The Big Lie Of Transparency

Dear Online Advertising Industry,

I have noticed recently that you have become very passionate about transparency.

• Mark Zuckerberg, you have said you want to bring Facebook to an "even higher standard of transparency."
• Google, you have issued a "Transparency Report"
• IAB - you've said "Transparency Is The Key To Programmatic Success"
• Marc Pritchard of P&G, you have given an "...impassioned speech on transparency."
• Keith Weed of Unilever, you have "...demand(ed) more transparency" from digital media.
• Sir Martin Sorrell of WPP, you have said "it’s important to be transparent."
• 4As - you have issued the "4A’s Transparency Guiding Principles of Conduct"
• ANA - you even created and celebrated Transparency Day! (Was there a parade? Did you have a Transparency Eve party?)

It seems like transparency is all the rage in the online ad world. Or maybe it would be more accurate to say that talking about transparency is all the rage.

Because I have a problem with this transparency talk. I think you're all full of shit. I think you people are loud and outraged when you can't get transparency but you become awfully quiet when you're asked to provide it.

You see, there's more to this transparency thing than the petty bickering of CEOs and billionaires. There's also the little issue of the relationship between you and us. Or does the public not figure into your idea of transparency? Is transparency only an issue when your money is at stake?

Personally, here's what I (and about 7 billion of my friends) would like a little transparency on...

• Mr. P&G and Mr. Unilever: I'd like some transparency on the type and the amount of personal, private information about me you have been gathering with your relentless online tracking.

• Mr. WPP: Would you mind explaining to me what you and your colleagues in the holding companies are doing with my information?

• Mr. Facebook and Mr. Google: If you wouldn't mind, I would like to know what kind of information about me you have been revealing to your clients.

• Ms. 4As and Mr. ANA and Mr. IAB: Just curious about who your members have been buying information about me from and selling information to? 

I hope you will prove me wrong and be open and transparent about what you've been collecting on me and how you're using it. Because it seems you're very passionate about transparency when you want answers, but not quite so passionate when you're asked to give answers.

If you're really as committed to transparency as you say you are, I would be grateful for a full accounting. Otherwise, I would appreciate it if you would take your transparency bullshit and stick it up your ass.

Top 10 Reasons Online Advertising Must Change

The current model of online advertising is only 20 years old but it is already far beyond its sell-by date. It has become a ridiculous anachronism, born in an era of naive digital utopianism, and now absurdly outmoded and unsuited to its job.

In no particular order, here are 10 reasons why online advertising must change.

1. Fraud: Online advertising fraud is completely out of control. According to JPMorgan Chase it has grown by over 100% in the past year to over $16 billion. There are no serious impediments to its continued metastasizing. The fraudsters are miles ahead of the feckless cyber-security crowd who are filling their clients full of delusional happy talk. According to the World Federation of Advertisers, within 8 years ad fraud may become the second largest source of criminal income in the world, after drug trafficking.

 2. Waste: The amount of money advertisers are wasting on online advertising is astounding. Marc Pritchard, chief brand officer of the world's largest advertiser, Procter & Gamble, says that only 25% of his programmatic budget ever reaches the consumer. The rest is wasted on non-viewable ads, fraud, and the questionable "contributions" of ad tech middlemen. When you add to that the fact that less than 10% of the advertising that does reach consumers is even noticed, you have a waste factor that is beyond belief.

3. Public Disgust: Worldwide disgust over online advertising is reaching a breaking point. People are so fed-up with the annoying, irresponsible, and relentless onslaught of online ads that over 600 million web enabled devices are currently armed with ad blockers. Every credible study ever done has shown that online advertising is the most disliked and distrusted form of advertising. The online ad lobby sold us on the idea that it would be more popular with consumers because tracking would make it more "relevant." What a joke that argument has turned out to be. In one study consumers were asked about 13 different types of advertising. The 8 most disliked were all forms of online advertising. Unless the current model of online advertising changes, ad blocking -- the mortal enemy of marketers -- will continue its unabated proliferation.

4. Effectiveness: Despite the growth of online advertising, substantial questions are being raised about its effectiveness. These questions are becoming widespread. Click rates are reported to be about 5 per 10,000 ads served. P&G announced that they had cut about $140 million in online ads from their 2nd quarter spending this year during which time their sales grew by 2%. According to The Wall Street Journal the online cuts ..."had little impact on its business, proving that those digital ads were largely ineffective."

5. Brand Safety: Anyone not comatose knows that in the bizarre world of ad tech and programmatic buying advertising can show up anywhere. Regardless of the empty promises of agencies and publishers, advertisers cannot control where their advertising appears. A comical example happened last week. An ad for the Association of National Advertisers, the body that exists to protect and defend the interests of advertisers, showed up on the big, bad, Breitbart website. The ANA, who strongly defend ad tech, looked like complete clowns when they had to apologize for "an unintentional result of a programmatic buy..."

6. Fake news: The online advertising industry is the engine that powers fake news. While most people believe that fake news is related to political operatives looking to deceive, the truth is it is also substantially the result of people looking to make money from a programmatic advertising ecosystem that rewards fraudulent sensationalism. A perfect example of how ad tech supports fake news can be found here. The fact that we have a populace that no longer knows what to believe from a media industry they once trusted is not an accident. It can be traced largely to online advertising, and specifically ad tech.

7. Degradation of Journalism: Ad tech drives money to the worst online publishers. Ad tech’s value proposition is this: we will find you the highest quality eyeballs at the cheapest possible locations. Ad tech can do this because of “data leakage.” Viewers developed by quality publishers like The New York Times are tagged and followed to crappy websites like kittylittervideo.com and served ads there instead of at the Times' website. This means ad dollars that should be going to quality publishers go to crappy publishers. Now wonder quality publishers are struggling to survive.

8. Non-Transparency: In 2017, 90% of advertisers surveyed by the World Federation of Advertisers said they intended to review their agreements with ad tech suppliers. A significant reason for this overwhelming show of no confidence was a damning report issued by the ANA in the U.S. which demonstrated that many advertisers had no idea how their money was being spent or how they were being charged for online advertising services. The more complex a system is the more opportunities there are for unscrupulous actors to find devious ways to extract money. The programmatic ad buying ecosystem is beyond complex -- it's insane.

9. Corruption: Along with the problem of non-transparency, the ANA report also asserted that corruption was "pervasive" in the online advertising ecosystem. Agencies were found to be taking kickbacks and using client money to arbitrage online ad inventory without the knowledge of clients.

10. Public Safety:  

“Today in the United States we have somewhere close to four or five thousand data points on every individual ... So we model the personality of every adult across the United States, some 230 million people.” — Alexander Nix (Chief Executive, Cambridge Analytica), October 2016.

We were taught to fear totalitarian governments. We feared they would know everything about us, follow us everywhere, track our every move, and keep secret files about us which could be used to influence our lives in ways that were only vaguely visible to us. We are well on our way to such a nightmare. Except it isn't our government that knows everything about us, follows us everywhere, tracks our every move, and keeps secret files about us. It is the marketing industry. Advertising used to be about imparting information to the public. Online advertising has become about extracting information from the public.

If we had set out to create an advertising structure that was a complete fiasco I'm not sure we could have done much better.

The online advertising industry is a preposterous train wreck that must be changed.

The Battle Begins

A few weeks ago, in a blog post entitled "The Battle Of The Century, " I wrote about the lobbying battle that is brewing over the EU's proposed ePrivacy Regulation.

If adopted the ePrivacy Regulation, along with the GDPR (General Data Protection Regulation) will make it much harder for online marketers and media in the European Union to collect personal private information about users without prior consent. In other words, it will make it hard for them to track us all over the web and collect, exploit, and sell the information they are harvesting without our explicit consent or knowledge. 

Last week, another shot in this battle was fired. A consortium of advertising, marketing and media companies sent a misleading and disingenuous letter to the members of the European Parliament attacking one of the core points of the ePrivacy Regulation. I have posted the letter here if you'd like to read it. The lead sentence of the letter reads...

    "ePrivacy Regulation threatens data-driven advertising business model of European press publishers and other online media and services."

Before we talk about what's wrong with this assertion, let's talk about what the letter gets right. The letter claims that most of the stuff we like about the web, including news, is made possible by the revenue publishers get from advertising.

This is true. Publishers could not exist solely on the payments they get from users. They also need income from advertisers. However, the letter then goes on to put forward two deceptive arguments.

First they imply that without "data-driven" advertising the revenue to publishers will dry up. This is nonsense. First of all, all advertising is "data-driven." Advertisers have used data for decades to make media decisions about TV, radio, print and every other advertising medium. If this regulation is enacted they will still use data to make decisions about online advertising.  

It is not "data" that will be regulated, it is the means by which certain data is collected - involuntary tracking, or spyware. What they won't be able to do is track us without our permission and use data derived from spying on us.

The second assertion has to do with a publisher's right to block users who won't agree to be tracked. The ePrivacy Regulation states that a publisher is prohibited... 

"...from denying access to their advertising-funded offerings if users do not consent to data collection needed for data-driven advertising."

In other words, publishers will not be allowed to block you from reading the content of their website if you refuse to be tracked. The letter claims...

    "...the ePrivacy Regulation puts into question the ability of publishers and other online services to continue offering a value exchange that affords Europeans access to content and services at little or no cost supported by advertising revenue."

This may not be true at all. As far as I have been able to determine, publishers can still block people who block ads, as they can do now. But they will not be able to block people who refuse to be tracked. The difference is enormous.

Publishers are entitled to some value for their work and efforts. None of us works for nothing, why should publishers? I believe it is a fair exchange for publishers to require users to allow ads in exchange for access to the content or news they publish. It doesn't mean we have to pay attention to the advertising, but we ought to allow it on the page. 

When we agree to be exposed to advertising we know what we are agreeing to. But if we are forced to agree to be tracked we do not know what we are agreeing to. We don't know what personal private information is being collected, how it is going to be used, who is going to have access to it, who it may be sold to, or how it will be protected, if at all.

Agreeing to receiving advertising is impersonal. Agreeing to be tracked is wholly personal. 

I want to repeat that I am not certain that the ePrivacy Regulation will allow publishers to block people who block ads. But I think it should.

Having to agree to be tracked, however, creates an unfair value exchange in which the publisher knows exactly what he is getting but the consumer has no idea what he is giving up.

In summary, for us to get what we enjoy from from the web we must understand that a great deal of the value is supported by advertising. But the advertising industry must understand that their desire to monetize data about us does not supersede our right to privacy.

The online advertising industry does not need to spy on us in order to thrive. Every other advertising medium has done quite well, thank you, without trampling on democratic principles of privacy and security.

Tracking, surveillance marketing, and the current model of ad tech are affronts to the values of free societies. The ePrivacy Regulation is a sound and reasonable reaction to our industry's inability to exercise a mature degree of restraint or self-control.

When Data Is Dangerous

It has become an article of faith in the marketing business that the future of marketing is about data.

 "Data are to this century what oil was to the last one: a driver of growth and change," says The Economist.

Scientific American says, "The digital revolution is in full swing...in 2016 we produced as much data as in the entire history of humankind..."

The primacy of data in marketing has been beaten into us for the past 10 years. In fact, it has become such a platitude that we no longer even stop to think about what it means.

Data sounds very scientific, impersonal and hygienic. But it is not.

When marketers talk about data what they usually mean is personal private information about us that is collected, traded, sold and exploited without our knowledge or consent.

To marketers, data is not all numbers and algorithms. It is your sexual preferences, your religious beliefs or lack thereof, your banking details, your medical and psychological diagnoses, your work history and political preferences. It is thousands of facts about you that you never suspected anyone knew or collected.

It has the potential to be used in a myriad of dangerous ways by any incompetent, irresponsible organization that has the wherewithal to collect it or buy it.

Data is just a bland, emotionless word for some highly sensitive information. It makes the collection of personal private information about us seem to be an inoffensive remote branch of mathematics.

Next time some cliché-spewing marketing-droid  blithely repeats the mantra that the future of marketing is all about data, remember this -- data isn't neutral. Data, in the wrong hands, is dangerous.

And we have every reason to believe that the marketing industry is the wrong hands.

Yahoo: Incompetent, Irresponsible, And Dangerous

If you would like an example of how the online ad industry's insatiable lust for "data" - usually just a pleasanter term for personal private information about us - has defiled our society and undermined our right to privacy, look no further than Yahoo.

In my new book, BadMen, I tell the story of how in 2014 Yahoo demonstrated utter disregard for the privacy and security of its users.

Their security chief warned them that their platform was woefully insecure and easily hacked. He recommended a system of end-to-end encryption to protect their users.

The ceo and the board rejected his recommendation because implementing the proper security measures would mean they could no longer scan the emails and text messages of their users and use this information to create targeting opportunities for their advertising clients.

Soon thereafter, half a billion Yahoo accounts were hacked.

But that ain't nothing.

It was revealed yesterday that a year earlier, in 2013, every single Yahoo account -- 3 billion of them -- were hacked. Somehow Yahoo never bothered to fully investigate the extent of the hack.

Earlier, Yahoo had reported that the 2013 hack affected 1 billion accounts - which is bad enough. But an investigation by their new owners - Verizon - revealed that the hack was actually three times larger than Yahoo reported. And, in fact, was the biggest known hack in history.

If I ran the world, Yahoo's ceo and board would be fined $1 per hack and dragged off to jail. But, then again, if I ran the world Yahoo would have been put to sleep years ago.





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From Amazing To Appalling

It was all going to be so amazing. It all sounded so great. Advertising was going to be amazing.

People weren't going to just look at online ads, they were going to interact with them.

People were going to go online and “join the conversation” about our brands and start their own conversations. And these conversations would grow virally and it wouldn't cost us a penny.

"If you can harness social media marketing, you don’t have to pay for advertising any more,” said a partner in Sequoia Capital.

It sounded so amazing. And it's turned out to be so appalling.

The online advertising "ecosystem" is a complete disaster.

• Ad fraud is out of control. The World Federation of Advertisers says that within eight years it could be the second largest source of criminal income in the world, after drug trafficking.

• The ANA says corruption within the agency media buying community is "pervasive."

• Viewability of online ads is reported to be below 50%.

• Interactivity with online ads is now reported to be about 5 clicks per 10,000 ads. You can't get much closer to zero.

• The public is so disgusted with online advertising that 600 million web-enabled devices are armed with ad blockers.

• Facebook and Google are reaping 77% of all online ad dollars in the U.S. and have become an arrogant duopoly who refuse to abide by long established standards of measurement and auditing.

• Online media continue to create preposterous metrics and foist them on credulous advertisers.

• The three-headed monster of tracking, surveillance marketing, and ad tech are endangering consumer privacy and undermining important principles of a free society.

• Quality online publishers are struggling for existence while the crappiest online sites - fed substantially by ad tech's data leakage - are stealing and monetizing their audiences.

• Fake news, also fed by the scourge of ad tech, has undermined the public's confidence in our news media.

• Foreign governments, encouraged by the online ad industry's irresponsible practices, have been caught trying to subvert the integrity of our electoral process.

If you set out to create an advertising medium that was a complete fiasco I'm not sure you could do much better.