Facebook and Google Have to Open Up

(Bloomberg) -- Martin Sorrell told you so.

The WPP boss has railed against the opacity of Facebook and Google for years, calling for independent checks on the effectiveness of advertising on the sites. So when Facebook said on Thursday that it had overestimated the average viewing time for video ads on the social network for the past two years, the veteran ad man was proven right.

This matters because big brands are pouring ad dollars online, with nearly half of spending going to Google and Facebook alone -- as the chart below shows. Not only do the likes of Unilever and P&G want to make sure their dollars aren't going to waste, they want to know they're reaching the right people.

One solution would be for the two web giants to be more open and allow third-party auditors to check how many people view ad campaigns on the platforms. But data on their users is Facebook and Google's main asset and they guard it fiercely.

Facebook has, smartly, taken steps to meet some of the advertisers' demands. A year ago, it gave an outside analytics firm called Moat access to its data so it could verify whether people were actually seeing display and video ads, and how long they interacted with them. In April, it added three more auditors including comScore and Nielsen.

More is needed. As well as letting outsiders in, Facebook and Google could use some of their engineering brilliance to develop better tools for ad agencies and brands to track their campaigns. Right now, it's difficult for them to compare a dollar spent with Google with one spent on Facebook, Twitter or Snapchat. Video ads are particularly expensive, as the chart below shows, so Facebook's disclosure will be doubly troubling.

Online ad fraud is rampant too: marketers lose money when "bots" that mimic human behavior pretend to see an ad. They pay for these useless views anyway, at an expected cost to global brands of $7.2 billion this year, according to the Association of National Advertisers. WPP itself has invested in comScore and built a media measurement business in 50 countries to try to get a better handle on this.

In fairness to Mark Zuckerberg, online advertising is a young medium so some of this stuff is still being worked out. But with Facebook and Google so dominant, they have a duty to prove that the products they sell to advertisers are for real. As the head of Unilever's marketing memorably said last year, it's as if these web giants are being allowed to grade their own homework.

If Facebook and Google don't respond, the risk is that the break-neck pace of growth in online ads, especially video, slows, and brands go back to the tried and true medium of television.

Such TV ads tend to be used to build-up brands' image to the masses, while the promise of web marketing is the ability to tailor marketing to the individual. To deliver on that pledge, Facebook and Google have to open up.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story: Leila Abboud in Paris at labboud@bloomberg.net.

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net.