Why Ad Fraud Thrives

If you're like me, you probably wonder how ad fraud can be so pervasive and harmful while the ad industry -- with billions of dollars at stake -- sits on its fat ass and does nothing.

The aha! moment came to me a while back when I came across and posted the chart below (which I've been using a lot lately.)

It comes from the World Federation of Advertisers and if you think about it, it explains why the ad industry doesn't give a flying shit about online ad fraud.

What this chart shows is that the flow of money within the advertising "ecosystem" (everything in grey) is exactly the same whether agencies are buying real traffic and real clicks or fraudulent traffic and fraudulent clicks.

The fraud doesn't enter the money stream until we get to the green area, by which time everyone in the agency/adtech world has already cashed their checks and is halfway to the Hamptons.

There are two groups of people getting royally screwed by ad fraud. One is too stupid to understand what's going on. The second nobody gives a shit about.

First is dumbass clients who astoundingly are still buying the bullshit they hear from their agencies about "systems they have in place" to identify and prevent ad fraud. You'd think that with all the recent headlines about ad fraud they'd start to connect the dots. But like all suckers, they always think it's the other guy who's getting screwed.

Second is online publishers who told us "information wants to be free" and are now reaping what they sowed. Advertisers are lining up to give their money to Google and Facebook and could not give less of a shit about the million other online publishers out there. In fact, take away Google and Facebook and digital advertising is actually in decline.

The stupidity of the advertisers is beyond explanation. I can understand how they won't listen to half-wit bloggers like me, but how can they continue to ignore the overwhelming amount of evidence that is coming at them daily that shows they are being fucked blind?

I guess they must think there is someone somewhere who's looking after their interests. There isn't.

Their agencies aren't protecting them. It's not that agencies are complicit in the fraud, it's just that as the chart above shows, they have no incentive to do anything about it. As long as clients keep pressing them for lower and lower rates they'll continue to use programmatic methods for buying crappier and crappier crap i.e., fraudulent traffic.

Their CMOs aren't protecting them. It's largely these geniuses who've been ramming digital horseshit down their throats for a decade.

The 4A's (American Association of Advertising Agencies) isn't protecting them. The 4A's has become the lapdog for the Big 6 holding companies, and the Big 6 are feasting on online debauchery.

The IAB (Interactive Advertising Bureau) is a cruel joke. 

The ANA (Association of National Advertisers) seems to know they're getting screwed but have no idea what to do about it other than issue whiny press releases.

So who's going to protect dazed and confused brands from themselves?

To understand this better, let's take a brief detour and talk about basketball and hockey.

Basketball is a game with rules that greatly favor offense over defense. If you're playing defense and you breathe too hard on your opponent you're called for a foul. Consequently, basketball is a game with a lot of offense. You usually have to score over 100 points to win.

Hockey is the opposite. In hockey, the defensive player has some very substantial advantages. You can pretty much maim or kill your opponent, as long as you don't do it with a tire iron to the windpipe, and not be penalized. The result is that 3 goals are usually enough to win a game.
 
In ad fraud, all the advantage is to the offense -- that is, the fraudsters.

Fraudsters have tremendous incentive to be aggressive. They can make enormous amounts of money. What incentives do agencies, ad tech companies, or the 4A's have to play defense? Are they going to make more money? No. It may even cost them money.

The only people with an incentive to play defense are 1) the advertisers, who still don't understand the connection between demanding the lowest possible rates and getting the worst possible crap, and 2) the publishers, who can only make a living by feeding advertisers "non-human" traffic.

It's a clown show extraordinaire.