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I don't think it's clear that advertisers are bearing the whole cost, at least not directly. Google, Facebook, Twitter, Snap etc. all sell placements via auctio
by Jonanin 8y ago
I don't think it's clear that advertisers are bearing the whole cost, at least not directly. Google, Facebook, Twitter, Snap etc. all sell placements via auction, so the advertisers themselves are determining the price. Presumably average fraud rate is already "priced in".
- munchbunny 8y agoAgreed with you there, to some extent the fraud rate is already "priced in". What I mean is actually this: Google, Facebook, etc. are opaque about fraud, to the point of misreporting metrics in Facebook's case. Let's say hypothetically that the advertiser had an oracle for whether any individual ad view was fake. I'm pretty sure the advertiser would be paying less. That difference is what I meant by bearing much of the cost. Google/Facebook's marginal cost for the fraudulent traffic is basically just the cost of infrastructure. The publisher (if there is one) is often the one causing the fraud, so they're not really "bearing the cost."
- sharkmerry 8y agoThe fraud rate is only priced in if every member of the auction has that oracle though right? Otherwise, they are unaware of the fraud and bidding as if their isnt. Inflating the ad price
- munchbunny 8y agoYes and no. You have a point, but I don't think you need every bidder to have this oracle. If only one bidder could tell the difference, that bidder might just buy fewer ads because ROI estimates will be lower, so fewer ad buys would look like positive ROI. Of course, that's under the assumption that fraud inflates performance metrics, but I think that's a pretty safe assumption.