Digital ad fraud affects between 10 to 60 percent of different types of digital advertising, according to numerous studies conducted last year. This year alone, digital ad fraud will cost publishers and advertisers US$6.3 billion or rather US$4.5 million every single hour. Globally, Solve Media puts the number at $11.6 billion. The landmark study conducted by the Association of National Advertisers (ANA) and digital security firm, WhiteOps, monitored 181 ad campaigns of 36 ANA member companies over 60 days and uncovered hundreds of millions of bots infecting the advertising of big brand names such as Ford, Verizon, and Pfizer. These bots were costing the companies millions in completely wasted ad spending.
So what does this really mean? Half or more of paid online display advertisements have never appeared in front of live human beings. The number of impressions that are not viewable can reach as high as 85 percent. According to Cnet, only 38 percent of traffic on the web is human. The rest is from bots, scrapers, hackers, spammers and other impersonators. Google believes only 44 per cent of views are human.
Here to shed some light on this topic is Rod Ponce who is the Chief Innovation Officer of BHIVE Social Media Labs. Mr. Ponce is an expert on social media advertising. He hails from Toronto, Canada where he successfully runs the BHIVE. Chief Bee as his colleagues usually calls him is going to be shedding some light on the effect that digital fraud ads have had on our social media community and how to mitigate it.
Interviewer: Please tell us how real digital fraud ad is.
Mr. Ponce: This is an unfortunate reality in the digital advertising industry today. This is a topic that doesn’t receive that much attention since it places both Google and Facebook at the center of the spotlight. This is something that we as a company have stopped recommending to our clients.
Interviewer: Why has this $16 billion problem become widespread?
Mr. Ponce: It is because many clients want immediate gratification. “Buy an ad, expect traffic.” At the core of it, is the idea of immediate results which some clients make an investment into marketing themselves in the digital world. Any marketing consultant that misleads clients to think that ads will render immediate results should accept some of the shadow cast by this $16 billion problem. They should educate their clients better. This is the fundamental flaw that exists in the online marketing community: Social media platforms like Facebook want to behave like Google. The only reason ads may function better on Google is simple: you are searching for something, and when you are searching for something, you are more prone to consume an ad. as opposed to Facebook where the ad is much more disruptive. Unfortunately, for Facebook and other social media platforms alike, their revenue model depends heavily on advertising revenue, and as clients see their competitors buying ads, they want to do the same. Sort of the ‘monkey see monkey do.’ This should be corrected at a marketing strategy/media buying level since these social media platforms have to respond to their shareholders and won’t be changing their product offering anytime soon.
Interviewer: What role is social media playing in this widespread?
Mr Ponce: The simple truth is this: mobile is the future, and social media platforms such as Twitter and Facebook are the new media outlets. Social media is not an advertising or marketing expense; it is an administrative cost. How does this translate to businesses and individuals looking to connect with their audience? For the most part, we have been advocating that social media is an administrative cost of doing business. It is a cost that should be amortized over time and not a marketing expense. In a nutshell, social media platforms are gated online communities, and your page is your new phone number within this gated community. If you use a phone, then what would be the return on investment on your phone? A growing proportion of traffic is coming from smartphones and tablets. The market is responding with 8 in 10 media buyers planning to increase their mobile advertising in the next 12 to 18 months. The challenge is to not only capture people’s attention on their mobile devices but also to engage them on a personal level. With a growing distrust of traditional advertising, consumers are tuning out. As many as 79% of television viewers skip at least some ads by channel surfing during commercial breaks. I can’t stress enough the growing importance of social media and the catch-up game many agencies and large brands are playing. This may sound a little presumptuous but the bigger point is some CFOs, CMOs and their big-name agencies are still stuck in the “campaign” way of thinking. –With campaign defined as We have $X budget for time A to B. Based on the number of purchases within this time frame, a return on investment is calculated to determine whether or not the campaign was successful. It’s probably one of the main reasons agencies are hired and fired at the flip of a coin. Social media has disrupted the advertising industry to its core. What I am suggesting is while social media may be used for marketing and PR, it should be handled and cost internally. Social media should be an ongoing administrative cost, not an on-and-off advertising expense. At some point, some companies will need to learn how to expense social media accordingly. In a B2B scenario, if you want to connect with your future clients, it’s time to pick up the phone or in this case login to Twitter and start chatting. The difference is, it’s not a cold call; to coin a phrase, it’s a cold tweet — 140 characters at a time.
Interviewer: You just stressed the importance of social media in ads, why then is it difficult to get across to customers even with these social media platforms at our fingertips?
Mr. Ponce: Staying with the example of social media platforms like Facebook as gated communities, access to your own audience has been monopolized. Facebook, for instance, owns the list of people who like your company page. Once someone likes your page, you will no longer be able to see them or message them directly. Instead, you will have the opportunity to boost your post as a way to reach them. How organic is that? Seeing a boosted message.
The like on a Facebook page technically translates as the new “I consent to receive boosted messages from this brand” and not necessarily I am genuinely interested in following this brand since the chances of a follower seeing a posted message within their timeline is unlikely.
Last I checked less than 1% of the followers (likes) of a Facebook page would see a post. I must tell you that Facebook is the least favorite for any business looking to connect and engage with their target audience. If you are considering using Facebook for your business, there are some reasons why you should reconsider.
First, Facebook double dings you. To grow your page and then again to “boost” your message to those you already paid to “like” your page. The second reason is that there is little or no engagement. If you are looking to engage people on Facebook, you have to trust Facebook’s targeting methods, which you don’t know who will see your ad. The third reason is that chances are the Facebook run a like firm of their own to justify your investment. I mean, if you look at who is liking you, they are no different than the ones you can buy from “Buy Facebook Like” type websites.
Facebook has become the new “myspace” blogging page, but there is very little room for businesses looking to engage with customers or potential customers. This is the reason I strongly suggest using alternative tools like Twitter and LinkedIn for social engagements, even Instagram and/or Pinterest – depending on the nature of your business.
Interviewer: Having heard all these, how can a company looking to do some digital marketing be money-wise in this era of digital fraud?
Mr. Ponce: We see a different future for social media platforms and how clients can benefit from them. We see them as gated communities, and the rise of influencer marketing supports this model. We have created products that position our clients as influencers within their targeted segments. The world of digital marketing ads, or how smart programmatic ads and/or native ads, is at the core of the problem. Since the client does not know who is ultimately clicking on their ads. Anyone can do the clicking, and nobody accepts responsibility for this gross misuse of money and trust. It is not like it is a controlled post and only those with a link can see. This is how these platforms can ultimately claim that they are not at fault, but as the saying goes, bots (who click your well-designed graphic or written link) do not buy, but the brand is on the hook for the cost of the click/impression. Bots cost clients $16 billion dollars this year alone. This is double last year. I would really encourage clients and fellow digital marketers alike to reconsider buying these digital ads and invest their (client) dollars differently. We suggest them to invest in programs (such as our own) that expedite the old organic growth model. We position our clients in a place where they may auto-discovered by their next client. This auto discovery is invaluable when it comes down to the brand position. The idea of immediate results is a thing of the past. Consumers are more tech-savvy, and the rise of ad blockers is not making digital marketing any easier in the future.
Interviewer: Going forward, what are the things to take note of as an advertiser, a company or a client?
Mr. Ponce: I have found many brands that have excellent content and amazing moderators. I absolutely love to see this. We have a strategic model we use. We call it the ACM model: Audience, Content, and Moderation. Three distinct responsibilities should be present in any digital marketing campaign. Building an audience is what is under the spotlight. Unfortunately, digital ads are an obvious waste. If ads continue to be purchased, it is almost criminal negligence now as reports of fraud trickle in. Agencies should evaluate their complicit positions when evaluating media purchases in this space as there may be future repercussions and/or consequences. We do provide an alternative model to generate good old-fashioned interest into our clients’ brands and advise agencies to contain this issue as they may already be exposed.
Content and moderation is a pass or fail. Either you are good at it or not, but growing a presence is what is a challenge for brands.
Listed below are some ad fraud statistics:
The amount of global advertising revenue wasted on fraudulent traffic, or clicks automatically generated by bots, could reach $16.4 billion in 2017, according to a new study commissioned by WPP and cited by Business Insider.
That figure is more than double the $7.2 billion the Association of National Advertisers estimated would be lost due to ad fraud in 2016.
Ad fraud remains a top concern regarding digital media planning among brand marketers and media agency executives. According to a recent survey conducted by MyersBizNet, 78% of brand marketers are concerned with ad fraud and bot traffic. Consolidation in the ad tech space can also help reduce ad fraud and bot traffic by reducing third-party participants that can help mask inhuman traffic.
If not effectively addressed, the potential lost revenue due to fraud could be immense. Over the next ten years, the global cost of ad fraud is projected to rise to $50 billion, according to the World Federation of Advertisers.
There’s no question that consumers are increasing the amount of time they spend consuming digital media, while advertisers are increasing their ad budgets into digital channels. What may come as a surprise, however, is the complexity of the interconnected web of companies involved in the process of delivering digital advertisements to end users. Collectively, these companies are known as “advertising technology,” or “ad tech” for short.
Ad tech companies are intermediaries between advertisers and publishers and add value to the ad delivery process by consolidating inventory, automating workflows, and offering precise targeting capabilities at scale. The automation of ad buying is also known as “programmatic advertising” — that is, using technology and software to buy digital ads. Programmatic Ad spends in the US is quickly ramping up: It will top $20 billion this year and reach $38.5 billion by year-end 2020.
But ad tech’s ascendancy isn’t without its drawbacks. The advertising industry in the US is dominated by two main players: Facebook and Google. As a result, ad tech players are fighting for a pretty small piece of the revenue pie, one of the many drivers of increased consolidation in the space.
2017 Source