Why your ecommerce advertising budget has probably been robbed

“Perhaps the most important problem we have in the advertising and marketing ecosystem is fraud in the digital advertising supply chain”

ANA President and CEO, Bob Liodice.

Bob’s right.

Online advertising is infested with an invisible disease.

And you probably had no idea..The disease is a cancer, almost impossible for us to detect. When some of us did finally find out what was wrong, we all just pushed on, pretending everything is just fine.

We stubbornly avoid the symptoms.

We are refusing to take our medication.

We just keep on living our marketing lives like we’ve always done before.

Dont_stick_your_head_in_the_sand.jpg

Short On Time? Your Skim-Read Summary: 

Too busy to read the whole thing? We get it: logistics, synergies, KPI's - all that stuff. Here's the skim read version. You really should read the whole article though...

You can click on the dot point that takes your fancy and head straight to the relevant section.

The problem with online advertising you probably never heard about

Online advertising is not just fine.

It’s broken.

If you're selling online, I'm almost 100% certain you are, or have at some point, spent money on ecommerce advertising.

It’s time you understood what is happening to your online ad dollars.

You should be shocked. We were.

You should be asking yourself why marketing managers around the globe aren’t all marching into their advertising agency right now to demand answers.

You should also revise your online advertising strategy before spending another cent.

Otherwise, prepare to be robbed.

What’s wrong with online advertising?

More than one issue is plaguing online advertising.

The first issue is a simple one - most of your customers hate it.

Online ads are generally interruptive, annoying and unwanted.

Some statistics suggest you’re more likely to climb Everest than deliberately click on a banner ad (regardless of the conjecture on these stats, you get the point).

The ‘skip now’ button has become an internet user’s version of a hospital patient’s red morphine buzzer.

We all just want to stop the pain.

we_just_want_advertisers_to_make_it_stop.gif

Global ad-blocking rates increased by 41% in 2015. Global ad-ignoring rates must surely also be at an all-time high.The_global_growth_in_adblockling.jpg The 2015 Ad Blocking Report from Page Fair and Adobe forecasts the trend to continue:

“Global data predicts that in 2015 as much as $21.8bn will be lost in online ad revenue due to ad blockers – and this is expected to increase to $41.4bn in 2016.”

Somehow in all of this, we’ve forgotten that we spend money on advertising to help us gain and retain more customers.

If those would-be customers are paying someone to stop our advertising, we might just be doing it wrong.

In the chase for ‘more eyeballs’, we’ve turned almost every publication on the internet into a virtual Time Square, with brands scavenging over every pixel for a chance to shout at people to buy their stuff.

ovewhelming_adverting_is_killing_online_experience.jpg

While we’ve been fixated with pageviews, click-throughs and impressions, we’ve turned online advertising into a loveless game of scale and efficiency.

Because online ads are cheap, and we often only have to pay for the clicks we generate - creative is almost an afterthought.

Where print, television and radio campaigns took months of love and care to develop, online ads are just a numbers game - a bunch of ‘spend’ sent to a faceless agency to ‘hit a target impressions KPI’.

There's a few key trends responsible for creating the perfect environment for the onlin ad industry's disease:

  • Audiences became a commodity
  • Ad slots are getting cheaper
  • The advent of programmatic models are squeezing the margins of the agency middle men
  • Online publishers are finding it harder and harder to succeed with a traditional ad-based business model

The acerbic (and often unnervingly astute) bastions of irony, The Onion, managed to spell out the ugly truth of the online advertising industry in just two satirical paragraphs.

This is a simplified view of how online publishers really feel about digital advertising;

“Don't get me wrong, we want tons of people to go to our website and click on our news stories, for sure.

But the only reason we want this to happen is so that their eyes might, by chance, wander over, like little lost children, to a nearby ad.

You think the New York Times is any different? Don't kid yourself.

What you are taking part in here is not a free exchange of information provided by The Onion as some sort of noble act of public service. Lord, no.

What you are taking part in here is, essentially, a scam.

A scam in which we trick you into visiting our website and looking at ads so that some large, omnipotent corporation will give us a big stack of cash.”

Some cynics would contend The Onion have hit on a truth deeper beneath the humour.

None of us are comfortable admitting it, but The Onion is bang on. This article explains everything wrong with online advertising.

But it’s not just publishers to blame. We brands are more focused on engagement metrics than genuine business results. We’re happy to farm out our ad management to the lowest bidder.

As long as we hit the right numbers, no questions are asked.

Don't believe me? 

How a completely blank video exposed the fraud of online advertising

Rumblings about digital advertising's lack of effectiveness were developing for some years, but the reverberations really started making a noise midway through 2015. 

Let's dial this story back to August of that year, and shoot over to Minnesota, U.S.A.

Minneapolis agency Solve, weren't specifically fighting acrusade against online ads.

Instead, they were fed up with the misleading nature of ‘vanity metrics’.

Solve CEO John Colasanti told Adweek:

"Among many marketers and agency peers, 'views' have become the holy grail. Views offer a seemingly simple and easy way to measure the power of content. This is a false indicator of success... Often the video didn't truly go viral; the view metric was purchased."

The agency set out to prove that when it comes to measuring ROI - ‘engagement’ metrics are, at best, flimsy indicators of success.

To prove the stupidity of relying on engagement metrics - Solve set themselves a challenge.

How could they make the world’s most boring video ‘go viral’?

Specifically, what is the lowest possible investment needed to manufacture 100,000 YouTube views for a blank video (a completely white screen with no audio)? 

Turns out it’s a measly $1,400 worth of YouTube advertising.

What can a blank screen with 100,000 views tell you about online advertising?

Likes, shares, retweets, and, in this case – views, are dangerous metrics.

They don't tell you anything in isolation.

Solve's blank video project proved their hypothesis.

Engagement does not equal genuine business results.

But isn't there a more serious question at play here?

Exactly how does $1400 worth of YouTube advertising generate 100,000 views?

The nature of YouTube’s business model means that online advertisers can pay to increase the reach of a video.

However, you are only charged by the Google subsidiary when users watch (or leave your ad running/ not ‘engaging’) for 30 seconds or more. If they skip before the 1/2 minute mark, you keep your ad dollars in your pocket.

It’s safe to assume that your target audience member hasn’t ‘engaged’ with your content, and your ad hasn’t really ‘moved the needle’ (excuse the advertising guff, but, when in Rome).

YouTube calculates a view when a video plays for 'around 30 seconds' without being skipped. But Solve's clip garnered over 100,000 of them.

So do 'views' really matter?

Shouldn't we be more focused on some sort of conversion goal to see if our advertising has made a genuine impact?

Even in YouTube's own PPC promo video (slick and beautiful as it may be), the focus is on skyrocketing views.

But as Solve has recently proved, more views doesn't mean more eyeballs, or more engagement - no matter how targeted your online advertising may be.

BUT HOW DID A BLANK VIDEO GENERATE 100,000 VIEWS?!?!?

online_advertising_disbelief.gif

Sorry for the all caps.

This all gets me a little worked up.

In this case, Solve’s video had an astonishing 104,797 getting past the 30 second mark.

What were over 100,000 people doing watching absolutely nothing?

One can only assume these users had a separate browser tab open, took the chance to fix a fresh cup of coffee, or simply have a very dull taste in entertainment…

online_ad_skepticism.gif

100,000 people aren't watching a blank video

There is something more sinister at play.

You know that invisible disease I mentioned?

The one systematically infecting online advertising. 

Terrible, audience-infuriating content isn't the deadly killer I'm talking about. But when all we marketers care about is views, and not quality - there's an opportunity for the money hungry to infiltrate and game the system.

Our fascination with engagement metrics has created the perfect habitat for our online advertising parasite.

This invisible villain now has a purpose-built incubator to latch onto its host, multiply and thrive.

Your online ads aren't just being served to humans

the_disease_plaguing_online_advertising.jpg

Robots are hacking online ads to swindle cash from your spend

The sinister cancer gnawing away at our industry is online advertising’s version of a computer virus.

How does this robot thievery happen?

Third party ‘audience brokers’ are offering publishers guaranteed impressions (ad views) in return for a nominal fee.

Most publishers willingly oblige - more ad views equals more revenue.

Problem is, a large bunch of these third parties rely on malware used to hack real human IP addresses.

Robots, acting in the guise of a web browser, are able to fraudulently load ads and generate more views and impressions.

‘Impressions’ are calculated not on human eyeball views, but on the amount of times an ad is loaded onto another machine (computer, mobile, tablet). Robot ad views still count under this measurement.

So your online ad campaign meets its engagement metrics target. The publisher happily reports these figures to the media agency. The media agency happily reports these figures to the brand manager happily reports these figures to their boss.

Ad targets met. Everyone's happy. 

The result?

  • the audience farm gets paid
  • the publisher gets paid
  • the ad agency gets paid
  • the brand unsuspectingly spends a bunch of their advertising cash on non-humans

In 2014, as much as one third of all online advertising traffic was generated by these robots according to this report from the Wall St Journal.

We brands paid for all this fraudulent traffic, blissfully unaware 33% of our money could have been unknowingly spent on serving our ad to robots.

‘Bot Fraud’ is here, and it’s rampant.

If online advertising is a part of your annual marketing budget, there’s a good chance you’re a victim of this robbery.

So what exactly is bot fraud and how does it happen?

This fantastic two minute video primer from Bloomberg Business simply explains the great online advertising heist rocking the industry to the core.

Because publishers are desperate for more revenue - they will pay for more traffic to increase their online advertising returns. 

If a third party comes along offering cheap views - the publisher is willing to take advantage.

This third party may generate a large proportion of the promised traffic using bots to inflate the number of ads served on the publisher's website.

The publisher doens't ask questions. They make more money.

The media agency doesn't ask questions. They hit their targets.

The brand doesn't ask questions. They simply can't believe something like this could happen. And they are only measuring views, clicks or likes - so it's hard to assess the quality of their ad impressions.

Numbers don't tell stories.

Impressions don't count eyeballs.

Robots don't feel guilty about stealing.

Guiltless_online_advertising_bot_fraud.jpg

This great online advertising heist is going on right under your nose

Industry insiders knew bot fraud was a problem. But these bots are almost impossible to detect.

That’s the whole point.

The cloak and dagger operation meant nobody really understood the scale of the problem.

Were brands losing a couple of percent of their spend to these bots?

Or was the problem more widespread than first thought?

A couple of research bodies started attacking this issue in the early 2010’s, but it was one groundbreaking report titled “The Bot Baseline: Fraud in Digital Advertising”, compiled in late 2014, that genuinely rocked the online advertising industry.

Malware detection agency White Ops Inc produced the report, in collaboration with the Association of National Advertisers.

You can download it here.

Online_ad_Bot_Fraud_Baseline_Report.jpg

(Some may question the objectivity of an agency like White Ops, with a vested interest in amplifying fraud issues, but the ANA balance the ledger, representing 10,000 members. Most of these members make their money from online advertising.)

The report is the most detailed of its kind to-date.

Researchers analysed the results of online advertising campaigns from 36 ANA members across 3 million sites, including a large percentage of premium publishers. The research included a diverse range of brands, across nine vertical categories, with total ad budgets ranging from $10 million to more than $1 billion.

Online ad bot fraud rates are worse than anyone expected

The ANA report’s finding were genuinely staggering.

Mike Riley, one of the author's of Bloomberg's expose titled; "How much of your audience is fake?" summarised the report and the dire state of the online advertising industry in this interview for Bloomberg Markets:

Here's a quick snapshot of the more alarming takeaways from the ANA's groundbreaking report.

  • Fraudulent traffic is not just generated from fake websites - most bots visit websites run by real companies with real human visitors
  • Secure, premium publishers are being infiltrated almost as much as second rate sites
  • Bots misrepresented the publisher’s audiences by anywhere from 5% to 50%
  • Most bots mimic humans by hacking their ISP and generating ad impressions
  • Of the 3 million sites, just thousands were completely built for bots, the rest were made up by a combination of impressions from humans and non-humans
  • The report conservatively estimates global advertisers will lose around $6.3 billion to bots in 2015
  • Of all traffic, the weighted average of fraud is 11% of display, 17% of programmatic, and 23% of video traffic

Bloomberg highlighted one specific case study within the research with startling results.

"One ad tracked in the study was a video spot for Chrysler that ran last year on Saveur.tv, a site based on the food and travel lifestyle magazine. Only 2 percent of the ad views registered as human, according to a person who was briefed on data provided to the study’s participants.”

Remember our friend Bob Liodice?

The gentleman with the quote at the beginning of this article.

Bob is the ANA Pesident and CEO - the guys who compiled this report.

He represents more than 680 companies with 10,000 brands that collectively spend over $250 billion in marketing and advertising.

Remember what he said about digital ad fraud?

I'll refresh your memory.

“Perhaps the most important problem we have in the advertising and marketing ecosystem is fraud in the digital advertising supply chain”

When Bob talks, people listen.

Finally, some alarm bells started to ring within the industry.

If you spend as much as one dollar on online advertising, you need to take the issue of bot fraud seriously.

take_online_ad_bot_fraud_seriously.jpg

What you need to do fix the online advertising problem

We don't just need to eradicate bot fraud.

The decline in effectiveness of online advertising, and the rapid increase in ad-blocking software use means we need to concentrate on creating advertising our audience actually wants to consume.

Either that or we need to find another way.

So if the whole online advertising system is broken - what should your brand do about it?

That's a huge question.

A really important question.

We could write 50 pages about it.

In fact - we did write 50 pages about it.

G8_Online_Advertising_Problems.jpgDownload Your Online Advertising Bot Fraud Report

 

If you want to know why online advertising is broken, and what your brand can do to fix it, you need to read our Online Advertising Bot Fraud Report.

The bots are just part of the problem.

Fixing ad-fraud is not the answer.

We can’t settle for the old status quo.

This report examines the reasons we all found ourself in this mess to determine exactly what the marketing industry needs to do:

  • In the short term - to avoid bot fraud
  • In the long term - to maximise the effectiveness of your budget

It's a detailed, thorough report, with a number of clear outcomes suggested to allow your brand to fix your online advertising problem.

You really should read it, and pass it on to your team.

At the very least - you need to make sure any future online advertising spend is measured on eyeball, not impressions...

 

Download Your Online Advertising Problems Report Now
Author

James Dillon

James tells stories for a living. Sometimes they are true. Always they are crafted to help brands delight, educate and funny-bone-tickle their audiences into coming back for more. He’s super passionate (read: obsessive) about ecommerce content marketing. James is dedicated to teaching ecommerce brands how to create their own repeat-customer-generating media empire. Keep an eye out for his online ramblings - you can expect a generous helping of lightbulb moments and cheeky guffaws.
LinkedIn