Online Advertisers Getting Hosed

Here at Ad Contrarian Worldwide Headquarters,  one of our axioms is that there is no bigger sucker than a gullible marketer convinced he's missing a trend.

We're starting to think that the same can be said of the entire advertising industry.

Our industry has been desperately trying to convince itself that the web is a fabulous advertising medium. We share each others' anecdotes about the handful of meager successes (amid the thousands of failures.) We go to conferences and listen to case histories that are two standard deviations from normal and try to convince ourselves that they are typical.

But we can't erase the facts. And the facts are dismaying.

Click-through rates are abysmal. The odds of breaking through on YouTube are in the million-to-one range. Facebook is a big fat turd that seems to have a new ad scheme every week. QR codes are a cruel joke. Content and social media are sounding more like religion, and less like business.

And now we're starting to get a peek at massive advertising frauds being perpetrated on the web.

Listen to Mike Shields, senior digital editor at Adweek...

If you spend enough time in the murky world of ad exchanges, ad tech middlemen and real-time bidding software, you might come away wondering why any major brand even bothers with online advertising.

Not only are banners dull and clickthrough rates low, but all the technology flooding the industry promising perfect targeting perfection can't even deliver real human audiences...

According to Business Insider...

...armies of computers unknowingly infected by hackers to drive fake traffic through ads, generating up to $400 million a year in fraudulent clicks. One botnet, dubbed "chameleon," consists of 120,000 machines driving traffic to 200 dubious publishers, who then bill the likes of  American Express, AT&T, Ford, McDonald’s, and Petco for displaying their ads.

Solve Media says, 29% of mobile ad traffic acted "suspiciously" in first quarter of 2013, and 14% was "confirmed" as bots. The truth is, no one knows the extent of the fraud being committed on web advertisers. But one thing we do know -- it's huge.

• 40% of all "captcha" traffic (those annoying words you have to type to prove you're human) is suspicious.

• 29% was bot traffic

• Suspicious activity was up 44%

• Spider.io claims that the above mentioned "chameleon" is resulting in a minimum of 9 billion phony ad impressions served per month.

To get a feel for the extent of the fraud, you really should read the abovementioned Mike Shields' excellent Adweek pieces. They are eye-opening and very damning.

Of course, the online advertising industry continues to turn a blind eye to the fraud. There's too much money in it. The IAB (Interactive Advertising Bureau) has formed a "task force" to "raise awareness" of this problem. Ohmygod, a task force!

If you want to get a sense of what a joke this task force is going to be, all you need to know is this. They already have a bureaucratic bullshit euphemism for the fraud -- NIT, Non-intentional traffic. Gag me.

This reminds me of another useless initiative the IAB undertook two years ago called "Making Measurement Make Sense" in which they set out to create a common "currency across the ecosystem." Thud. And two years later that common currency would be...?

If TV viewing were to drop 1% we would hear all kinds of wailing. But fraud of 25 to 40% in online advertising? No problem, we'll appoint a committee or something.

When you take a gullible industry that has acted in an irresponsible and foolhardy manner to sell snake oil to its clients, add to that some very sophisticated crooks who are way ahead of the naive buyers and sellers of ads, and top it off with indecipherable metrics that are intentionally designed to confuse and mislead, you have yourself a very toxic blend.

Try not to be there when it explodes.