February 27, 2014

The Epic Screwing Of Online Advertisers

Banner advertising continues to grow at a blistering rate. Apparently, the only thing growing faster is the screwing of the people who buy it.

In the past we have documented the alarming fraud that is happening daily in online advertising. But an article in MediaPost's Marketing Daily last week makes everything else seem like small potatoes. To be fair, the following are someone else's numbers, and I can't vouch for his numbers or his math.

The article claims that only 8% of online ad "impressions" have a chance of being seen. If this is true, it is beyond belief.

The story starts with what the online ad industry calls an "impression." It has nothing at all to do with what any rational human being would call an impression.

We think of an impression as one ad seen by one person. In the impossibly sneaky and perfidious world of online advertising an "impression" has nothing to do with either ads or people.

Instead, it has a definition that is so supremely full of shit that you have to be brain dead not to realize that it was created to confuse and deceive.

Here is the Interactive Advertising Bureau's (IAB) definition of an "impression":
“‘Impression’ is a measurement of responses from a Web server to a page request from the user browser.”
How's that for bullshit? In other words, a browser sends a message to a server to send it something, and that's called an impression.

There are three major things wrong with this absurd farce.

First, about 15% of the time, a technical error occurs. According to the article:
Most ad networks will report, and try and manage, these numbers but it happens about 15% of the time.
This is not intentional or crooked, but 15% is a very large margin of error.

Second, and more damaging, is non-human traffic. According to the article...
...bots count as site views, falsely driving up the impression count of your ad... Multiple studies show that up to 60% of all traffic on the web is bots (their words, but my link - TAC)
Finally, there's out-and-out fraud.
There is lots of money to be made in purposefully creating fraudulent impressions to steal ad dollars... Wenda Millard, president of MediaLink, claims that 25% of the entire online ad market is fraudulent.
According to the author, the cumulative effect of these three obstructions is...
...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 (again my link - TAC)... 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.
As I have written before, the amount of fraud in online advertising is staggering. The metrics are bullshit. The data is fraudulent. If this guy is even close to being correct, the screwing that advertisers are getting from agencies and publishers is truly thrilling to behold.

If you want to prove to yourself the absolute cluelessness of the people pissing away your money buying online advertising impressions, here's a fun little experiment. Call your  CMO or your media buyer and ask him what an online "impression" means.

Ten bucks says he doesn't even know what the hell he's buying.


Samuel Scott said...

Bob, you're correct that a lot of impression-based advertising is BS. But one thing that helps is that the digital ad industry is moving in many areas towards "performance advertising."

Essentially, advertisers do not pay per impression (CPM) or per click (CPC -- which can also bring fraudulent clicks) but rather per action (CPA). In a B2C example, I may pay the network $2 for every purchase that comes from the ad rather than $0.01 for every impression or $0.30 for every click. In my experience, it's more accountable, real, and usually more cost-effective.

Jim said...

Problem is that many digital people have argued that the idea of banner ads etc is that they are brand awareness ads. This is their come back to the fact that they rarely get clicked and when they do their is a chance it may be by a bot. But what they do is help with brand awareness.

In CPA does it rely on the advertiser having to report a purchase? Is it practical?

I am sure many digital advertisers would be happy with this, though I fear that the companies that sell the advertising may end up without much revenues.

It similar to the suggestion of payment by results by clients and agencies. If sales go up you can have a % of the change in revenue / profits. This is fraught with issues.

theadrianflores said...

So if only 8% of ads are seen, then those 1% click through rates aren't quite as bad as we thought? silver lining and all that?

Charlotte said...

Isn't it 1% of that 8%?

theadrianflores said...

no, a theoretical 1% CTR would be 12.5% CTR if you only consider 8% of impressions to be valid.

bob hoffman said...

Adrian, Please re-read. "Let me clarify: that does not mean that 8% of impressions are seen. That means only 8% have the chance to be seen."

Sonny said...

The network TV cost-per-thousand criteria used to evaluate programs are the same kind of impressions - based on people "watching" not necessarily seeing the commercial.

Tedel said...

Well as it seems, ads are best if purchased by time (days, weeks, etc.) or paying a commission for a full conversion (lead, email subscription, purchase, etc.). Still, it is known that commissions can be stolen (with something called cookie high-jacking), so I would opt for time-based advertising.

It is a pity to learn there is fraud online and that it is THAT massive. It deludes the confidence in all the industry. I just can hope "the big fish" of online advertising would change their sneaky methods to make money. Being honest pays more in the long run.