December 08, 2014

What Every CEO Needs To Know About Online Advertising

Dear Mr. CEO,

I am writing to you as a friend.

I was once a ceo myself. In fact, I was ceo of two different advertising agencies.

Consequently, I understand how difficult it is for you to know everything that is going on in your organization. But there is something you need to know.

If your company is spending money on online advertising, you are almost certainly being robbed.

Here are some facts:
  • Google reported last week that 56% of online display ads that are paid for by advertisers are never seen by a live human being. (And remember, Google is one of the world's largest sellers of online display ads.)
  • Recently The New York Times ran a story claiming that 57% of online video ads are never seen.
  • CNET reported on a study by research firm Incapsula that found only 38% of traffic on the web is human.
  • A few weeks ago Kraft announced that it was rejecting 75-85% of the online ad impressions it was being offered because they were "fraudulent, unsafe, non-viewable or unknown."
  • Adweek, one of the advertising industry's leading trade publications, estimated that online ad fraud in the U.S. may have reached $9.5 billion last year.
I am sure that your marketing people will tell you that they have systems or people in place that protect you from this corruption. They don't. No one knows the extent of the fraud. No one even knows how to determine the extent of the fraud. Online ad fraud is completely out of control.

A company in the advertising fraud detection business recently estimated that just one reasonably sized bot-net could be responsible for one billion fraudulent ad impressions every day.

There are 3 types of fraud you are being exposed to:
1. Intentional fraud: Here's how The Economist describes it: "Evil-doers infect personal computers with a “bot”, a piece of software that visits websites in the background. It cannot be detected by the user, and is nearly impossible for advertisers to spot, because it shares the real user’s unique “cookie” identifier. Fraudsters have other tricks too: they can stack hundreds of adverts on top of each other on a website, or stuff a whole website into a small pixel on a page so advertisers think their ads are seen. Either way, they are deliberately claiming “views” and “clicks” for ads that no one ever sees."
2. Unintentional fraud: The online ad world is so arcane and opaque, people are unknowingly buying and selling ad inventory that exists only in a technical sense -- it does not exist in the real word. This is euphemistically called the "viewability" problem. In the article cited above, The New York Times describes how people have no idea where their online advertising is running.
3. Unknown fraud: Once again, the online ad world is so complex and impenetrable, there may very well be types of fraud we haven't even discovered.
As I'm sure you know, all forms of advertising are subject to waste. This is because not everyone notices every ad. This is just the nature of advertising. Apologists for online advertising try to excuse these problems as just another example of ad waste. It is not.

The waste in online ads is of another magnitude. First, criminals are stealing your money. Then, unviewable ad placements are siphoning more of your money. And after all that, what's left is still subject to the normal waste of advertising.

Your marketing people will not tell you about this corruption and fraud because they do not want to look like fools. Your agency will not tell you about it because they are afraid they will be blamed.

If you are a substantial online advertiser, you are almost certainly a victim of this fraud.

I spent over forty years in the advertising business, and in that time I never saw anything like the corruption and double-dealing that is currently being perpetrated by the online advertising industry.

I have no skin in this game. I don't own a TV station or a magazine or billboards. I'm just a retired ad guy who doesn't like to see my industry corrupted.

You are being screwed. I thought you'd like to know.

Love always,



Cecil B. DeMille said...

P.S.: That college kid with the MBA in Marketing you're thinking of for CMO? SOOO not going to work out. Hire someone with a brain, ad experience, and some balls (and yes, females can have balls in this sense). Then, with that person's help, pick a good agency – which does not require consultants or a pitch process – and let them work.

Gaw said...

Suggestion to CEO: pay per click.

Don Marti said...

"Clickbots" were some of the earliest ad fraud tools. Google has been fighting them for years, and some get through. And if Google still has trouble with them, lesser ad networks are getting beat, hard.

Jason Fox said...

Slow down, Cecil, before your common sense gets you blacklisted.

Cecil B. DeMille said...

With Bob? That's better than 99% of the other lists I'm on.

JR said...

I agree that digital advertising has major issues with fraud (and other areas), but does that mean that we as marketers should give up on it as a channel? It seems most of your posts are quick to attack the various weak areas of the digital industry, but no solution is really given except for 'don't get involved with it'. It would be good to hear your thoughts on if it has a future if the fraud issue can be mitigated, or you think the problem is too terminal and marketing budget should be left offline.

Mark Pilipczuk said...

I've never heard Bob say "stay away" from digital advertising nor suggest that it should all be offline or traditional. Rather, he's one of the very few pointing out the fact that our industry is being corrupted by outright criminals and is being abetted by marketers and advertising agencies interested in the latest shiny new object.

I don't know what the technical solution is. What DOES help is healthy skepticism. Ask your agency exactly how they are combating fraud and don't believe the answer. Sit down with the person actually fighting the fraud on a daily basis and ask them. (I have and I have been frightened at the response.)

You've got to use all the media at your disposal to get your message across. You just have to be a little old-fashioned, or you or your clients will get skinned.

Patrick Scullin said...

You asswipe! There goes that lucrative speaking gig I was negotiating for you at the Digital Place Based Advertising Association.

I'm dying here, Bob!!!

Matt L. said...

After years of automating their way to fatter profits, it's slightly amusing that automation is being used to bilk CEOs. Automation giveth and automation taketh away.

Matt L. said...

Pay per click retina scans -- coming soon to a pair of Google glasses near you!

Jonny Stark said...

How about, much as the PR industry is trying to do with AVE, we just kill off the impression 'metric'. For too long we've worried about meaningless metrics (CPC sits alongside CPM and others) which has driven what you're describing above. Clients spending their money based on outcomes (e.g. sales) can see what the return is on their media $ and the media partners focus on delivering improved ROI over time. If we measured true value, it would make it easier to spot where the issues are too. Just a thought. And yes, the industry itself needs to unite to combat this.

ForCryingOutLoud said...

Half your luck Cecil! Seems that if you put 'digital' in front of anything these days it becomes a 'thing' and takes on a lift of it's own. Hence we're blessed with a plenitude of Digital Marketing Managers that seem to know fuck-all about marketing itself?

Jim said...

Yeah never stop doing something that doesn't work. Especially if other people are doing it too. Makes you wonder how mankind ever stopped bloodletting to prevent illness.

Egon Spengler said...

That would have worked if you hadn't stopped me.

Jorge said...

Bob, did you see today's article in The Financial Times?????

The truth is coming to light!!!!!!

Jason Fox said...

From the industry in general. I suspect Bob will always welcome you.

stuart said...

Oh dear, The NYT story and the Google story is not about fraud, it's about press ads buried in the dark pages of newspapers or radio spots going out at 4am or Posters off main roads....Advertising could never be effectively measured - it can now. Pity an ex Adman doesn't realise that digital is the greatest Advertising media of them all. Instead of which, us traditional Admen rubbish it because we feel threatened by it. Stopping digital is like standing on the beach trying to push out the tide...Why? because it works.