Fox News is a case in point. On Friday, the day of the Newtown massacre, Fox published an ad for a novelty T-shirt that appeared like this:

Chicago lawyer Evan Brown noticed the ad late Friday afternoon. Appalled, Brown took a screenshot of the ad and published it here.

How did this happen?

Fox News did not respond to a request for comment, but the t-shirt company and advertising-industry people I spoke with provided enough information to piece together what happened. The unfortunate ad is not the result of Fox’s insensitivity or someone’s screw-up, but instead just reflects the reality of online advertising.

According to Mike Grouse of Bad Idea T-Shirts, the company has been running the bloody shirt ad for the last year. On Friday, it moved to take the ad down.”Yes, we removed the ads from Google upon becoming aware of the tragedy. We worked directly with our Google rep to expedite the process. We also blocked Fox News from receiving our ads,” he told us by email.

Google was involved in this case because it was the company that provided the back-end tools that let the t-shirt company buy the ads (other companies offer similar tools). In situations like this, Google works with both publishers and advertisers to help hit the kill switch on the technology that serves the ads.

“As soon as we recognized the sensitivity of the ad in this context, we stopped serving it,”  said a Google spokesperson by email.

Fox and the t-shirt company weren’t the only ones to publish ill-advised ads on the day of the Newtown killings. As Fast Company reported, Facebook ads on Friday invited people to try machine gun video games:

Do publishers have any control anymore?

While newspapers make ad blunders from time to time, their publishing process often means they are in the driver’s seat in deciding whether ads appear in their papers, and if they do, on which pages. The situation is far different for online publishers — even rich, powerful ones like Fox or Facebook — which serve millions of diverse ads in real time.

It’s just publishers that can be stung by this — big brands that buy through ad-bidding exchanges (and many do) and whose ads wind up near unflattering content could also be dinged reputationally.

All of this is a function of how the online ad industry has evolved. Publishers used to simply sell ad space ahead of time, usually at a given dollar amount for every thousand times an ad was seen. But as ad inventory grew, publishers began turning to third-party services that that helped them fill unsold spots with low cost ads. The benefit was extra money; the downside was a loss of control over what appears on their site.

Dealing with third-party ad suppliers can be tricky because you’re effectively opening a portal to a flood of unknown content. This appears to be what happened in the case of Fox. If Fox had sold the ad space directly, it would have been better prepared to stop the ads from appearing; but since, the bloody t-shirt ads were just some of the millions of third-party ads flowing onto its sites, Fox’s ability to react was limited.

Publishers do have some control, of course. They can rely on tags to screen out certain categories like politics or pornography. But in unlucky cases like this one, it took hours for the diverse parts of the ad operation — the advertiser, the ad broker and the publisher — to respond (but as one source noted, news sites like Fox publish sensitive stories all the time so Fox may need to tighten its controls).

The bottom line

Publishers will have an easier time responding to a Fox-like situation if they have pre-sold their ad inventory, according to people I talked with. Nonetheless, they do not have technology to be pro-active about ad-screening — there are too many ads and it’s impossible to foresee every type of mismatch. And, unlike a newspaper, publishers and ad staff do not have a time delay to review how an ad will appear.

With the spread of new ad tools that make it easier for brands to bid on ad space in real time, mishaps like this could become more common. According to IDC, real-time ads will amount to $2 billion and 20 percent of all display ads in 2012.

If there is bright spot for nervous advertisers, it’s that online publishing is transient, and it’s easy to scrub mistakes. Unlike ill-advised newspaper ads, ads like the bloody t-shirt one will simply vanish — unless, of course, someone captures them with a screenshot.

This, anyways, is the promise of BlueKai, a company that helps publishers and brands collect information and marketing insights about their audiences. BlueKai’s primary customers have always been advertisers but now it’s turning more attention to publishers, offering tools that help them create reader profiles and develop data-driven ad sale strategies.

“The world before for publishers was ‘I have these great audiences, I have these places’ please buy them’,” said BlueKai CEO Omar Tawakol in a recent phone interview. Now, though, ad buyers want publishers to supply information that lets them reach very specific groups of people — soccer dads, not soccer moms for instance. Publishers can offer this information by mining their audience data (including registration info and log-in location) and combining it with data BlueKai has about those users’ web-surfing activities. Such tools can also help publishers track when the same customer is coming to the site through a desktop, tablet or cell phone device.

The data tools are fine in theory but are they a practical investment for publishers who could spend the money on writers or developers instead? According to one executive, some publishers might not have a choice.

Vikram Somaya, a former VP of Operations and Audience at Reuters, says that audience data has become “table stakes” for premium publishers if they want to be considered for major ad purchases by national brands. In practice, this means that a company like Ford might only consider buying online ads for a given campaign if the publisher can provide a target audience of car buyers.

“Anyone who hasn’t picked an [audience data] product, is behind… it’s not an option to ignore anymore,” said Somaya in a phone interview. He acknowledged though that, for now, BlueKai-type tools may only be practical for big publishers that are in Comscore’s list of top 500 web sites. (Somaya, who is now a VP at the Weather Company, used to work at BlueKai but said his opinion is impartial).

A publisher’s size, however, may not be the only consideration about whether it should invest in audience data. The nature of its readers is a consideration too. The more general a publisher’s audience, the greater its need for data. As the FT reported last week (reg. req’d), Time Inc has just launched a major new ad strategy based on mining customer information so as to offer better-placed ads.

On the other hand, audience data is less critical for more specialized publications. As an executive for a major New York based publication, who did not want to be named, explained by email:

While we are a BlueKai customer, our experience is that most advertisers do not require audience segmentation data as part of their buy. It certainly sometimes comes up, but it’s the relatively rare exception, not the rule. My guess is that it’s probably more important for publishers with a more mass audience. Our audience is relatively targeted (and valuable) already and so segmentation isn’t needed to get the audience advertisers are seeking.

What this means in practice is that niche publishers can likely forgo fancy data tools for now.

(Image by Dusit via Shutterstock)

That growth indicates “a tremendous amount of innovation,” said Luma Partners CEO and founder Terence Kawaja. But he asked: “Is that a situation that can continue or does it need to change?”

In a presentation on digital advertising’s “state of the state” during Federated Media’s Conversational Marketing Summit Monday, he said that there are 1,400 companies featured across his company’s eight sector-specific slides. Each of those companies, or at least the bigger ones, are building their own sales teams, business development plans and technology, to each sell their own unique solution that isn’t operable with others, Kawaja continued.

While the industry wouldn’t want to quash the innovation, he floated the idea of addressing what he called the “rationalization” issue through standardization. Just like mobile technology has its Android and iOS platforms, Kawaja said, digital advertising could have its own operating system.

“Many other industries have benefited greatly by having an operating system, a common platform upon which other companies can build their tools,” he said.

Another potential solution to this problem could come through consolidation. Over the past few years, merger and acquisition activity hasn’t only picked up, it’s attracted interest from a wider group of potential buyers. Google, Microsoft and Yahoo used to be the “usual suspects” in driving M&A in online media. But as the field has become more data-driven and scientific, it’s started to include new players from marketing, technology and commerce, he said.

Facebook’s upcoming IPO, he added, will “fundamentally change this industry from the perspective of M&A, rationalization and consolidation.” Not that Facebook itself is going to quickly pick off a bunch of new companies, Kawaja said, “but just their presence, their currency, their ability to grow organically.”

In addition to rationalization, he highlighted two other key themes: big data and automation. In 2009, programmatic media buying didn’t even in exist, he noted. But, according to IDC, in 2010 companies spent $352 million on real-time bidding. By the end of 2012, that is expected to reach $1.975 million and, in 2015, it’s projected to hit about $5 billion.

As for his highly-cited Lumascape slide, Kawaja said it’s been cited in six books and a Harvard Business School case study (not to mention countless conference presentations and sales decks). It’s also received more than 350,000 views online, from people in 116 countries.