> An estimated $16 billion will be lost to ad fraud this year, and a significant portion of that will go to criminals who use bots and other nefarious means to siphon money out of the digital ad ecosystem.
That's a mind bogglingly big number, if true. I don't really find myself feeling sorry for advertisers, though.
You shouldn't feel bad for the advertisers, but you should be worried about the content producers you love who provide you free content based on advertisements.
If true fraud levels were exposed it could shift the digital economy in a massive way.
Say you have an unpopular dishwasher and it breaks. It's great to go to Youtube and find someone showing you how to fix the problem even for a relatively niche dishwasher. But if the ad money dries up for that content producer, that video won't be there the next time you look for it.
It's great to go to Youtube and find someone showing you how to fix the problem even for a relatively niche dishwasher. But if the ad money dries up for that content producer, that video won't be there the next time you look for it.
Not everyone who makes YouTube videos is doing it for ad money, especially the sort of content you're referring to. A lot of people just do it to document things for themselves and use YT as a "convenient place to put videos"; the fact that everyone else can see is incidental.
But the only reason that YouTube is there as a platform that allows people to upload videos for free is that they expect to make money either off of that video through ads, or through other videos through ads.
Not necessarily true. Some want to get famous with their videos, some want to express themselves in a creative way, or spread ideas, or build an online following to capitalize later on...
For a while now I've been thinking about the idea of having a state-funded free and open video and image sharing platform. In the modern world I view sites such as imgur and youtube as vital infrastructure, and would really like to see them removed from commercial influence.
Just like roads need to be created regardless of their profitability, I think it's important for society that we have means to share and view image and video content regardless of profitability.
The vast majority are. Producing high quality content -- a good camera, good lighting, clear views into the disassembled appliances -- is a lot of work.
>You shouldn't feel bad for the advertisers, but you should be worried about the content producers you love who provide you free content based on advertisements.
You're getting paid with advertising dollars for posting on hacker news?
Surprise: you (and all the other posters on hacker news) are the content producers I love. We've never been paid for this nonsense, and I doubt we ever will be. Won't stop us posting though. I'm really not that worried if buzzfeed and medium go under.
I use an adblocker for most sites, but I enjoy the fuzzy feelings Red gives me. Also, I get Google Play Music All Access, and adblocking doesn't work on mobile.
I have it because I pay for Google Play Music. I don't know how people use YouTube without it. If I load a YouTube video in a private browsing window or on a friend's device, I can't imagine what it must be like watching all those ads.
It could cause short-term shocks, but I feel like over the long run things would recover.
If the advertisers thought they were paying $500 for 10000 clicks resulting in $1000 worth of visible revenue, the fact that they really only got 5000 "real" clicks resulting in the same $1000 worth of visible revenue doesn't really change the equation much.
Over the long run companies spending money on advertising are going to hone in on how much they can spend compared to how much revenue they get can trace back to that advertising spend.
The pay-per-click model and the current cost-per-click pricing is just an implementation detail of the current state of web advertising. Advertising still works when those stats aren't available, like in Podcasts.
It does matter though. They don't say they want 10000 clicks in a vacuum. They pay for that many clicks because the math tells them it should be worth $1k in revenue. In reality someone is manipulating the math
They should have been able to dedicate half the money for the same revenue, or the same money for double the rev, in your scenario.
Put another way, the estimate is that they pay out $500 for $2k in revenue, then someone came in and dumped a bunch of bots in the way and ate away half their revenue. It's not like those empty clicks are people who just weren't compelled to buy what they were selling. They are bots intentionally disrupting commerce.
"Over the long run companies spending money on advertising are going to hone in on how much they can spend compared to how much revenue they get can trace back to that advertising spend."
In some niches, there's an unending new supply of get-rich-quick newbies that will pay for underperforming ads.
There's really no incentive for Google's AdSense team to focus on fraud in these spaces. Because the suckers just keep coming. Google profits from it, so there's little incentive to fix the glitch.
Publishers are buying traffic that is too good to be true from dubious networks and then it is being laundered through the programmatic ad tech machine at scale.
Brands looking to build awareness are buying access to this fraudulent traffic.
Advertising agencies, ad tech companies, and publishers more times than not are incentivized to look the other way and not investigate what is going on too closely as long as it is profitable.
Digital display advertising has long been considered a channel of questionable effectiveness. But the current state of programmatic advertising has made things much worse and will ultimately lead to Advertisers pulling billions of dollars out of this space unless there are significant improvements in getting more transparency into their advertising investments.
The typical dish washer repair video on YT with 10-100k views makes $10-100 in total. And many don’t even have ads enabled. So these are hardly going to be affected.
Now, I‘m not sure YouTube itself will survive in its current form if ad money dries up.
That would lead to massive piracy... it is not a solution. A business model needs work like a business, not a charity, and you’re always competing its free.
It’s simple... ad value or die as a business. Is that easy? No, but why should it be?
You are right Patreon is great, but in the case I mentioned above, I would never support someone on Patreon after my specific dishwasher issue was fixed.
Patreon works great when you enjoy someone content on a continual basis. These 1 off trouble shooting type of content producers need to find their own way.
It's not that large a number. All of advertising is a $500-$800 billion business depending on where you get the numbers, so that represents 2.5% lost to fraud.
That is believable to me. Larger than fraud in a lot of markets, but not particularly large, and everyone knows the market is full of bots, bad stats, and scams.
As someone who has run a lot of decent sized FB campaigns, the norm would be for me to receive about 60-70% of the clicks I paid for. Not saying that was all fraud, maybe some people clicked and changed their mind... but I suspect the real "fraud" number is much, much higher than 2.5%. My guess is around 25%.
Well still, even in a perfect set up something like 20% of your display clicks still won't be counted as sessions. Lots of misclicks, exits before analytics loads, etc.
Edit: Oh did you mean advertising reports for sessions?
I tried all kinds of things. The most interesting thing (to me) was the clicks_paid_for / clicks_landed changed, depending on different targeting mechanisms I used.
I may have forgotten to acknowledge that I never really cared I didn't get all the clicks -- I was doing a CPA campaign, so I just baked in the non-visits.
Depending on targeting and platform, there was almost always a 20-70% discrepancy between the clicks I paid for (reported by the ad platform), and the visits that landed on my site (reported by GA, server logs, piwik, and analytics.js).
Is it? I don't mean that facetiously. If you and I are both selling the same product and you spend more on marketing, does that mean you can raise your price that much more, or is it just a little, where the primary spending comes at the expense of your margins?
I'm sure it differs case by case, but I would naively expect the latter is more common if you have competitors.
People in tech tend to look down on MBAs, but these are the kind of pricing decisions you learn how to make. It depends on your brand strategy, the strategies of competing brands, the anticipated lift, your margins, your assumptions about the margins of your competitors, the advertising channels available, your ability to enforce pricing discrimination (the innocous version), the macroeconomic environment... And on and on.
There's never a right answer to "am I charging the best price", it's always a guess.
Sure, but are the MBAs really good at this, or are they not also just winging it, finding the right strategies via hit and miss? I don’t look down on them, but find them full of strange ideas and dogma that falls apart when tested in real world situations. (Just my n=1 observation, and I probably have it all wrong)
In any discrete instance it may seem like that, but what you interpret as "strange ideas and dogma that falls apart when tested in real world situations" to a practitioner is a history of different approaches to a problem that have been tried in the past, a few standard ones that are sort of your go-to, and a huge amount of case studies and research about why different approaches worked or not and what might make it work or not again in the future.
The problem always is that it very difficult for an observer to tell the difference between an educated guess and just a, like, regular guess. So I don't fault anyone for interpreting it like that.
When I was shopping for lawyers, not that it was a consideration in my evaluations but I found that lawyers I recognized from subway or daytime TV ads were considerably more expensive than random selections from the phonebook. Their ads project images where you've been victimized, and you need a legal gladiator, willing to fight the evil empire to get all that settlement money that rightfully belongs to you. I found that the service was better with the random selects-- free consultations, quicker responses to inquiries, more services rendered, better aftercare, etc.
Dentistry is the same. I've noticed a lot of billboards for dental services around my area. Most of them evoke Fisher-Price colors and softness, playing up to peoples' fears in how the experience doesn't have to be scary or painful. But when I did the legwork for quotes on significant dental work, I found that those that offices which advertised were much more expensive than random Yelp selections. The quotes varied by thousands of dollars for the same work.
Auto repair does things slightly differently. I live in a small town and don't have much choice in this space, but for lack of time I recently took a vehicle to a shop that bought ad placements simply because aside from that their reputation in town was better. Their quote was fair and accurate given the job and they did the work without playing any games or breaking anything else. But then they tried to upsell me on additional services (fluid changes, etc.) at absolutely obscene prices. Since auto ownership is a cargo cult where nobody knows even the basics of what goes into making them work, I'm sure this tactic works on plenty of other rubes.
Similar story-- I had a car break down on the side of the road on a long road trip. AAA towed it to the nearest repair shop, which happened to be a dealership (dealerships generally spend mad money on ads, and already have reputations for being overpriced). I know the failed part cost less than $300 and would take less than an hour to put in. They must have seen the out-of-state plates and the after-hours dropoff and banked on my presumed desperation and ignorance because their quote was $6000. I said no, had it towed to another garage and got it done for $450.
The presumption is that consumers don't (or in some cases, literally can't) shop around, are generally unintelligent and are easily swayed by appeals to emotion, so you play to these factors and charge as much as you can get away with-- not some paltry "(cost of goods + cost of labor + cost of advertising) + 10% markup" silliness.
My rule of thumb is that anything you see advertised is a sign of a hustle. If you don't know how the hustle works, you'll get got. This applies doubly so for anything marketed to the poor or minorities.
Every layer of abstraction and complexity is another chance for fraud and the advertising and content generation industries are layered like onions.
These business models seem like they’ve been modeled after real world JIT manufacturing logistics. Deliver X units of product A to site B on this schedule to meet these quotas and fulfill this growth pattern.
But real world manufacturing chains deal in real physical goods that can be easily verified at the point of use. But in the world of online content manufacturing, all the intermediary products are ephemeral electronic side effects of human action that are easily duplicated artificially.
I hate to say that this world is due for a bubble burst but I hope it happens sooner rather than later. Because if it’s working as envisioned currently then our world is going to get more and more unpleasant.
A bank spends $1000 on advertising and it ends up with dozens of accounts and credit cards opened and they decide it's a good ROI. So they spend another $1000 on advertising and get the same results again.
Why does it matter that millions of the ad impressions were fake?
It matters to buzzfeed it their competitors are getting deals off fake traffic :)
But really, when you are a large corporation that advertises through hundreds of channels there is no way to attribute conversion to particular ads. You are paying to have your ads seen by real people to create brand awareness and get the multiple touches that will result in conversions. If those ads aren't getting seen then obviously they are not effective.
I am talking about large corporations like JPMorgan Chase (the subject of the article) that are on the internet, tv, radio, billboards, print, sponsoring conferences, sports teams, lobbying governments, thousands of physical locations and ATMs that people see every day, etc, etc, etc.
Even with a PPC ad that results in a conversion can you really attribute that sale to that particular ad?
For a large corporation no, because you can't tell what part of the sale is due to the corporation's existing brand that is built up through exposing the consumer to that brand thousands of times across multiple media.
Conversion rates for digital ads are only meaningful relative to the conversion rates for other digital ads. They do not not allow you to attribute a value to digital advertising relative to the rest of your ad spending.
Many ad campaigns are sold by the impression. It would be like if you bought a bag of rice, but after you opened it you discovered that half the grains were in fact plastic. Of course you could still filter out the fakes, and you're still left with a half bag of edible rice, but in the end that's not what you thought you bought. In other words, this is fraud, and marketplaces fail if there's too much fraud.
Ad campaigns used to be sold by impressions, but any advertisers worth their salt doesn't buy like that anymore. Most are sold with a budget and a guarantee of a minimum amount of impressions, and then a goal cost per acquisition (sale, etc.) that the performance is actually measured against.
For one the "fake" impressions represent actual revenue brought into the ecosystem that's taken out by fakers aka fraudulent parties aka criminals. Banks don't want to be funding criminals.
This assumes that they can actually track advertising impressions to events they care about, many advertisers don't have this, either for technical reasons (i.e. just not implemented), or fundamental reasons (e.g. you sign up for a credit card offline).
It also assumes you have enough impressions from a single source to actually be able to make a statistically significant decision - if you only get 1000 impressions from a single site, not getting any conversions may not be out of the ordinary.
If you aren't tracking conversions then buying fraudulent impressions is your fault. Regardless of how your site/business works you should attribute some valuable actions to your ads and optimize against that.
That sounds great, except how is Coca-Cola meant to advertise? Or any car company? Or McDonalds? And why is crediting the last advertisement a user saw the right thing to do when it is usually a totality of advertising that causes people to buy things, rather than a single ad.
Good points! 40% of my clients are actually car dealerships and branding is easier is than is seems. Last-touch attribution isn't always the best, that is why for display ads you count post-impression conversions as well.
For car companies they track website sessions, chat/contact us forms/phone calls, and "vdps" (vehicle description pageviews, basically the product page for a car). There are services that claim to track back a car purchase to user's online habits/ads viewed but I've never had the chance to try it out.
For Coke/McDonalds you do brand lift studies which are expensive and difficult, but if you're doing branding advertising you can afford it. They basically test before and after how many people know your brand and how they feel about it. If your numbers are flat thats good, if they're up thats great.
Last touch credit isn't always the best, but its what everyone uses and makes sense most of the time as long as you track post-impression conversions for display and social and give them partial credit. (I'm a fan of time decay models, but since google analytics is last touch that what always gets used.)
> For car companies they track website sessions, chat/contact us forms/phone calls, and "vdps" (vehicle description pageviews, basically the product page for a car).
But here's the thing: all of these things are fake-able. chat sessions are probably the least gameable metric since you'd need to target that specifically, whereas all the others can be done in a completely non-ad specific way - just browse the site in a statistically normal way, but how many impressions do you need to tell that the chat metric isn't tracking the other ones and become suspicious? And do you just not advertise on longer tail sites where you can't get that volume?
[EDIT]: I mean, click throughs definitely get faked, and post-click behaviour too. I don't know what chat rates you expect, but if it's small enough you might have people manually doing those chat sessions. Not all of these bots/fraudsters are naive.
Yeah thats true.. but as far as I can tell that advanced fraud is at an acceptable level. That level might be 15% of traffic/conversions.. but its not severely hurting campaigns. This is a weird answer, but all the fraud/viewability/etc is priced in to some degree. So an advertiser who wants less fraud can just spend more to get high quality impressions.
The long tail is super important and you can't exclude it. How you can see those individual sites (by proxy) is through something like a supplier vendor, fold location, geo, etc.. so you can't see the site, but other factors you can bid will point to and show that fraud.
I think my point is that a skilled campaign manager can get rid of fraud, but the average marketing manager can't. That is a problem for most businesses, but also why agencies specialize in things like rtb.
If half of your traffic is fake, then you could have spent less and gotten the same amount of new business. This is the same as every other kind of advertising.
Sophisticated advertising campaigns involve looking at the actions of each source of traffic separately, because there will always be bogus sources.
It doesn't, until it does... When the whole scenery is fraught with fraud and dubious ROI, you pull the plug and see how well you do without any advertisement.
Because there may be another strategy that you are missing out on because you are incorrectly measuring this one.
If there are fake impressions then your actual ROI is higher than stated, so it's likely there is another strategy that is less effective that you may switch to without realizing it.
Why is it legal to buy any amount of traffic and specifically "view" ? Most of the time even if the traffic is "real" it actually originates from some developing country.
Edit: Here's the part I am referring to:
> Publishers often buy traffic at the end of the month or quarter to ‘make its numbers.’ Traffic sellers often promise the publisher that the traffic is human and will pass through all ad fraud detection filters.
So I am not questioning advertising but blatantly buying traffic.
Edit: In response to OP's edit. "Buying traffic" is literally just advertising. You spend x dollars and that drives y traffic. Its worded like that so it sounds bad.
As someone who's built a few sites that relied on "buying traffic" to increase user growth, we always called it "buying traffic" and I don't really think it sounds all that bad.
The problem is when you're paying per impression in advertising, as that's the easiest to game - the number of shitty impressions I've seen coming from small, not-well-known data centers has taught me that cost per impression is so prone to advertising fraud as to not be worth it.
Yeah, so blacklist that data center. You can't just spend money and assume everyone will give you a good deal. Optimize your campaign to buy good traffic.
The most egregious fraudulent traffic came from at least a dozen different no-name data centers, and it was actually easier for us to cut out the fraudsters selling us the traffic than to blacklist the traffic itself (even though it was several steps away from the original source the traffic was purchased from).
The traffic itself was actually rather easy to identify independently of its actual network source, because they were using Selenium locked to a specific, outdated version of Firefox that also happened to consistently throw some errors that our standard infrastructure monitoring caught and alerted us to.
I still think that cost per impression is a difficult traffic source to properly verify (especially if you end up with a traffic source that is botting from compromised PCs) and as such should be treated with skepticism. Cost per conversion/install/etc. generally seem to be slightly less gameable (excluding, of course, the farms spread around economically disadvantaged areas where workers have hundreds of actual devices on which they are installing apps to game the cost per install ad traffic)
Nine out of ten times paying for traffic means that your money ends in someone who spreads malware and controls a botnet of infected machines. The traffic is as real as it gets in this context considering that you get residential IPs from the majority of western countries but in the same time you legitimize the use of malware. In my view, none of these publishers have the right to complain, they got what they deserved.
By "legal" do you mean within the service agreement? It's probably not, but this isn't something that should be illegal. Ad networks should have realized on day one their business model was stupid and payout shouldn't be based on views and clicks.
So newspaper adds have been brought in that way for decades based on the readership and also on the quality of the paper the Washington Post or any other broadsheet can charge more because its read by ABC1's ie Middle and Upper class readers
I'm not clear on the parallel there. The article is about publishers buying "traffic" from traffic providers. They do that so the publisher can tell their advertisers "your ad was viewed X many times this month" even if 25% of X comes from bots or scripted traffic.
In the print world, it would be like WaPo selling its advertisers on 100K copies circulated to ABC1's, but actually handing a quarter of the papers out for free on Skid Row.
Publishers who buy traffic should absolutely know that the traffic is unqualified, unknown viewers... the least valuable. That means the publisher is selling ads based on their best qualified customers but delivering a fraction of dregs along with them. The publisher plays an arbitrage game with their reputation.
That practice can't help but make the advertisers discount the value of digital ads.
> In the print world, it would be like WaPo selling its advertisers on 100K copies circulated to ABC1's, but actually handing a quarter of the papers out for free on Skid Row.
Not inconceivable. This past Thanksgiving I got the local paper's black-Friday deals edition delivered for free to my doorstep. I am not nor have every been a customer of that particular paper.
For a while, Best Buy was handing out free Sports Illustrated subscriptions any costumer with a pulse who'd give them their address.
If the stats are true then the whole internet ecosystem is at risk. Just look at where the big internet services get their money. It is all advertising. If the ad impressions are bunk then eventually advertisers will pull their budgets due to declining sales or adjusting their ad budgets.
Also consumers are getting smarter by using ad blockers.
The only thing left is these schemes making the illusion that real people are watching.
Yeah I was also thinking (orthogonal to this specific post) that if you show people ads of things they were already going to buy, then you can attribute your impressions to the conversion. The business can become predicting what people will buy versus directly influencing what they buy. That isn't to say that there is no value to advertisers, but it might be oversold, especially for large brands.
Surely part of the reason that this is the case is that online ad impressions are a fraction of the price of traditional media.
You can "reach" thousands of people for less than $200 online, whereas conventional advertising is substantially more expensive.
This has to be one of the underappreciated reasons that traditional media has been savaged so badly by the internet - the price difference is stark, especially on a CPM level. But that price difference is also jacked up by massive fraud everwhere - for example Facebook has told advertisers they have access to more people in the US, than live in the US.
That's not to say that traditional media is clean in how they measure their audience, but at least with a traditional ad you can turn on the TV and watch it, or pick up a newspaper and read it, or drive past it. How many digital ads never get seen by a human?
Ages ago when I'd see something like this, I'd grab their affiliate code from the URL, then email the advertiser the site and offending affiliate code to them as an FYI.
No idea if anyone ever bothered to look, I just moved on.
Why can't we do ad payments based on location? I know it's not foolproof but that will at least not reward click farms or IOTs from third world countries.
My favorite part of this article is the block of bright red text advertising their tip line. Who has any interest in snitching for the benefit of advertisers?
That's a mind bogglingly big number, if true. I don't really find myself feeling sorry for advertisers, though.