz, Head of the Emodo Institute at Ericsson Emodo

Producers
Robert Haskitt
Adam Kapel
Jake Moskowitz

Original Episode Art
Jeff Boese

Music
Dyaphonic
Small Town Symphonette


Transcript of Episode 7: The End of Consumer Tolerance

“Some people may think that 5G’s going to solve that. I would say, No, it’s not. It’s going to make it worse because the consumer expectation is just going to get higher. The bar is going to be higher.”

Jake:

Let’s talk 5G. Welcome to FIVE, the podcast that breaks down 5G for marketers. This is Episode 7: The End of Consumer Tolerance. I’m Jake Moskowitz.

These days, more than 80 percent of digital advertising is transacted and executed programmatically. It’s become such a standard part of everyday advertising, it’s easy to lose sight of all the companies, technologies, innovation and data that connect and operate behind the scenes to make it work. it’s really pretty remarkable. In an effort to follow buyers off of managed service models, ad tech vendors continue to streamline self-service processes and user experiences.

As issues like viewability, brand safety and fraud became too big to ignore, the industry eventually rallied to chip away at those threats. But programmatic is another issue that’s been brewing in the background for several years. Some believe 5G will fix it. Others believe 5G will make it work. Both can’t be true.

Let’s talk about what we’re talking about.

The programmatic ecosystem is thick with issues that bog it down, issues that slow consumer experiences and access to the ad-supported internet. Most programmatic buyers know this. Publishers are very aware. Consumers may or may not realize the cause, but most experience the effect. In fact, they often respond to slow-loading web pages by taking steps to avoid slow sites. An Adobe survey in 2018 showed that content being too slow to load is the number one reason that drives consumers to either stop what they’re doing or switch devices, higher even than a site not working. 

Publishers have expressed concern and frustration about abandonment and the growing adoption of ad blockers among consumers. According to Deloit [00:02:14], 20 percent of mobile users say they use an ad blocker on their mobile phone. Computer ad blocking is even higher. Luckily, consumers who don’t block ads are often sheltered from the real ugly effect of programmatic sloth; most have either grown to expect slow experiences or they have slow connections that conceal the delays. That’s about to change.

In this episode of FIVE, we’re focusing on the impact of 5G on programmatic advertising. Will the speed, and especially the low latency of 5G fix the high-latency effect of programmatic advertising? Or will it reveal some of the warts of advertising automation to consumers who expect blazing fast 5G experiences.

In order to know which is true, we need to take a brief look at the key factors. You might not be surprised that we’ll cover FIVE.

  1. Consumer expectations. The continuous hype and messaging around 5G is, in many cases, intended to get consumers excited about 5G’s transformative speed and capabilities. If they rush to adopt but don’t experience the difference, that’s going to be a problem.
  2. Bad ads. Programmatic latency is often caused by ads that are weighted down by a shocking number of tags, redirects and other issues that slow down the rendering of ads. Will 5G make that a non-issue?
  3. Today’s programmatic infrastructure isn’t ready for a 5G future. Instead, the programmatic data and infrastructure are centralized in cloud-based solutions that depend on just a few huge centralized server farms.
  4. Most of today’s digital ad spend and delivery is mobile, and marketing aspirations are leaning more and more on personalized, location-based mobile advertising. Will 5G finally make programmatic, people-based marketing possible?
  5. To enable real-time targeting decisions, data will largely move from deterministic to AI. Essentially, super-charged probabilistic models.

Let’s take a quick look at consumer expectations. Verizon is currently touting 5G mobile advantages, like streaming 4K movies with virtually no buffering, console quality multi-player gaming you can play on the go, and downloads that used to take minutes taking only seconds with 5G. AT&T is claiming their network will transform how we live, work and play. Bold claims in bold type, and that’s driving a lot of exuberant excitement.

All of those claims may be spot on if advertising doesn’t get in the way. And, as you’ll hear shortly, that’s pretty likely. Slow ads aren’t going to sit well with 5G users, who will in turn point the finger at publishers and ad tech that are standing in the way of a fast mobile experience. But in what way is programmatic the showstopper? That leaves us to the next two factors: bad ads, and inefficient infrastructure.

Let’s start from a place we can all relate to. When you take out your phone or even open up your laptop and go to a web page, even a major one, does the site immediately load with all ads fully rendered? Not in my experience, and I’m guessing not in yours either. It usually takes a few seconds for everything to load. We as consumers have come to expect that. The problem is, in many ways, those of us in marketing have taken advantage of that delay to create a really convoluted ad ecosystem of ad tags and waterfalls and complex multi-auction header bidding. Sound familiar?

Kate:

My name is Kate Reinmiller. I am the CRO and co-founder of a company called Ad Lightning. We were founded to actually solve the problem of bad ads. For a publisher, latency is a big issue when it comes from ads because it is decreasing the number of page views, or ad impressions, that they are able to serve to their audience. That’s less money for them that they are able to make from selling advertising, and it is also frustrating for their end user so, over time, it starts to erode their brand. People don’t want to go to sites that take forever to load.

Ads, because of the way they are transacted, add to that latency in a couple of different ways. One, there’s the loading of the ad itself. For an ad to get to a page, it seems like it would be very simple, but actually, and ad can pass through somewhere in the course of 20 to 30 different technologies before it even loads on a page. Each one of those different technologies has a different role to play, whether it’s loading assets or pulling trackers or managing some kind of auctions. All of those things as they are happening, each piece takes a little bit of time to happen, and that contributes to the overall latency in the process of loading an ad. Over time, there has been different shifts to consolidate technologies, look for different ways to speed those things up. In the pass, they used a technology with a term called “waterfall” so there was a decision that, “if this happens, then this happens, then this happens.” They’ve started to do those more asynchronously so they load header-bidding auctions or server-side auctions. What those are doing is trying to speed up the process of getting the ad to the page, but it still has to run a decision-making process before it can do that. So all of those things that are happening contribute to latency of an ad, which then slows the page down.

There’s also the ad itself that can also contribute to latency, which is another separate headache. Whether the assets are really large – a lot of times brand creative is beautiful, but to load beautiful creative it takes a lot of CPU and bandwidth and it also contributes to latency. There are steps that advertisers can take to streamline that, but if you want high-quality creative, especially as video is becoming more and more popular, that is just inherently slow. As things get more sophisticated, there are ways to optimize it, but we’re still trying to account for large assets and things like that.

Jake:

To what extent do you think 5G will fix these issues?

Kate:

It seems to me that 5G is just going to highlight the problem a little bit more because it’s really not going to allow any of those transactions to go any faster.

They still have to make a decisions. When a user comes to a page, we have to call for the impression, run an auction, pull a creative down, load the creative, make all the other decisions that need to happen. That’s happening separate from the 5G connection. That’s just the pipes of the advertising ecosystem. If the site is loading faster or that connection’s faster but the process is showing a blank or stalling, I think that’s just going to exacerbate the issue.

Jake:

The solving for bad ads and inefficient infrastructure will be tricky because of industry inertia and a lack of willingness to change. For instance, even the ad quality benchmark set by the IAB a few years ago have been set aside because, says the IAB, “Controlling compliance was just too difficult. The guidelines were essentially ignored.” So the IAB stopped trying to enforce ad quality all together.

5G may bring some marginal improvement due to improved performance in 5G connections, but it doesn’t solve the problem. Let me take a moment to explain way. While 5G is incredibly fast, let’s remember that 5G only impacts the connection between the phone and the cell tower. The factors that lead to latency in ad serving are, for the most part, not located in that part of the infrastructure.

That leads us elsewhere, to the point beyond the cell tower, to what’s referred to as back call and the cloud. Hey Kate, what goes on there?

Kate:

There are three main technologies an ad passes through before it gets to a publisher. it’s got its input system, which is called the DSP. Then there are the pipes that connect everything in the middle, that’s called the SSP. Then there is the ad server that delivers the ad to the page, and that’s the publisher’s page. We, basically, can map for the publisher all the different hops an ad took before it gets to the page so they can optimize the folks that they’re working with to get the best quality ads to their site.

Jake:

You used the word “quality” right there. I just want to clarify for listeners what you mean by “quality” or “ad quality” because I think that can mean different things in different contexts.

Kate:

When we’re talking about ad quality, there tends to be three categories that ads can fall into. There are the ads that have content that’s not desirable. That could be offensive creative, something with a weapon, things like that, may just not be in line with a publisher’s brand. Those are ad quality issues that are more about the content of the ad.

There are issues that surround compliance. Those are things around the size of the file, the number of requests an ad takes to load, the number of seconds it takes to load. There’s a set of rules that ads need to follow and we’re able to identify ads that don’t play by those rules.

Last, there is the malicious bucket of ads. There’s malware, those really annoying mobile redirects – those pop-ups that have the “You won an Amazon gift card! You won an iPhone!” They take you away from the screen. That’s actually malware. It’s infuriating for the end user, but also very annoying for the publisher. Those are the kinds of ads we help catch, identify, and help publishers remove.

Jake:

For ad platforms, do they need to be thinking about this now in terms of how they reformat their infrastructure, how they run the operations process to serve an ad to be ready for the 5G speeds that consumers are going to expect?

Kate:

Right now, there are just so many different technologies that an ad is casting through, it’s impossible to optimize for that. What we’re seeing now in the ad tech ecosystem is that companies start to consolidate and as they consolidate, we’re able to handle multiple decisions in one step. From an ad tech perspective, that’s going to be important.

For the marketers, they see the end product of their creative but don’t necessarily know the impact that a large creative file can have on a publisher. It hurts the brand of the publisher when they have a slow loading site. From my perspective, it also hurts the advertiser itself, because if you see an ad loading from Coke that is taking up a lot of bandwidth and slowing down your site, you also leave a little bit of a negative impact about that advertiser. They need to be aware of how things are being transacted and they are holding their partners accountable throughout the chain to make sure that it is optimized and that, if there is an issue, you need to be made aware of it.

Programmatic advertising is great, but everything happens in this magical black box. If you can’t see what’s happening, there’s no way to fix it. The ability to see where things are coming from and what the problems are and remedy it, I think everyone needs to be eyes wide open to those types of solutions.

Jake:

How could someone remedy these problems? If you’re a publisher and you find out that some of your ads are taking forever to load and it is slowing down the user experience, what would you actually do about it?

Kate:

There are solutions in place now that a publisher can put in place so ads that are really large or could be causing negative behavior for user experiences, they can block those ads. That’s one suggestion that I think we’re seeing publishers start to adopt. Two, just having more data and more insight, I think publishers just need to hold their demand partners accountable. All the different technologies that are plugged into their site, they need to make sure they are monitoring that constantly, evaluating it, and eliminating partners that they know to be problematic. Data to help make those decisions wasn’t available three or four years ago. Now that they are starting to get comfortable with the availability of that data, they can make those optimization decisions.

Jake:

It sounds like, if you’re a marketer and you’re doing things that are causing high latency for publishers, especially high-end publishers who might be more worried about their brand and more sensitive to these kind of latency issues, you may find that your ads are being blocked at some point in the future if you don’t take steps to alleviate the issues that are causing the latency.

Kate:

Yeah. Exactly. Publishers have tools now that are able to say, “This ad is taking X amount of time to load on your site.” We have tools to say, “Block it or don’t serve this advertiser on my site anymore.” At some point, the loss in revenue from the overall experience is much less than just blocking an advertiser outright. It gives the publisher a lot more control over what is running on their site.

Jake:

Taking it one step further: if you’re an ad platform and your infrastructure is such that you’re causing latency issues on the publishers that you rely on for the high-end inventory that you’re making available to advertisers, it’s very possible sometime in the near future that high-quality publishers – maybe the highest quality publishers – might start cutting you out of the monetization process.

Kate:

Absolutely. When we look at an ad, we actually can see all of the tags – we call them resources – that load alongside of a creative. I think the industry standard is supposed to be somewhere in the ballpark of fifteen. On average, we see somewhere between 50 and 60 resources load with every ad. That’s 60 different companies associated with loading an ad, which is pretty incredible.

Jake:

Programmatic tech and data are centralized in cloud-based solutions that operate outside the mobile network. Today’s 4G is built on a smaller number of cell towers that are spread out and cover a wide physical space. To reduce latency, 5G is designed differently. It uses a much more distributed model that means the closest cell tower is much closer to the 5G consumer.

The cloud works much the same way. Today, there is a very small number of very large server farms that service a wide physical area. To cut down on latency, cloud providers would have to decentralize in much the same way, creating a much larger number of small server farms much closer to 5G consumers. That decentralized model is called “edge cloud computing.”

Yves Boudreau is VP of Partnerships in Ecosystem Strategy at Edge Gravity, an Ericsson company.

Yves, can you go into more detail on edge cloud computing?

Yves:

The edge cloud itself is a continuation of what people affectionately know as the public cloud. The public cloud, as most people would contend, started 14 or 15 years ago with a very small number of services that Amazon Web Services deployed, which still account for a very large part of their business today. It has grown to some 150 to 200 platform services over a 14 or 15 year period. The edge cloud itself is meant to extend the public cloud much further into the network, closer to devices, closer to consumers, and move parts of the public cloud infrastructure and application into the operator network where it can better serve end devices and end consumers with bits and pieces that simply don’t scale well in high-centralized public cloud.

Jake:

When you say, “don’t scale well,” what do you mean by don’t scale well? What are the negative ramifications for depending only on the central cloud.

Yves:

We think of scale in a bunch of different metrics. I think the most popular one that you hear about is latency. We think more in term of performance, and performance has many characteristics including latency, jitter, packet loss, and bandwidth. When you think about applications or enterprises that use the edge of an operator network, you can think of people who have one or more of those problems, either in reality or from a perceptual standpoint, where their application, if they were to run it at scale to tens of millions of users all around the world, would have scaling problems in, let’s say, one of those four dimensions. 

Jake:

For content providers or content distributors or ad platforms, in your view, will 5G fix these performance problems on its own?

Yves:

5G as a whole, if deployed correctly, is meant to solve a lot of the shortcomings of previous generations of mobile networks. Ironically, in 4G and LTE, some of the problems that we see today are not inherent in the technology but more inherent in the way the technology was deployed. If you look at a lot of the larger countries and larger carriers around the world, it’s a very highly centralized deployment model, which means packets typically need to travel a very long distance to get to that first point of IP insertions – IP in this came being Internet Protocol. That’s where all these web services live; they all live in the IP domain.

What 5G actually does is it makes the concept of local breakout of that IP traffic available much, much closer in a standardized form to where the radio are deployed. The further I can deploy IP networking closer to the end radios – and keep in mind, those radios connected to antennas are what make our cell phone communication possible – the further I can get IP into the network via a properly deployed 5G architecture, the lower the latency, the tighter the jitter, the lower the packet loss, and the higher bandwidth I will be able to actually serve those consumers and those devices with.

Jake:

So, to clarify, if I’m a content distributor or owner or an ad platform, do I just wait around for 5G to be implemented by the carriers and a lot of my latency problems will go away, or is there something that I actually have to do?

Yves:

When we talk about programmatic and real-time buying, for example, some of the issues that we’ve heard numerous times is that the actual real-time buying or auction process doesn’t have enough time to complete before an ad’s buy is missed. Those ads typically are delivered over a content delivery network, and that content delivery network may not have enough capacity close enough to the users for that real-time buying process to complete, to select and then serve the ad in the time it should have been placed.

Yes, if we can get edge cloud resources closer to radios and last-mile networks, we believe that we can significantly improve not only the accuracy, but the delivery of real-time ad insertion for personalized ad insertion.

Jake:

So the proximity of edge computing makes the exchange of information a lot faster and interaction more immediate. But as I mentioned before, 5G can only enable high-speed connections from the user’s device through the closest or one of the closest 5G cell towers and back again. The programmatic infrastructure is not a part of that matrix. What happens on the public internet or the back end depends on the technologies on the back-end.

In order to optimize for 5G and keep up with the content experiences consumers will expect and get used to, programmatic vendors will need to follow the carriers’ lead and adopt more distributed edge computing, too.

Jeremy:

My name is Jeremy Lockhorn. I was at Razor Fish for a very long time, almost 22 years. Last year I left to start my own business. I’m running a small consultancy called Newman Eecky[00:22:49] Consulting now. I focus a lot of my time on the emerging media space, including the mobile ecosystem and 5G particularly.

When you think about what 5G is going to do to connectivity in general and to expectations from a consumer experience perspective, it gets really tricky really quickly because you’re talking about a complete step change in download speeds and reduction in latency. When you look at the customer data today, there’s very little patience on a 4G network. You see a bunch of different studies that point to even with a one or two second delay on a mobile phone, you’re seeing bounce rates go up by 100 percent at two seconds, for example.

You see other studies that point to the download time necessary to reach peak conversion on an e-commerce website on a mobile device a year ago was three seconds, which is not a lot of time. Nobody is close to that in the retail world. If you run some real basic tests, everybody’s more in like five, six, seven, eight, nine, ten seconds, minimum.

The point being, some people may think that 5G’s going to solve that, but I would say, no it’s not. It’s going to make it worse, because the consumer expectation is just going to get higher. The bar is going to be higher. It’s not just about the download speed. We’ve got to figure out how to re-engineer the systems so that they are able to deliver and keep up with that pace. I think that’s the real challenge.

Jake:

Have you put much thought into what sort of players are poised to thrive in 5G and which are not – not necessarily names, but what are the strengths or the foci or the strategic decisions that characterize marketers in the 5G world as opposed to a company that’s left behind?

Jeremy:

When you consider the changes that 5G is going to force on the ecosystem and you recognize the importance of 5G as an ingredient to this era of connected intelligence, there’s four things that I believe brands, marekters and any player in the ecosystem are going to have to do to capitalize on a lot of those opportunities. 

Those four things are represented by an acronym I call SICC: 

  • First, being Seamless. This is about enabling consumers to move seamlessly from one touch point to another, from one digital or physical touch point to another. It’s about removing as much friction from the process. Both of those things are going to become everyday expectations once 5G becomes a scaled reality.
  • The second thing is Immersive. A lot of this is about augmented reality and virtual reality becoming new ways for consumers to experience the world. Again, that means both digital and physical experiences. New types of physical and digital experiences become possible. 
  • The third one is Clairvoyant. For me, this is about leveraging all of the data that we have to become predictive, to begin to fabricate a guess as to what the consumer is going to want next and deliver it before they even ask for it.
  • And the fourth one is Collaborative. This is about three things: breaking down silos inside of internal organizations to drive collaboration, which will be necessary to move at the speed that 5G demands. It’s about external collaboration, thinking outside of your organization and establishing strategic partnerships with an eye towards agility and pace of movement. And the third thing is finding ways to truly collaborate with machines, with artificial intelligence. I think some of the most powerful examples of using AI that we’ve seen so far to date are when we really capitalize on that collaborative opportunity. I think that’s the gateway to the future.

Jake:

Decentralizing programmatic solutions from the cloud to the edge will take some time, but it’s a necessary step for us as an industry to stay relevant in a 5G world. To make it more concrete, let’s discuss what and edge cloud-powered programmatic ecosystem will look like. Let’s talk about four things that will be different.

  1. We’ll reduce our dependence on ad techs. 
  2. We’ll cease to view header bidding as a source of efficiency.
  3. We’ll decrease our dependence on a centralized, deterministic database.
  4. Finally, our definition of AI will change.

With much better data inputs leading to much more accurate models, 5G presents a significant opportunity for marketers to finally realize visions of people-based marketing in the relatively near term, IF their preferred ad tech vendor supports it. Some programmatic solutions will be upgraded and 5G friendly. Others won’t.

It’s in marketers best interest to rally for 5G readiness early. If programmatic solutions don’t move to the edge, there will likely be an uptick in private auctions and more transactions may even revert to direct buys when attempting to engage a 5G audience. Or at least a programmatic platforms with a direct publisher relationship.

Like with any new technological generation, existing players can easily fall prey to being too comfortable, working about short-term impacts and losing sight of the longer term future. It’s going to take change for the rest of industry to keep up. That’s why we need to start now. If slow ads and page loads persist on 5G networks, those experiences will seriously test the tolerance of 5G-connected consumers.

If you’re a programmatic advertiser, buyer, planner, data architect or analyst, it’s not too early to assess your 5g strategy and start 5G conversation with your tech and data vendors. Ask them about their 5G road map and plans for edge computing. Make sure they get it. Faced with the potential with consumer intolerance, it’s a good time to zero in on the vendors and the solutions you trust to meet the heightened programmatic needs for the 5G future.

Before we go: High-speed, high-resolution video is one of the most anticipated benefits of 5G, but programmatic video advertising has even more latency issues to be resolved.

Kate:

Video advertising is going to have to pay specific attention to these changes and these shifts because video is going through an overhaul of its own right now, just behind the scenes in ad tech. They’re building out programmatic video, being able to make sure video is compliant across all these different platforms. There’s a lot happening behind the scenes to get that ad to load. Those quality issues are going to be very important to keep an eye on. Sometimes when we deal with video, we can see up to 200 or 300 resources for a single ad call.

Jake:

Thanks for joining us.

The FIVE podcast is presented by Ericsson Emodo and the Emodo Institute and features original music by Diaphonic and the Small Town Symphonette. This episode was produced by Robert Haskitt, Adam Kapel, and me. I’m Jake Moskowitz.