Huge Video Ad Fraud Uncovered

I know, I know...I'm supposed to be on vacation. But this is just too delicious to let go.
For years fools like me have been warning advertisers and marketers about the absurd amount of crime and fraud in online advertising. And, of course, because marketers are smarter than everyone else, none of the warnings have any effect.

Well, maybe they'll wake up now.

Introducing Methbot -- “the largest and most profitable ad fraud operation to strike digital advertising to date” says, WhiteOps, a provider of online fraud protection software.

According to the Pivotal Research Group, Methbot is responsible for...

- 200-300 million fraudulent video impressions a day
- $3-$5 million in criminal revenue a day
- More than $1 billion in annual revenue a year from fraudulent online video advertising

When you realize that total US income from online video advertising will only be $7 billion this year, you can see how enormous this fraud is. Pivotal says, "the scale of this single fraud is stunning."

And nobody knows how many other bots are out there.

According to Pivotal, here's how Methbot works...

"....it is focused on programmatic video inventory and because of the way it has fabricated both demand and supply of inventory. Among other details, Methbot produces counterfeit premium publisher sites and generates fraudulent ad calls that appear to originate from US-based internet providers including Verizon, Comcast and Spectrum. Methbot then generates revenue from programmatic sources of demand seeking premium video inventory."

If you understand any of that, please drop me a post card.

So let's recap:

- The Association of National Advertisers says kickbacks and other corrupt activities among agencies is pervasive."

- The New York Times reports that about half of all online ads paid for are not viewable.

- The Guardian reports that 60-70% of online ad budgets are being scraped off by ad tech middlemen.

- Over 1/2 billion people have ad blockers installed on their online devices.

- The World Federation of Advertisers says that within 8 years online ad fraud could be the second largest source of criminal revenue in the world (after drug trafficking.)

- We know that online ad fraud is completely out of control and no one knows how large it is.

- We have just learned about the biggest online video ad fraud ever uncovered.

Yup, sounds like online advertising is just the thing for today's busy marketing moron.

The Obligatory End-Of-Year 5-Point Click-Bait List

With 2016 about to come to an end, and me late to the market with the obligatory 5-point click-bait list, let's take a step back from the mundane and horrifying details of  day-to-day life in ad land and take a look at the big picture.

Here are the five major advertising industry realities of 2016.

1. Agency Business In Trouble
Several years ago the agency business as a whole stopped investing in creativity and placed its bets on data, analytics, and other disciplines which seemed more promising. Having abandoned their raison d'etre for these apparently fertile and trendy pastures, agencies are now paying the price. They are finding that clients are even more dissatisfied than usual. The momentum for large clients to move their business in-house, or to consultancies-cum-agencies, or to non-AOR arrangements is growing and is a serious threat to the health of the agency business.

2. Online Advertising Equals Google and Facebook
Outside of China, Google and Facebook account for 72% of online ad revenue. Of all the new revenue that came into the online ad industry in 2016, about 90% went to Google and Facebook. The millions of other ad-supported web publishers are fighting over the scraps. The market is speaking loud and clear. It is telling us that with the exception of the duopolists they think online advertising is worthless.

3. The Web Is Evolving Into Television 
Gadgets change, people don't. Video viewing is at an all-time high and a lot of it is being done online. Not because "television is dead," but because television is the web's killer app. Over 70% of internet bandwidth is used for video. Every major online player is developing proprietary video content. Consumers couldn't care less about what pipe programming and content are delivered through as long as it is simple, cheap and entertaining. It is only a matter of time until Google, Facebook, Amazon or Apple tries to buy a TV network.

4. Corruption Is Widespread
The ANA investigation into agency media buying concluded that kickbacks and other unsavory practices were "pervasive." The Department of Justice is now investigating agency bid-rigging. The World Federation of Advertisers reported that within 8 years online ad fraud may become the second largest criminal activity on the planet, after drug trafficking. The Wall Street cuties have taken over the ad industry and the culture of anything for money has come along for the ride.

5. Ad Tech Is A Fiasco
Advertisers, publishers, and consumers are all disgusted by the current state of online advertising. Ad tech middlemen are scraping 60-70% of online ad budgets from advertisers and publishers. Over half a billion consumers have ad blockers installed on their devices. 70% of marketers say they are dissatisfied with the current state of online advertising. So who likes ad tech? The people who are taking it to the bank -- Google, Facebook and holding companies.

It seems that every year I write that it has been a pretty shitty year for the ad industry. It's getting tiring.

In other news...

This is my favorite blog post every year. It's the one in which I say it's holiday time and this is going to be my last post of the year.

It's not that I don't enjoy writing this thing, it's just that I keep wondering when I'm going to hit empty.

On the other hand, when you write about advertising and marketing there's really no end to the silliness. So if you search hard enough, you can always find amusing material.

I sometimes think that the only reason for the existence of the marketing industry is to make the rest of humanity seem prudent and levelheaded.

In more other news...

The perfect gift for every business bozo on your holiday gift list is a book entitled "Marketers Are From Mars, Consumers Are From New Jersey."  How do I know? Trust me, I'm a blogger. Don't believe me? Read the reviews here (and be sure to read the great Geraldine's review.)

It is available in both paper and pixels. Even though I don't make anything on the electronic version, I prefer you buy it. We need the trees more than I need the money.

In even more other news...

Before I pour myself a festive holiday beverage, let me take time to thank some people.

First I want to thank the people who hired me to speak or to advise or to appear on their shows or wrote about me this year. In no particular order: Comcast SportsNet; NBC; 1000watt; BeanCast; Marketing Book Podcast; Cox Media; Screenforce Austria, Switzerland and Germany; Business Insider; MadClarity; TVNZ; ASIcast; Discovery Networks; IAPA; Worthshop; Software Engineering Daily; Ireland AM; The Irish Times; WPP; National Business Review; Business Day; Media Post; StopPress; Agency Spy; Mumbrella; The Cog Blog; Tech Crunch; MarketingWeek; The Economic Times; The Age; and the organizations for whom I did confidential advising -- you know who you are. I'm sure I've left some groups out, so thank you, too.

Also, thanks to the people who write intelligently about marketing and advertising and whose thinking I steal from shamelessly. You also know who you are.

Most of all, thanks to the people who read this thing and keep it interesting with comments -- especially the brilliant ones that agree with me.

Happy holidays to all, even the bozos who don't agree with me, and I'll see you next year.

Disruption Is Not A Strategy, It's An Outcome

It’s hard to imagine an industry more in need of disruption than the fossil fuel industry.

There is no question that the burning of fossil fuels creates toxic byproducts that cause serious illnesses and death.

There is compelling evidence that the burning of fossil fuels is contributing to what might turn out to be irreversible damage to the environmental stability of our planet.

Geopolitically, the economics of attaining fossil fuels has caused hundreds of billions of dollars to be transferred from Western countries to places bent on our destruction.

And individually, purchasing fossil fuels for automobiles is a major financial burden on many low income consumers.

It’s hard to draw up a more compelling case for the need for disruption.

Strangely, there is a very obvious technological solution to a substantial aspect of the problem — battery powered vehicles, or as we call them, electric cars.

And yet, electric cars have not been anything near a disruptive technology.

In 2008 we had 12 car models in the US that were battery powered. Today we have 55. But they are languishing. Between 2008 and today the electric car's share of the automotive market has crawled from 2.3% to 2.8%. If it wasn't for production driven by government mandated emissions standards, I doubt the share would have grown at all.

So what's gone wrong?

As we’ve said so many times here, marketers always overestimate the appeal of new things and underestimate the power of traditional consumer behavior.

So far, battery powered cars are very unappealing to consumers. They’re too expensive, they have limited range, and except for a few, they look like crap.

Despite the incessant marketing horseshit about consumers' passion for products that “do good” and products that "align with their values,” most consumer behavior still operates on a very simple principle -- what’s in it for me?

If you think your new technology is going to be disruptive you better first be sure it has consumer appeal.

Amazon, Uber, and Airbnb aren’t popular with consumers for technological reasons. They are disruptive because they are 1)cheaper and 2)produce a better user experience.

In other words, they are an improvement.

Disruption is not a strategy. Improvement is a strategy.

When improvement is compelling enough, disruption is the outcome.

Quote Of The Week...
...And speaking of things that are not a strategy, here's a great quote from Coke global CMO Marcos de Quinto, "Social media is the strategy for those who don't have a true digital strategy." Or as I am fond of saying, "Social media isn't a strategy, it's absence of a strategy."

Another Scandal In Ad Land

The US Department of Justice (DOJ) is investigating whether agencies are guilty of bid-rigging on production and post-production jobs. Commercial production and post-production is a $5 billion business in the US.

There is no announcement yet of which agencies may be under investigation but you don’t have to be a rocket scientist to take a good guess. WPP, Omnicom, IPG, and Publicis all have in-house production and post-production capabilities. IPG has said that it has been contacted by the DOJ about this investigation.

According to The Wall Street Journal, agencies have been accused of manipulating the bidding process and coercing production houses into submitting phony, overpriced bids — called “check bids.” These phony bids create a paper trail that agencies use as cover when clients want a rationale for why agencies award jobs to themselves.

This new scandal comes on the heels of the ANA investigation this summer which found that unethical media buying practices were “pervasive" in the agency business — particularly in online advertising.

There is a big difference, however, between an ANA investigation and a DOJ investigation. The ANA investigation was a toothless joke. It was all thunder and no lightning.

The DOJ is a whole different ballgame. You do not want to fuck with these people. Price-fixing and bid-rigging are criminal activities. The same person who is apparently investigating the bid-rigging for the DOJ was also involved in investigating criminal charges that sent several agency print production execs to jail not long ago.

It may turn out that this investigation goes nowhere. But don't bet on it.

As each new scandal comes to light, it becomes harder and harder to overstate the damage that consolidation has done to the advertising industry.

There is little doubt that there have been crooks in the ad business - just as in every business - since the beginning of time. But the culture of the publicly-traded, consolidated agencies, steeped in financial sleight-of-hand and Wall Street monkeyshines, have created an environment in which ethics are malleable.

The agency business is a mess. You have to ask yourself how much of this crap clients are going to put up with? Is it any wonder that they are taking advertising in-house or hiring consulting firms to do their advertising? We are losing the confidence of sensible business people everywhere.

We jump from one fad to another; we are a cesspool of -isms; we have traded our knowledge-base for trendy clichés; we have eroded anything resembling a moral code; we have fired our experienced, talented people and replaced them with cheap, amateurish nobodies who have degraded our product; and we have brutalized our language into a liturgy of dreadful jargon and insufferable bullshit.

Other than that, we’re doing great.

Potato Chip Line Extensions

It all started with pineapple pizza.

Who's fucking idea was that?

Then we got blueberry bagels and olive oil ice cream and avocado toast and almond milk and pretty soon it'll be salted caramel Viagra.

Have you tried to buy potato chips lately? Do they have to fuck with everything? Can't they leave potato chips alone?

I went to the grocery the other day to buy my favorite lunch: a tuna sandwich, chocolate milk, and potato chips.

I stood there staring at the potato chip shelf for about 10 minutes and couldn't find a bag of simple, plain-ass potato-flavored potato chips. Everything had insane ingredients that had no business being anywhere near a potato chip. Bloody Mary and Jalapeno and...

Anyway, as long as the snack food industry has decided to go off the deep end, I thought I'd help them out with some new flavor ideas for potato chips. Here we go:

- Red Pepper and Milk

- Sweet Maui Onion and Handbag

- Fully Grown Beaver

- Cheddar and Self-Driving Car

- Mushroom and Dust

- Diet Dijon

- Honey Glazed Sweatsock

- Sri Lancan Sriracha

- Spicy Field Mouse

- Plump Chicken and Beans

- Aggressive Panhandling and Vinegar

- Wax Paper and Maple

- Crispy New York Toenails

Enjoy your lunch.