This is an unfortunate reality in the digital advertising industry today. This is a topic that doesn't receive that much attention since it places both Google and Facebook at the center of the spotlight. This is something that we as a company have stopped recommending to our clients. Below we have listed a series of issues that lie within this pandemic fraud that so inherently exists within our digital community.
1. Immediate gratification. Buy an ad, expect traffic.
At the core of it, is the idea of immediate results which some clients make an investment into marketing themselves in the digital world. Any marketing consultant that misleads clients to think that ads will render immediate results should accept some of the shadow cast by this $16 billion problem. They should educate their clients better. This is the fundamental flaw that exists in the online marketing community: Social media platforms like Facebook want to behave like Google. The only reason ads may function better on Google is simple: you are searching for something and when you are searching for something, you are more prone to consume an ad. As opposed to Facebook where the ad is much more disruptive. Unfortunately, for Facebook and other social media platforms alike, their revenue model depends heavily on advertising revenue and as clients see their competitors buying ads, they want to do the same. Sort of the 'monkey see monkey do'. This should be corrected at a marketing strategy/media buying level since these social media platforms have to respond to their shareholders and won't be changing their product offering anytime soon. Here is a video clip we prepared that that explains this in more detail.
2. Social media is an administrative cost of doing business
For the most part, we have been advocating that social media is an administrative cost of doing business. It is a cost that should be amortized over time and not a marketing expense. In a nutshell, social media platforms are gated online communities, and your page is your new phone number within this gated community. If you use a phone, then what would be the return on investment on your phone? Here is a link that explains this further.
3. Monopolized access to Followers on Facebook
Staying with the example of social media platforms like Facebook as gated communities, access to your own audience has been monopolized. Facebook, for instance, owns the list of people who like your company page. Once someone likes your page, you will no longer be able to see them or message them directly. Instead, you will have the opportunity to boost your post as a way to reach them. How organic is that? Seeing a boosted message. The like on a Facebook page technically translates as the new "I consent to receive boosted messages from this brand" and not necessarily I am genuinely interested in following this brand since the chances of a follower seeing a posted message within their timeline is unlikely. Last we checked less than 1% of the followers (likes) of a Facebook page will see a post. Here is a link that explains this further.
4. Rise of Influencer Marketing
We see a different future for social media platforms and how clients can benefit from them. We see them as gated communities and the rise of influencer marketing supports this model. We have created products that position our clients as influencers within their targeted segments. The world of digital marketing ads, or how smart programmatic ads and/or native ads, is at the core of the problem. Since the client does not know who is ultimately clicking on their ads. Anyone can do the clicking and nobody accepts responsibility for this gross misuse of money and trust. It is not like it is a controlled post and only those with a link can see. This is how these platforms can ultimately claim that they are not at fault, but as the saying goes, bots (who click your well-designed graphic or written link) do not buy, but the brand is on the hook for the cost of the click/impression. Bots cost clients $16 billion dollars this year alone. This is double last year. MIT/McKinsey alumni Dr. Augustine Fou explains this in more detail in his presentation. We really encourage clients and fellow digital marketers alike to reconsider buying these digital ads and invest their (client) dollars differently. We suggest them to invest in programs (such as our own) that expedite the old organic growth model. We position our clients in a place where they may auto-discovered by their next client. This auto discovery is invaluable when it comes down to the brand position. The idea of immediate results is a thing of the past. Consumers are more tech-savvy and the rise of ad blockers is not making digital marketing any easier in the future. Check our last journal entry for more information, but nevertheless, we support the idea of positioning our clients as an influencer, not the other way around.
5. Clients/Agencies can't be bothered with the work of generating real interest to their brands
We have found many brands who have excellent content and amazing moderators. We absolutely love to see this. We have a strategic model we use. We call it the ACM model: Audience, Content, and Moderation. 3 distinct responsibilities should be present in any digital marketing campaign. Building an audience is what is under the spotlight. Unfortunately, digital ads are an obvious waste. If ads continue to be purchased, it is almost criminal negligence now as reports of fraud trickle in. Agencies should evaluate their complicit positions when evaluating media purchases in this space as there may be future repercussions and/or consequences. We do provide an alternative model to generate good old-fashioned interest into our clients' brands and advise agencies to contain this issue as they may already be exposed. Content and moderation is a pass or fail. Either you are good at it or not, but growing a presence is what is a challenge for brands. We can help with all 3 three Audience, Content, and Moderation.
- Rod Ponce, CIO BHIVE
The amount of global advertising revenue wasted on fraudulent traffic, or clicks automatically generated by bots, could reach $16.4 billion in 2017, according to a new study commissioned by WPP and cited by Business Insider.
That figure is more than double the $7.2 billion the Association of National Advertisers estimated would be lost due to ad fraud in 2016.
The data highlights the need for the marketers to more closely vet the quality of the publisher traffic when planning a campaign. While various advertising entities set guidelines and standards for publishers and marketers, this is clearly not decelerating ad fraud, and curbing fraud will likely require a collaborative, industry-wide effort.
Ad fraud remains a top concern regarding digital media planning among brand marketers and media agency executives. According to a recent survey conduct by MyersBizNet, 78% of brand marketers are concerned with ad fraud and bot traffic. Consolidation in the ad tech space can also help reduce ad fraud and bot traffic by reducing third-party participants that can help mask inhuman traffic.
Advertisers could dedicate fewer ad dollars to programmatic. According to Integral Ad Science, nearly 9% of digital ads delivered via programmatic channels are fraudulent, compared with only 2% of ads delivered through direct deals with publishers. The numerous intermediaries involved in programmatic open auctions create complexity and limits effective detection of bot traffic and ad fraud.
Ad tech companies could use blockchain technology to address ad fraud. Data stored in a blockchain is public, cannot be changed once stored, and is unduplicated. For ad tech, this means that ad impressions can be tracked along the supply chain, and record where an ad is delivered and to whom. The technology could help in identifying fraudulent traffic, and also adds another layer of transparency to the programmatic ad-buying process.
If not effectively addressed, the potential lost revenue due to fraud could be immense. Over the next 10 years, the global cost of ad fraud is projected to rise to $50 billion, according to the World Federation of Advertisers.
There's no question that consumers are increasing the amount of time they spend consuming digital media, while advertisers are increasing their ad budgets into digital channels. What may come as a surprise, however, is the complexity of the interconnected web of companies involved in the process of delivering digital advertisements to end users. Collectively, these companies are known as “advertising technology,” or “ad tech” for short.
Ad tech companies are intermediaries between advertisers and publishers and add value to the ad delivery process by consolidating inventory, automating workflows, and offering precise targeting capabilities at scale. The automation of ad buying is also known as “programmatic advertising” — that is, using technology and software to buy digital ads. Programmatic ad spend in the US is quickly ramping up: It will top $20 billion this year and reach $38.5 billion by year-end 2020.
But ad tech's ascendancy isn’t without its drawbacks. The advertising industry in the US is dominated by two main players: Facebook and Google. As a result, ad tech players are fighting for a pretty small piece of the revenue pie, one of the many drivers of increased consolidation in the space.