New Context

New Context

<Interview with TOYO KEIZAI and BI.Garage>Companies Need Advertising Strategies to Protect Brand Value

What role should digital advertising play and how must it be transformed in today’s online environment that is overrun with malicious media, including fake news and fraudulent articles written with generative artificial intelligence (AI)? 
This series examines these issues and looks toward the future via interviews with members of the Quality Media Consortium, which was founded by advertising and media companies striving to build a healthy media environment. First up is a conversation with Hiroaki Takita (president of Toyo Keizai Inc.) and Hideyuki Nagasawa (special advisor of BI.Garage). Click here for Part 1

Online ads are the least trusted type, but they comprise the largest category

Nagasawa: Companies are paying more for online advertising than any other ad category in Japan. However, the Japan Interactive Advertising Association conducted a survey, Improving Trust in Online Media and Advertising: Results of 2021 User Attitude Survey and Efforts to Solve Issues, that showed around 40% of respondents trusted ads in newspapers, magazines, and TV programs, but only half as many (about 20%) replied that they trusted online ads. Why are Japanese companies devoting half of their advertising expenditures to online ads, when they are the least trusted type? There is a similar trend around the world, but the Japanese situation is particularly concerning. 

Without a doubt, this is caused by the platform-focused ecosystem that prioritizes ad optimization. Platforms provide efficiency and effectiveness to buyers (advertisers), but they are not concerned with protecting a company’s brand value or user loyalty. This fundamental philosophy is aimed at earning clicks and selling products, which contributes to the decline of human morals. I think this is the worst thing about the mechanisms used by Google and other Big Tech companies.

I feel like advertisers are also part of this negative spiral. They may think there is no problem with delivering lots of ads and hoping for clicks. With the pay-per-click model, they don’t care what mediums they advertise in—they just want to sell products, and they feel no responsibility for the places where their ads are displayed.

Image created by Digital Garage, based on Improving Trust in Online Media and Advertising: Results of 2021 User Attitude Survey and Efforts to Solve Issues (Japan Interactive Advertising Association)

Considering this, I encourage everyone to think about whether these platforms are a type of media. Tech companies don’t think so, but I disagree because platforms have algorithms that select mediums where ads are shown. That’s why I feel they should work harder to fulfill their mission of eliminating social risks, and of creating and maintaining healthy content and media environments. If these platforms don’t change, users will feel increasingly negative about and distrust online ads, like the survey results I mentioned before.

Takita: Unfortunately, I don’t think we can expect tech companies to act conscientiously. They raise financial capital to hire engineers, with the goal of becoming like Silicon Valley companies. Profit is their main objective. Of course, it would be ideal for them to have a conscience, to think about their actions, and to do good journalism, but I believe we must start from the premise that this is a fundamentally difficult request. The ones who should be giving this a great deal of thought are the companies you mentioned, and the executives who are in charge of them.

Weekly Toyo Keizai magazine published a special issue in December 2017, The Dark Side of Online Advertising. Our plan was to show corporate managers where their ads are posted, and to ask them if they think this is appropriate. We wanted to tell them, “Terrible mediums are running ads by your company, a major corporation that all citizens know about. This is harming your brand. Are you aware of these circumstances?” Marketers only have to report on clicks, conversion rates, and sales. Because they focus solely on numbers, I don’t think they are particularly scrupulous about other things.

Top executives are the ones who must establish advertising strategies to maintain brand value. They lack up-to-date awareness of the Internet and online ads, so our special features and articles don’t have any effect on them. This is demonstrated by the fact that The Dark Side of Online Advertising was our worst-selling issue in 2017, although it did make a big impact and get lots of people talking in the industry. Regular companies seemed totally unconcerned, but in some ways it’s unsurprising that these companies have to focus on profit. Six years after that publication, I want to state loudly that this is our last stand, and that democracy is in danger.

Do you know your ads are being unintentionally run on sites owned by anti-social forces?

Nagasawa: A Ministry of Economy, Trade and Industry survey indicated that over 70% of advertisers don’t know the websites where their ads are displayed. Let’s compare this to the mass media. Advertisers are sensitive to problematic content on TV programs, and will decide to withdraw their ads. Why isn’t this the case with online advertising?

Lately, I’m seeing lots of ads for investment products based on growing interest in stocks and the Nippon Individual Savings Account (NISA). There are many ads for fraudulent investments utilizing images of famous individuals without permission, such as corporate chairpersons or newscasters. When you investigate the sources of these ads, they come from outside Japan. Global anti-social forces, like the so-called “net mafia,” are at work behind the scenes. 

The same is true of fake news sites. Expensive damage has already been caused by bad actors who are extremely skilled at using technologies and producing content. Companies are contributing funds to anti-social forces when they advertise on these websites. This is a compliance issue that could affect stock prices, and could even become more serious than the Johnny & Associates scandal. Companies must control for these risks in the era of online advertising.

Takita: Listening to what you say about the executives who didn’t read The Dark Side of Online Advertising because they were uninterested in these topics, I wonder if general meetings of stockholders might be the most effective way to get their attention. Imagine if a stockholder asked, “Do you approve of your ads being run on sites of this nature?” Unfortunately, that single question might be vastly more effective than a magazine. I hope this article might inspire some readers to feel a sense of danger.

Safeguarding quality media outlets that uphold democracy

Nagasawa: I’ve spoken with Yukiko Yamaguchi, head of the Digital Media Committee at the Japan Advertisers Association. We discussed how morality might disappear from Japan’s advertising culture, or from its overall content culture, if companies don’t revise their thinking about and reform the quality of digital advertising. She also spoke at the end of the Ministry of Internal Affairs and Communications’ Investigative Commission on Restoring the Health of Online Information Spaces to members of concerned government agencies and eminent persons. There, Yamaguchi clearly stated, “Advertising must work to uphold democracy.” I was happy that her views align with the Quality Media Consortium, and I think the first thing we should do is precisely convey the fact that advertisers must change their ways. 

Takita: The ad industry is built on content that doesn’t cost money to view. I want readers to know that nothing good would come from destroying this structure. I also want to warn advertisers that democracy is in danger. I want people to be aware of the extremely difficult circumstances facing the media right now, so much that I think this is a critical moment for democracy.

The 30 consortium members are working together, but it’s possible that the online ad model might not suffice in the future. Speaking frankly, I don’t think anyone is profiting very much from online ads. Media companies are surviving by making money in other fields like intellectual property and data. I hope advertisers and regular users will think about the world that awaits if all these consortium members disappear. If there were no way to obtain correct information, would it be a good world?

Our declaration isn’t aimed at regular consumers; it’s a plea for executives to think about the consequences of choosing a world where they do not pay the required expenses for democracy. They are furthering the cause of non-democracy. If society doesn’t realize this, these companies will naturally be weeded out. I want everyone to take this opportunity to consider whether that would be a positive thing.

Quality Media Consortium

Jointly administered by 30 leading media companies, this organization was founded by BI.Garage to improve the quality of Japanese digital advertising. It is the only ad network that works to provide the highest-quality advertisements by focusing on the quality of ads and the mediums where they are delivered.

*Quality Media Declaration