- Created: Wednesday, 29 July 2015 18:38
"This is the biggest advertising story of the decade, and it's being buried." Without mentioning any names or companies, we have discovered how is something that is being practiced quite openly and nobody is talking about it. It is the reason we will be creating a BHIVE Websites which guarantees organic traffic with a powerful SEO backend and responsive format. It is time we bring it out in the open and free up some budgets for good wholesome organic traffic with social media and BHIVE Websites. As per the fraudulent "Online Ads" world, keep reading below. Warning though, you may not ever buy another ad again. Contact us if you suspect that you have been a victim, we can help. - Rod Ponce, Chief Innovation Officer BHIVE Labs
So wrote Ad Contrarian Bob Hoffman, the retired CEO and chairman of Hoffman/Lewis Advertising, in June 2013 on a $7.5 billion scandal that has been developing under the digital radar in the advertising world for the past few years. The three main allegations, according to those who are making them:
These charges have not seen much discussion within the online marketing community. But the allegations have the potential to affect everyone involved in online advertising—ad agencies, in-house departments, agency and in-house digital marketers, online publishers, media buyers, and ad networks. An entire industry—billions of dollars and thousands of jobs—is at stake.
And it all starts with a single impression.
Online advertising is based on an "impression"—without the impression, then an advertisement cannot be viewed or clicked or provoke any other engagement. The Internet Advertising Bureau, which was founded in 1996 and "recommends standards and practices and fields critical research on interactive advertising," defines "impression" in this manner:
a measurement of responses from an ad delivery system to an ad request from the user's browser
In another words, an "impression" occurs whenever one machine (an ad network) answers a request from another machine (a browser). (For reference, you can see my definition and example of a "request" in a prior Moz essay on log analytics and technical SEO.) Just in case it's not obvious: Human beings and human eyeballs have nothing to do with it. If your advertising data states than a display ad campaign had 500,000 impressions, then that means that the ad network served a browser 500,000 times—and nothing more. Digital marketers may tell their bosses and clients that "impression" is jargon for one person seeing an advertisement one time, but that statement is not accurate.
Just because a server answers a browser request for an advertisement does not mean that the person using the browser will see it. According to Reid Tatoris at MediaPost, there are three things that get in the way:
Tatoris crunches all the numbers:
We start with the notion that only 15% of impressions ever have the possibility to be seen by a real person. Then, factor in that 54% of ads are not viewable (and we already discussed how flawed that metric is), and you're left with only 8% of impressions that have the opportunity to be seen by a real person. Let me clarify: That does not mean that 8% of impressions are seen. That means only 8% have the chance to be seen. That's an unbelievable amount of waste in an industry where metrics are a major selling point.
Essentially: If you have an online display ad budget of $100,000, then only $8,000 of that ad spend has the chance to put advertisements in front of human eyeballs. (And that's not even taking into account the poor clickthrough rates of display ads when people do see them.)
If you are paying $0.10 per impression, then the $10,000 that you will pay for 100,000 impressions will result in only 8,000 human views—meaning that the effective CPI will actually be $1.25.
Jack Marshall, an alleged reformed fake web traffic buyer, explains in a Digiday interview how the scheme allegedly operates. Here are just three excerpts:
How and why were you buying non-human traffic?
We were spending anywhere from $10,000 to $35,000 a day on traffic. My conversations with [these ad networks] were similar: They would let me decide how much I was willing to pay for traffic, and when I told them $0.002 or below, they made it clear they had little control over the quality of traffic they would send at that price. Quality didn't really matter to us, though. As a website running an arbitrage model, all that mattered was profit, and for every $0.002 visit we were buying, we were making between $0.0025 and $0.004 selling display ads through networks and exchanges. The biggest determinate of which traffic partner we were spending the most money with was pageviews per visit. Since we were paying a fixed cost per visit, more pageviews equaled more ad impressions. Almost none of these companies were based in the U.S. While our contacts were in the US and had American names and accents, most of the time we found ourselves sending payment to a non-US bank.
In other words, the publisher would allegedly pay an ad network $0.0020 for a visit from a bot, and the resulting ad impression would garner $0.0025 to $0.0040 in revenue—that's a gross margin of 25% to 100% for the publisher for doing nothing! It's no wonder that so many websites around the world may be allegedly involved in this practice.
Do you think publishers know when they're buying fake traffic?
Publishers know. They might say "we had no idea" and blame it on their traffic acquisition vendor, but that's bullshit, and they know it. If you're buying visits for less than a penny, there's no way you don't understand what's going on. Any publisher that's smart enough understand an arbitrage opportunity is smart enough to understand that if it was a legitimate strategy that the opportunity would eventually disappear as more buyers crowded in. What we were doing was 100 percent intentional. Some articles revolving around bot traffic paint publishers as rubes who were duped into buying bad traffic by shady bot owners. Rather, I believe publishers are willing to do anything to make their economics work.
Do networks, exchanges and other ad tech companies do anything to stop this from happening?
We worked with a major supply-side platform partner that was just wink wink, nudge nudge about it. They asked us to explain why almost all of our traffic came from one operating system and the majority had all the same user-agent string. There was nothing I could really say to answer that question. It was their way of letting us know that they understood what was going on. It wasn't just our account rep, either. It was people at the highest levels in the company. Part of me wished they'd said "You are in violation of our TOS and you have to stop running our tags." I would have been happy with that. But they didn't; they were willing to take the money.
If these stories are true, then ad networks do not care that the impressions are from bot traffic and publishers do not care that are getting bot traffic because they are both making money. Who gets hurt? The companies advertising their products and services.
It's not only that online display ads are alleged to be amazingly useless and that many publishers and ad networks are allegedly involved in sleazy deals. A March 2015 investigative report in Ad Age found the following:
Kickback payments tied to U.S. media-agency deals are real and on the rise, according to Ad Age interviews with more than a dozen current and former media-agency executives, marketers' auditors, media sellers and ad-tech vendors who said they'd either participated in such arrangements or had seen evidence of them. The murky practice—sometimes disguised as (undisclosed) "rebates" or bills for bogus services—is being motivated by shrinking agency fees and fueled by an increasingly convoluted and global digital marketplace. "It's really ugly and crooked," said one ad-tech executive who described receiving such requests.
Some arrangements go like this: A large media shop, poised to spend $1 million with that ad-tech executive's firm to buy digital ads last year, asked for $200,000 to be routed back to the agency's corporate sibling in Europe. The $200,000 would pay for a presentation or presentations by the sibling's consultants. But these types of presentations aren't worth a fraction of the price tag, according to numerous executives dealing with the same issue, who spoke on condition of anonymity for fear of losing business.
Essentially, here is what is allegedly happening:
I think we can see who the loser is—everyone is making money except for the clients.
During the same month as the Ad Age report, former Mediacom CEO Jon Mandel reportedly told the Association of National Advertisers Media Leadership Conference that widespread "media agency rebates and kickbacks" were the reason that he left the agency business.
I have yet to hear about this issue being addressed in any talk, panel, or session at a digital marketing, martech, or adtech conference. Prior to today, I have seen only one article each in two major publications in the online marketing industry. (Mozzers, please correct me if I am mistaken and have missed something major on this topic.)
Why is no one talking about this?
No marketing agency wants clients to know that 92% of its display advertising spend is wasted. No advertising manager wants the CMO to know that only 8% of the company's ads are reaching people at 100% cost. No CMO wants the CEO to know that 92% of the entire ad budget is being flushed down the digital toilet.
I myself would probably have not been permitted to write this article when I held various agency positions in the past because I managed clients' online advertising and some PR and digital marketing clients of the agencies were advertising networks themselves.
(Today, I am the director of marcom for Logz.io, a log analytics startup, and I have the luxury of being accountable only for the results of my in-house work—and I do not plan to use online advertising anytime soon. Still, I was a journalist in my first career years ago, and I wanted to write this report because I think everyone in my beloved industry should know about this explosive issue.)
Hoffman, the retired ad agency CEO who I quoted at the beginning, puts it better than I can:
How does an agency answer a client who asks, "You mean more than half the money you were supposed to be custodian of was embezzled from me and you knew nothing about it?" How does an ad network answer, "You mean all those clicks and eyeballs you promised me never existed, and you knew nothing about it?" How does a CMO answer his management when they ask, "You mean these people screwed us out of hundreds of thousands (millions?) of dollars in banner ads and you had no idea what you were buying?"
Everyone is in jeopardy and everyone is in "protect" mode. Everyone wants to maintain deniability. Nobody wants to know too much. If display advertising were to suffer the disgrace it deserves, imagine the fallout. Imagine the damage to Facebook, which at last report gets over 80% of its revenue from display. Imagine the damage to online publishers whose bogus, inflated numbers probably constitute their margin of profit.
If the comScore findings are correct and projectable, it means that of the 14 billion dollars spent on display advertising last year in America, 7.5 billion was worthless and constituted some degree of fraud or misrepresentation.
But clients, CMOs, and CEOs are going to read one of these articles one day and start asking uncomfortable questions. I would suggest that Mozzers—as well as all digital marketers and advertisers—start thinking about responses now.
Google, to its credit, has disclosed that 56% of its digital ad impressions are never actually seen—of course, the report was also released with the announcement of a new ad-viewability product.
Ginny Marvin summarizes at Marketing Land:
Google's viewability measurement tool, Active View, is integrated into both the Google Display Network and DoubleClick. Advertisers can monitor viewability rates and buy ads on a viewable impression basis rather than by served impressions.
Google also announced an update to DoubleClick Verification last week, which includes viewability monitoring, ad blocking, a content ratings system and spam filtering capabilities.
The goals of the Media Rating Council (MRC), an industry organization founded in the United States in the 1960s following congressional hearings into the media industry, are:
The MRC has certified "viewable impressions" as a legitimate metric (as opposed to "served impressions"). The Interactive Advertising Bureau (IAB), mentioned earlier, issued guidelines in December that online advertising networks should aim for at least 70% viewability.
Facebook, for its part, announced in February 2015:
We are working with the MRC and a consortium of advertisers and agencies to develop more robust standards for viewable impressions. Our goal is to work with the MRC, our partners, and industry leaders around the world to help apply further standards for feed-based websites like Facebook, mobile media and new ad formats.
The American Association of Advertising Agencies, Association of National Advertisers, and IAB announced last year that they would create a new organization, the Trustworthy Accountability Group, to fight problems in the online advertising market and do the following:
TAG now consists of representatives from Mondelez International, JCPenney, Omnicom, Motorola, Google, Facebook, AOL, and Brightroll.
Canada's latest anti-spam legislation aims to fight Internet malware and bots—but a big stumbling block is that most of the problem comes from outside the country.
Will these corporate and organizational responses be enough? For the following reasons and more, it's impossible to know:
I have no answer—only time, I suppose, will tell.
But others are coming up with their own answers—those large corporations that are spending billions of dollars a year on online display advertising. As Lara O'Reilly wrote in May 2015 at Business Insider, $25 billion in ad spend is now under review in what Adweek is calling "Mediapalooza 2015." O'Reilly gives one possible reason:
Media reviews let brands reassess their ad spending, often by offering those contracts out in a competitive bidding process. The companies include General Mills, Procter & Gamble, Volkswagen, Visa, Sony, Coca-Cola, Citi, 21st Century Fox ... the list goes on. Some of these — P&G, Sony, and 21st Century Fox — spend more than $1 billion on advertising each year...
It could be that marketers are finally getting fed up with the apparent lack of transparency about where their budgets are actually being spent and why.
(Image of an Indian online-marketing team I used with rights in a prior Moz essay
on the future of marketing departments)
Regardless of what the future will hold, here are my recommendations on how digital advertisers can respond:
Hire a companies like BHIVE Labs that can generate true organic traffic via social media networks (BColonies)
Beyond the current responses of the ad industry and my present recommendations for marketers, I do not know what will happen. My goal here is simply to explain to digital marketers what has allegedly been occurring. What the future will hold—well, that's up to we marketers and advertisers.
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