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.
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.