8 ms·

Alleged $7.5B fraud in online advertising

167 points by inthewoods 11y ago

curiously 11y ago
this is a huge market correction just waiting to happen. I'm glad, it should take these annoying banner ads out once and for all.
- logicallee 11y ago
  If you see banner ads (without clicking) you have the same experience as everyone else who actually sees them. Maybe the reason you notice them and they bother you, is because the amount of your attention that that experience has to take up has to be so great that your peers' attention is worth the payment even when that attention is divided by 10 (if we assume 90% click fraud.) In other words, given no other change except eliminating payments to non-person audience members, you might find the Internet is suddenly filled with advertisement that violently takes only 1/10th as much of your attention as currently, since the money is being spent on you and your peers only; and not on you, your peers, and then botnets and other dilution. Put yet another way: the leakier the transaction between you (real user) and advertiser, the worse the experience you have so as to make up for it. Let's put some numbers on it! Let's say everyone is happy to buy a banana online and the profit is 20 cents. Then if click fraud is 0% and the cost of an ad is 1 cent, a 7% click-through is fine: it costs 14 cents to get a customer, leaving 6 cents profit. Any more than 7% click-through is pure profit. But raise the click fraud to 90% and suddenly 7% won't do it: the real ad cost is now 10 cents, and instead of 7% click through you now need 70% clickthrough. So the ad will be much, much louder.
  - fineman 11y ago
    > So the ad will be much, much louder. And you figure that'll make the ad-haters click it more? Also, that 10cent ad is much more ripe for the picking than the 1cent one. All of a sudden you're attracting click-fraud attention from far more sophisticated attackers. And driving more "normal people" to ask a techie to hide these annoying dancing bananas (and all others ads at the same time.) I don't really think you've thought this through to the endgame.
    - logicallee 11y ago
      I don't know. Consider television advertisements. A 90% fraud rate (false, fraudulent, invented impressions) versus a 0% fraud rate baked into impression numbers reported to advertisers surely would affect how much sales movement they have to show, doesn't it? I mean sure, as the other comment pointed out cpc prices must in some sense rationally reflect the fraud amount. But nobody is perfect, no market is perfectly rational and efficient, and at the end of the day the quality of advertisement that next to no real person sees must be different from one where every impression paid for gets seen by a real person... (including you and me.) It would be a strange world otherwise.
  - geon 11y ago
    You are assuming the advertiser is not measuring the perfomance in any way. More likely, the ongoing fraud is driving the prices down. Once the fraud stops, cpc would go up.
taberiand 11y ago
They should use that new "I am not a robot" captcha technique to automagically guess that the viewer is a human
- codezero 11y ago
  They unfortunately have little incentive to do so, since they profit from fraudulent clicks.
  - dangrossman 11y ago
    The long-term incentives for ad companies like Google are aligned with the advertisers. They only profit from fraudulent clicks in the short term. Every fraudulent click they charge an advertiser for increases the likelihood that advertiser's campaign has a negative ROI and they stop advertising. The lost future revenue is a much larger number than the revenue from today's clicks.
    - codezero 11y ago
      This makes sense, thanks. It also assumes that the entire org is aligned with the long term goals. Couldn't short term gains be worthwhile for some group, at some time?
    - codezero 11y ago
      Since you built Improvely, I'm curious, what motivation is there for click fraud? Who benefits from fraudulent clicks? By that, I mean, who's paying for bots to generate this activity, and what do they gain by it? edited :)
      - deleted 11y ago
        [deleted]
      - dangrossman 11y ago
        The motivation is a monthly paycheck from an ad network without having to build a real audience for your website. If you can generate fake views and clicks at a lower cost than the network pays you, and convince the network the bot-generated activity is genuine, you're printing money.
dangrossman 11y ago
Google's the most open about the click fraud problem. They'll show you all the fake clicks you received but aren't being charged for if you customize the columns of your AdWords reports to add these two: http://i.imgur.com/sW1stNL.png http://i.imgur.com/sW1stNL.png A lot of the traffic they charge for on the display/content network is still awfully iffy. I get spikes of traffic from blogspot blogs that didn't exist the day before all the time. They won't exist a week later. How likely is it that a new blog with a single uninteresting post suddenly has tons of traffic interested in clicking my ads? Not very.
- Gustomaximus 11y ago
  The worse point for junk clicks is mobile display - particularly in app. Id never advise RON campaigns here without super tight monitoring. I've never been sure if it's more fraud or 'well placed ads'. I'm guessing the latter as kids apps seem to be the highest offender for mobile display. @dangrossman I build white lists rather than a black lists for companies where I handle their marketing for display on mobile. Not sure if your offering something like this in Improvely but I imagine it would be of value to a bunch of clients. Advertising networks will hate you!
  - icelancer 11y ago
    >. I'm guessing the latter as kids apps seem to be the highest offender for mobile display. My son clicks ads and whines about it nonstop when I let him play iPad in his games.
- partiallypro 11y ago
  My concern isn't that Google is being "open" about click fraud on their network advertising, which I think they are. But what about the fraud on Google service sites themselves. It at that point is no longer in Google's self interest to be as strict in their "open" reporting; it's ~90% of their revenue. So, it becomes an ROI game, which as long as ROI is strong they can keep their rates up while keeping their profits climbing. Then again, Google's top line has been shrinking recently, so it is possible they are doing something about it, and it is hurting them. That or it's the general shift in advertising to focus on mobile where it's much harder to get engagement. PPC campaigns feel like a shell game to me often times. Agency switching among advertisers is staggeringly high as people hunt for higher ROI.
Gustomaximus 11y ago
Old story. For non-brand advertising this is easily solved by down funnel tracking. Any marketer worth their salt tracks to the 'ultimate goal' and will avoid the shadier networks by looking at overall results. End of the day it comes down to a ROMI metric. It doesn't matter if 50% of the impressions are fake as long as the total investment pays off. For brand marketing I follow the networks that show DM performance as this shows some level of quality.
- newman8r 11y ago
  The tricky part is what to do when it doesn't pay off.. This isn't and has never been my primary line of work - but I can't say that every campaign I ran was profitable, even though the ones that were extremely profitable did make up for those.
  - geon 11y ago
    It is not tricky. You just stop using that ad network.
    - newman8r 11y ago
      That's a solution to mitigate losses but it doesn't address the fact that someone has lost money due to fraud - and I'm guessing it hurts small businesses the most. Strategy-wise the solution is simple, but digital marketing is intrinsically flawed nowadays and it's one industry that could literally be turned upside down at some point in the coming decades as the internet evolves. And I think a lot of people wouldn't mind that - especially the people with the power to bring the change (i.e. developers and proponents of open source solutions and haters of crappy spam)
      - geon 11y ago
        > it doesn't address the fact that someone has lost money due to fraud You would try it out with a few hundreds or possibly thousands first. If it isn't showing any return at all, something is fishy. You wouldn't with a sum that would hurt to lose. Then nice thing about the web is that we can measure and analyze user behavior.
CaveTech 11y ago
Isn't click fraud basically solved by the free market? I mean, as more and more bots create fake clicks and impressions, the value of the traffic itself is reduced. This will lower the CPC and CPM and you'll still be able to buy traffic at its free market value. If the traffic becomes worthless, no one will be willing to pay for it. Advertising fraud is basically arbitrage. The fraudsters are inflating the numbers but someone is still willing to pay a specific value for the traffic they're receiving. If a specific market is more prone to fraud, its because the amount publishers are paying is below its actual value.
- dangrossman 11y ago
  It's "solved" for advertisers who can measure ROI, at least short-term. It's unsolved when the success metric for the campaign is not easily measured, like brand awareness. It's also not solved for the publishers not engaging in arbitrage or fraud who earn less and less per impression. Let it play out unchecked and the bad actors will kill the market by driving all the legitimate suppliers out of business: if ad rates are driven so low that content sites can't pay their staff with the ad dollars, they'll either go out of business or exit the market (i.e. erect paywalls, return to direct ad sales instead of participating in exchanges, etc).
  - meritt 11y ago
    > brand awarenesss Exactly. Brand-awareness media buys tend to rely on third-party web traffic "experts" like Alexa, comScore, Hitwise, Quantcast, etc. These tools are incredibly simplistic and count the majority of fraudulent traffic as legit. When a site ranks highly across these experts, it is then used to increase the CPM a brand-advertiser ends up paying.
- greglindahl 11y ago
  The solution is better analytics. Any market player who can tell the difference between real and fake clicks will be better off than anyone depending on the market to somehow magically save them from increasing fake clicks by decreasing CPC and CPM.
- 11y ago
papercruncher 11y ago
I work for an AdTech company. One of our selling points is that we track much time users actively spent on our ads (= ad is in viewport + tab is active + user has moved the mouse or scrolled in the past 20 seconds). If we consistently see a source of traffic spending < 30 secs, then we manually start digging into the logs. If you're a brand/marketer, I recommend two easy things to increase your ROI: (1) Make sure you are not being charged for GoogleBot traffic. Seriously, for frequently updating sites, self-advertising GoogleBot can account for up to 10% of all impressions. Ad Networks can easily filter that traffic out. (2) If you're paying per impression, work with partners that charge on viewable CPM.
- nkozyra 11y ago
  Are there seriously ad companies that aren't filtering out common bots by UA in 2015? That seems unlikely but would be very disturbing if true. Second, I think simple tests like "time spent on ads" as a trigger is an extremely simplisitc, inefficient and likely inaccurate way of determining "potentially not human." The systems here are very complex, designed to mimic randomness within humanesque constraints.
  - papercruncher 11y ago
    Yes, sadly there are. It's not necessarily out of malice, a lot of folks just don't grasp how big spider traffic is. Even Google Analytics doesn't filter out crawlers by default, that setting is buried somewhere in the admin panel. You're right, "time spent on ad unit" is simplistic but it's not inefficient. It shouldn't be the only thing in your arsenal but it's a good signal. I reckon you are also overestimating the amount of sophistication that goes into these systems. The ones that are out for purchase in a black market become well-understood within a few weeks and are easy to fingerprint. Since the network is paying on net-30 days, there is some time to retroactively run some analysis and filter out provably non-human traffic.
logicallee 11y ago
Just a stylistic note, I found the word alleged to be a bit overused in the first part. A source of a quote in the article is given as: an interview given by "Jack Marshall, an alleged reformed fake web traffic buyer". How about an interview by Jack Marshall, who says he is a reformed fake web traffic buyer...
- sjscott80 11y ago
  Hello! I'm the author. I just needed to use "alleged" a lot because I was citing second-hand -- though credible -- information and did not do any independent research. I could not verify anything myself, so I needed to make sure that the point was clear.
alttab 11y ago
This isn't news IMO.
davidbanham 11y ago
In my experience, buyers are usually not sophisticated enough to have this discussion. Often, syndicate salespeople don't understand the issue either. Nobody else in the value chain is incentivised to educate them about the issue, so it doesn't happen. I founded, ran and sold a digital advertising company in the video space. We sold through various means including networks, direct sales and quasi-direct sales where we would engage a local syndicate to sell on our behalf. These were usually major digital publishers that used to be print publishers. These people are moving a _lot_ of the volume in this industry. They're battling widespread redundancies and falling budgets. They are not attracting the cream of the crop and are in an unfamiliar industry (tech).
- newman8r 11y ago
  I'm not even in the marketing business but I tend to have a lot of fun with the people calling up trying to sell adwords packages... I know I have won if in the end they say "ok, actually that's more of a question for the tech guys in the back room...." when I ask them incredibly basic questions about their methods. Guess it's so easy to sell to clueless business owners that taking 10 minutes to learn about the crap they are peddling isn't even worth it.
ChuckMcM 11y ago
This isn't being 'buried' it just isn't that interesting. All of the money the client gives to the agency gets spent, some goes to the agency, some goes to the networks, some goes to the content providers. That isn't news at all. Fraud is rampant. Also not new, although it is also also pretty easy to spot and block. Almost nobody pays per 'impression' because, well that went out of style about the same time Yahoo! banner ads did. Eventually the advertisers are going to pay for performance, and to do that they are going to have to fix the way they do advertising so that their ad, leads to their landing page which identifies who delivered the ad. Then they are going to pay based on whether or not the person who landed on their page actually buys something (service, good, or subscription). No money, no ad payment. Most companies other than Amazon really aren't set up for that, and Amazon won't do it yet because, as far as I can tell, they aren't being forced too. Its a shame that "affiliate" ads like the ones they let bloggers use have 100X there ROI of "CPC" ads and yet they have convinced the bloggers they can pay then a nickel and they should be happy when Google gets $13 - $23 for the same result. I started building this system out of disgust but never finished it. It isn't that technically difficult, but it does have a lot of moving parts, and it does require infrastructure on the advertisers web site which can create durable transaction records. Some day I think.
- omarchowdhury 11y ago
  Almost nobody pays for impressions? Do you know how much money is spent on display ads on a CPM basis? Billions.
  - BorisMelnik 11y ago
    is true, and not just display ads even a lot of facebook is still CPM/CPC
    - ChuckMcM 11y ago
      the point of this article though, is that folks are slowly learning that CPM/CPC is completely worthless. No amount of fraud detection is going to get it under control, and when your typical click frauder can spin up 10,000 micro instances on Amazon and generate a couple of billion false "impressions" you realize that its not cost effective to try to play that game. I agree though that many people have yet to learn this lesson, especially on Facebook but it is happening.
newman8r 11y ago
All I can say is, every now and then I used to request a few grand from a popular network that I won't name but you probably know which one it is... about click fraud, inconsistencies (which I was not making up at all). Every single time,. no questions asked, I was given the full amount requested... Now I'm not saying that means anything... but it always felt a bit odd like... yes yes we know how bad it is, take your money and shut up and keep buying those ads
anti-shill 11y ago
this puppy is gonna come crashing down...just like real estate bubble a few years ago....what will be the effect? Less online content, I guess.
- fapjacks 11y ago
  That is the fear, certainly. But I don't think so. I am thinking that advertising will become more aligned with the content, and ad-publisher relationships will become more organic. Now, I'll also readily admit that I think cooperatives are the future of business, so I can see where people wouldn't agree with my crystal ball vision of the future of advertising.
throwaway3453 11y ago
This article is a mess. The author states, "An entire industry—billions of dollars and thousands of jobs—is at stake," then goes into a completely different rant, "why is nobody talking about this?" Over half the images are incomprehensible or offer no insight. >https://upload.wikimedia.org/wikipedia/commons/c/cb/Clickpath_Analysis.png https://upload.wikimedia.org/wikipedia/commons/c/cb/Clickpat... Including an unintelligible graph without an explanation to why it's necessary is bizarre. Even more so writing headers like "Responses to the scandal" and dropping in a stock photo of a gavel. It's like a pull quote, but even lazier. There is some value in this article, >Hoffman, the retired ad agency CEO who I quoted at the beginning, puts it better than I can: >http://adcontrarian.blogspot.co.il/2013/06/the-75-billion-ad-swindle.html http://adcontrarian.blogspot.co.il/2013/06/the-75-billion-ad... Even the author suggests to read this one instead.
Vegemeister 11y ago
Good. Every dollar that buys an ad shown to a robot is not buying an ad shown to a human.
- nfoz 11y ago
  I am extremely against advertising, but even though this is money being spent towards something that offends and antagonizes me, I still think that fraud in the industry should be called out and fixed.
mkramlich 11y ago
On the server-side most bots are easy to recognize in an automated way. not all, but most. So speaking in general terms if the advertiser (by this I mean whoever's product or service is being promoted) site wants to filter out bot traffic, or only place ads with partners who block bots, there are ways of doing that, or at least reducing it. This has been pretty well-known for over a decade in this industry, easily.
geon 11y ago
In the mid 00's I was working for a cashback/incentive site. Basically we would give monetary incentive to members of our site to complete whatever each specific ad was measuring. It could be signing up for a newsletter, or registering an account at some site. Poker websites would pay well for new users. The whole scheme was of dubious value for the advertisers, obviously. The ad networks were happy to have us, though.
zw123456 11y ago
I don't know anything about advertising but sometimes I watch TV late at night and I see ads for various local and national companies and I always wondered how they ever could verify that they actually are getting the air time during the time periods and channels that they are paying for, it seems like the type of thing that could easily be either intentionally or unintentionally messed up. It seems like it could be something that could be automated, a system that would listen and or watch all the channels and log the adds for the companies that subscribe to the service to insure that the broadcasters are giving the time they say they are. There is probably already something like that out there, does anyone know if there is such a thing?
- bjterry 11y ago
  This definitely exists under the name "media monitoring." For example http://www.mediamonitors.com/ http://www.mediamonitors.com/ but there are a bunch of different providers.
reilly3000 11y ago
Moz is not a disinterested party. They sell services to promote marketing that doesn't involve paid media. I am in the paid media business, and I am not disinterested either as such. I feel strongly that advertising is the lesser of evils of the alternative is marketing messages buried deep in content and social spam.
- sjscott80 11y ago
  Hello, I'm the author of the Moz piece and just wanted to respond. (No, I do not work for them -- I'm just a contributor.) 1. They do not sell marketing services. They sell marketing software. 2. I pitched my article to them, and they were very skeptical about the topic at first. Obviously, the issue can come across as very conspiratorial and sensational. But once I showed them all of my credible sources and citations and explained everything in-depth, they decided to publish the piece. 3. Again, I cannot speak for Moz, but my sense is that they will publish anything that they perceive to be very helpful and interesting for their audience -- digital marketers. They more that they do so, the more that their brand will grow among their audience and the more that people will visit the website to read the good articles.
lessthunk 11y ago
The smarter players measure and target accordingly. The rise of RTB and 3rd party companies or your own JS solutions let you cherry pick what you want, or you simply bid much lower (if at all) on traffic you consider not valuable. This is mostly a problem for unsophisticated players and exaggerated hype originating from players that support tracking view ability, etc.
- mrweasel 11y ago
  >This is mostly a problem for unsophisticated players Aren't most customers of online ads unsophisticated users? The solution could of cause be to let a professional online ad company run your buying, but then you still don't know what they're doing with your money. I believe that most of the people are running their online ad buys as if they where bus stops ads. That might be wrong to, but that's where the business needs to start.
paulpauper 11y ago
I'm sure fraud & waste exists in all mediums of advertising $7 billion over meany years, while it seems like a lot, is still just a small amount of the total advertising online market The figure may still be exaggerated and more research is needed. It could include things that are mistankingly called 'fraud' but instead if a misunderstanding of terminology In a free market, online advertising fraud would depress prices as advertisers pay less due to worse results. If advertisers were getting 100% human traffic, rates would go up, making the ads more expensive. So in the long-run it balances out. But on an individual level it sucks getting scammed.
sjscott80 11y ago
Hello, everyone! I'm the author -- and I'm completely amazed. Thanks to whoever submitted this, and thanks to all the upvoters! I'll be going through the comments and responding when necessary. Feel free to AMA! Oh, there seem to be a lot of interesting stories here from people who worked for ad companies and related firms. Feel free to post your comments on the original Moz article -- I'm sure the community there would love to hear about it.
oxfordbiochron 11y ago
Here's a video on our bot detection called BioChronometrics. Basically eliminates ad fraud. http://oxford-biochron.com/biochronometrics-a-look-under-the-hood/ http://oxford-biochron.com/biochronometrics-a-look-under-the...
vannevar 11y ago
Has anyone ever attempted to correlate the claimed activity with actual human behavior? You'd essentially survey a sample of people's online habits, extrapolate to the larger population, and compare that with a similar sampling/extrapolation of reported clicks and impressions. My guess is that the fraud rate would actually be closer to 90%. But as others have pointed out, the market eventually catches up and discounts the watered-down traffic.
stickfigure 11y ago
Who is buying ten-cents-per-impression ads? $0.10 CPM sure, but $0.10 CPI?

167 points by inthewoods 11y ago

this is a huge market correction just waiting to happen. I'm glad, it should take these annoying banner ads out once and for all.

logicallee 11y ago
If you see banner ads (without clicking) you have the same experience as everyone else who actually sees them. Maybe the reason you notice them and they bother you, is because the amount of your attention that that experience has to take up has to be so great that your peers' attention is worth the payment even when that attention is divided by 10 (if we assume 90% click fraud.) In other words, given no other change except eliminating payments to non-person audience members, you might find the Internet is suddenly filled with advertisement that violently takes only 1/10th as much of your attention as currently, since the money is being spent on you and your peers only; and not on you, your peers, and then botnets and other dilution. Put yet another way: the leakier the transaction between you (real user) and advertiser, the worse the experience you have so as to make up for it. Let's put some numbers on it! Let's say everyone is happy to buy a banana online and the profit is 20 cents. Then if click fraud is 0% and the cost of an ad is 1 cent, a 7% click-through is fine: it costs 14 cents to get a customer, leaving 6 cents profit. Any more than 7% click-through is pure profit. But raise the click fraud to 90% and suddenly 7% won't do it: the real ad cost is now 10 cents, and instead of 7% click through you now need 70% clickthrough. So the ad will be much, much louder.
- fineman 11y ago
  > So the ad will be much, much louder. And you figure that'll make the ad-haters click it more? Also, that 10cent ad is much more ripe for the picking than the 1cent one. All of a sudden you're attracting click-fraud attention from far more sophisticated attackers. And driving more "normal people" to ask a techie to hide these annoying dancing bananas (and all others ads at the same time.) I don't really think you've thought this through to the endgame.
  - logicallee 11y ago
    I don't know. Consider television advertisements. A 90% fraud rate (false, fraudulent, invented impressions) versus a 0% fraud rate baked into impression numbers reported to advertisers surely would affect how much sales movement they have to show, doesn't it? I mean sure, as the other comment pointed out cpc prices must in some sense rationally reflect the fraud amount. But nobody is perfect, no market is perfectly rational and efficient, and at the end of the day the quality of advertisement that next to no real person sees must be different from one where every impression paid for gets seen by a real person... (including you and me.) It would be a strange world otherwise.
- geon 11y ago
  You are assuming the advertiser is not measuring the perfomance in any way. More likely, the ongoing fraud is driving the prices down. Once the fraud stops, cpc would go up.

taberiand 11y ago

They should use that new "I am not a robot" captcha technique to automagically guess that the viewer is a human

codezero 11y ago
They unfortunately have little incentive to do so, since they profit from fraudulent clicks.
- dangrossman 11y ago
  The long-term incentives for ad companies like Google are aligned with the advertisers. They only profit from fraudulent clicks in the short term. Every fraudulent click they charge an advertiser for increases the likelihood that advertiser's campaign has a negative ROI and they stop advertising. The lost future revenue is a much larger number than the revenue from today's clicks.
  - codezero 11y ago
    This makes sense, thanks. It also assumes that the entire org is aligned with the long term goals. Couldn't short term gains be worthwhile for some group, at some time?
  - codezero 11y ago
    Since you built Improvely, I'm curious, what motivation is there for click fraud? Who benefits from fraudulent clicks? By that, I mean, who's paying for bots to generate this activity, and what do they gain by it? edited :)
    - deleted 11y ago
      [deleted]
    - dangrossman 11y ago
      The motivation is a monthly paycheck from an ad network without having to build a real audience for your website. If you can generate fake views and clicks at a lower cost than the network pays you, and convince the network the bot-generated activity is genuine, you're printing money.

dangrossman 11y ago

Google's the most open about the click fraud problem. They'll show you all the fake clicks you received but aren't being charged for if you customize the columns of your AdWords reports to add these two: http://i.imgur.com/sW1stNL.png http://i.imgur.com/sW1stNL.png A lot of the traffic they charge for on the display/content network is still awfully iffy. I get spikes of traffic from blogspot blogs that didn't exist the day before all the time. They won't exist a week later. How likely is it that a new blog with a single uninteresting post suddenly has tons of traffic interested in clicking my ads? Not very.

Gustomaximus 11y ago
The worse point for junk clicks is mobile display - particularly in app. Id never advise RON campaigns here without super tight monitoring. I've never been sure if it's more fraud or 'well placed ads'. I'm guessing the latter as kids apps seem to be the highest offender for mobile display. @dangrossman I build white lists rather than a black lists for companies where I handle their marketing for display on mobile. Not sure if your offering something like this in Improvely but I imagine it would be of value to a bunch of clients. Advertising networks will hate you!
- icelancer 11y ago
  >. I'm guessing the latter as kids apps seem to be the highest offender for mobile display. My son clicks ads and whines about it nonstop when I let him play iPad in his games.
partiallypro 11y ago
My concern isn't that Google is being "open" about click fraud on their network advertising, which I think they are. But what about the fraud on Google service sites themselves. It at that point is no longer in Google's self interest to be as strict in their "open" reporting; it's ~90% of their revenue. So, it becomes an ROI game, which as long as ROI is strong they can keep their rates up while keeping their profits climbing. Then again, Google's top line has been shrinking recently, so it is possible they are doing something about it, and it is hurting them. That or it's the general shift in advertising to focus on mobile where it's much harder to get engagement. PPC campaigns feel like a shell game to me often times. Agency switching among advertisers is staggeringly high as people hunt for higher ROI.

Gustomaximus 11y ago

Old story. For non-brand advertising this is easily solved by down funnel tracking. Any marketer worth their salt tracks to the 'ultimate goal' and will avoid the shadier networks by looking at overall results. End of the day it comes down to a ROMI metric. It doesn't matter if 50% of the impressions are fake as long as the total investment pays off. For brand marketing I follow the networks that show DM performance as this shows some level of quality.

newman8r 11y ago
The tricky part is what to do when it doesn't pay off.. This isn't and has never been my primary line of work - but I can't say that every campaign I ran was profitable, even though the ones that were extremely profitable did make up for those.
- geon 11y ago
  It is not tricky. You just stop using that ad network.
  - newman8r 11y ago
    That's a solution to mitigate losses but it doesn't address the fact that someone has lost money due to fraud - and I'm guessing it hurts small businesses the most. Strategy-wise the solution is simple, but digital marketing is intrinsically flawed nowadays and it's one industry that could literally be turned upside down at some point in the coming decades as the internet evolves. And I think a lot of people wouldn't mind that - especially the people with the power to bring the change (i.e. developers and proponents of open source solutions and haters of crappy spam)
    - geon 11y ago
      > it doesn't address the fact that someone has lost money due to fraud You would try it out with a few hundreds or possibly thousands first. If it isn't showing any return at all, something is fishy. You wouldn't with a sum that would hurt to lose. Then nice thing about the web is that we can measure and analyze user behavior.

CaveTech 11y ago

Isn't click fraud basically solved by the free market? I mean, as more and more bots create fake clicks and impressions, the value of the traffic itself is reduced. This will lower the CPC and CPM and you'll still be able to buy traffic at its free market value. If the traffic becomes worthless, no one will be willing to pay for it. Advertising fraud is basically arbitrage. The fraudsters are inflating the numbers but someone is still willing to pay a specific value for the traffic they're receiving. If a specific market is more prone to fraud, its because the amount publishers are paying is below its actual value.

dangrossman 11y ago
It's "solved" for advertisers who can measure ROI, at least short-term. It's unsolved when the success metric for the campaign is not easily measured, like brand awareness. It's also not solved for the publishers not engaging in arbitrage or fraud who earn less and less per impression. Let it play out unchecked and the bad actors will kill the market by driving all the legitimate suppliers out of business: if ad rates are driven so low that content sites can't pay their staff with the ad dollars, they'll either go out of business or exit the market (i.e. erect paywalls, return to direct ad sales instead of participating in exchanges, etc).
- meritt 11y ago
  > brand awarenesss Exactly. Brand-awareness media buys tend to rely on third-party web traffic "experts" like Alexa, comScore, Hitwise, Quantcast, etc. These tools are incredibly simplistic and count the majority of fraudulent traffic as legit. When a site ranks highly across these experts, it is then used to increase the CPM a brand-advertiser ends up paying.
greglindahl 11y ago
The solution is better analytics. Any market player who can tell the difference between real and fake clicks will be better off than anyone depending on the market to somehow magically save them from increasing fake clicks by decreasing CPC and CPM.
11y ago

papercruncher 11y ago

I work for an AdTech company. One of our selling points is that we track much time users actively spent on our ads (= ad is in viewport + tab is active + user has moved the mouse or scrolled in the past 20 seconds). If we consistently see a source of traffic spending < 30 secs, then we manually start digging into the logs. If you're a brand/marketer, I recommend two easy things to increase your ROI: (1) Make sure you are not being charged for GoogleBot traffic. Seriously, for frequently updating sites, self-advertising GoogleBot can account for up to 10% of all impressions. Ad Networks can easily filter that traffic out. (2) If you're paying per impression, work with partners that charge on viewable CPM.

nkozyra 11y ago
Are there seriously ad companies that aren't filtering out common bots by UA in 2015? That seems unlikely but would be very disturbing if true. Second, I think simple tests like "time spent on ads" as a trigger is an extremely simplisitc, inefficient and likely inaccurate way of determining "potentially not human." The systems here are very complex, designed to mimic randomness within humanesque constraints.
- papercruncher 11y ago
  Yes, sadly there are. It's not necessarily out of malice, a lot of folks just don't grasp how big spider traffic is. Even Google Analytics doesn't filter out crawlers by default, that setting is buried somewhere in the admin panel. You're right, "time spent on ad unit" is simplistic but it's not inefficient. It shouldn't be the only thing in your arsenal but it's a good signal. I reckon you are also overestimating the amount of sophistication that goes into these systems. The ones that are out for purchase in a black market become well-understood within a few weeks and are easy to fingerprint. Since the network is paying on net-30 days, there is some time to retroactively run some analysis and filter out provably non-human traffic.

logicallee 11y ago

Just a stylistic note, I found the word alleged to be a bit overused in the first part. A source of a quote in the article is given as: an interview given by "Jack Marshall, an alleged reformed fake web traffic buyer". How about an interview by Jack Marshall, who says he is a reformed fake web traffic buyer...

sjscott80 11y ago
Hello! I'm the author. I just needed to use "alleged" a lot because I was citing second-hand -- though credible -- information and did not do any independent research. I could not verify anything myself, so I needed to make sure that the point was clear.

alttab 11y ago

This isn't news IMO.

davidbanham 11y ago

In my experience, buyers are usually not sophisticated enough to have this discussion. Often, syndicate salespeople don't understand the issue either. Nobody else in the value chain is incentivised to educate them about the issue, so it doesn't happen. I founded, ran and sold a digital advertising company in the video space. We sold through various means including networks, direct sales and quasi-direct sales where we would engage a local syndicate to sell on our behalf. These were usually major digital publishers that used to be print publishers. These people are moving a _lot_ of the volume in this industry. They're battling widespread redundancies and falling budgets. They are not attracting the cream of the crop and are in an unfamiliar industry (tech).

newman8r 11y ago
I'm not even in the marketing business but I tend to have a lot of fun with the people calling up trying to sell adwords packages... I know I have won if in the end they say "ok, actually that's more of a question for the tech guys in the back room...." when I ask them incredibly basic questions about their methods. Guess it's so easy to sell to clueless business owners that taking 10 minutes to learn about the crap they are peddling isn't even worth it.

ChuckMcM 11y ago

This isn't being 'buried' it just isn't that interesting. All of the money the client gives to the agency gets spent, some goes to the agency, some goes to the networks, some goes to the content providers. That isn't news at all. Fraud is rampant. Also not new, although it is also also pretty easy to spot and block. Almost nobody pays per 'impression' because, well that went out of style about the same time Yahoo! banner ads did. Eventually the advertisers are going to pay for performance, and to do that they are going to have to fix the way they do advertising so that their ad, leads to their landing page which identifies who delivered the ad. Then they are going to pay based on whether or not the person who landed on their page actually buys something (service, good, or subscription). No money, no ad payment. Most companies other than Amazon really aren't set up for that, and Amazon won't do it yet because, as far as I can tell, they aren't being forced too. Its a shame that "affiliate" ads like the ones they let bloggers use have 100X there ROI of "CPC" ads and yet they have convinced the bloggers they can pay then a nickel and they should be happy when Google gets $13 - $23 for the same result. I started building this system out of disgust but never finished it. It isn't that technically difficult, but it does have a lot of moving parts, and it does require infrastructure on the advertisers web site which can create durable transaction records. Some day I think.

omarchowdhury 11y ago
Almost nobody pays for impressions? Do you know how much money is spent on display ads on a CPM basis? Billions.
- BorisMelnik 11y ago
  is true, and not just display ads even a lot of facebook is still CPM/CPC
  - ChuckMcM 11y ago
    the point of this article though, is that folks are slowly learning that CPM/CPC is completely worthless. No amount of fraud detection is going to get it under control, and when your typical click frauder can spin up 10,000 micro instances on Amazon and generate a couple of billion false "impressions" you realize that its not cost effective to try to play that game. I agree though that many people have yet to learn this lesson, especially on Facebook but it is happening.

newman8r 11y ago

All I can say is, every now and then I used to request a few grand from a popular network that I won't name but you probably know which one it is... about click fraud, inconsistencies (which I was not making up at all). Every single time,. no questions asked, I was given the full amount requested... Now I'm not saying that means anything... but it always felt a bit odd like... yes yes we know how bad it is, take your money and shut up and keep buying those ads

anti-shill 11y ago

this puppy is gonna come crashing down...just like real estate bubble a few years ago....what will be the effect? Less online content, I guess.

fapjacks 11y ago
That is the fear, certainly. But I don't think so. I am thinking that advertising will become more aligned with the content, and ad-publisher relationships will become more organic. Now, I'll also readily admit that I think cooperatives are the future of business, so I can see where people wouldn't agree with my crystal ball vision of the future of advertising.

throwaway3453 11y ago

This article is a mess. The author states, "An entire industry—billions of dollars and thousands of jobs—is at stake," then goes into a completely different rant, "why is nobody talking about this?" Over half the images are incomprehensible or offer no insight. >https://upload.wikimedia.org/wikipedia/commons/c/cb/Clickpath_Analysis.png https://upload.wikimedia.org/wikipedia/commons/c/cb/Clickpat... Including an unintelligible graph without an explanation to why it's necessary is bizarre. Even more so writing headers like "Responses to the scandal" and dropping in a stock photo of a gavel. It's like a pull quote, but even lazier. There is some value in this article, >Hoffman, the retired ad agency CEO who I quoted at the beginning, puts it better than I can: >http://adcontrarian.blogspot.co.il/2013/06/the-75-billion-ad-swindle.html http://adcontrarian.blogspot.co.il/2013/06/the-75-billion-ad... Even the author suggests to read this one instead.

Vegemeister 11y ago

Good. Every dollar that buys an ad shown to a robot is not buying an ad shown to a human.

nfoz 11y ago
I am extremely against advertising, but even though this is money being spent towards something that offends and antagonizes me, I still think that fraud in the industry should be called out and fixed.

mkramlich 11y ago

On the server-side most bots are easy to recognize in an automated way. not all, but most. So speaking in general terms if the advertiser (by this I mean whoever's product or service is being promoted) site wants to filter out bot traffic, or only place ads with partners who block bots, there are ways of doing that, or at least reducing it. This has been pretty well-known for over a decade in this industry, easily.

geon 11y ago

In the mid 00's I was working for a cashback/incentive site. Basically we would give monetary incentive to members of our site to complete whatever each specific ad was measuring. It could be signing up for a newsletter, or registering an account at some site. Poker websites would pay well for new users. The whole scheme was of dubious value for the advertisers, obviously. The ad networks were happy to have us, though.

zw123456 11y ago

I don't know anything about advertising but sometimes I watch TV late at night and I see ads for various local and national companies and I always wondered how they ever could verify that they actually are getting the air time during the time periods and channels that they are paying for, it seems like the type of thing that could easily be either intentionally or unintentionally messed up. It seems like it could be something that could be automated, a system that would listen and or watch all the channels and log the adds for the companies that subscribe to the service to insure that the broadcasters are giving the time they say they are. There is probably already something like that out there, does anyone know if there is such a thing?

bjterry 11y ago
This definitely exists under the name "media monitoring." For example http://www.mediamonitors.com/ http://www.mediamonitors.com/ but there are a bunch of different providers.

reilly3000 11y ago

Moz is not a disinterested party. They sell services to promote marketing that doesn't involve paid media. I am in the paid media business, and I am not disinterested either as such. I feel strongly that advertising is the lesser of evils of the alternative is marketing messages buried deep in content and social spam.

sjscott80 11y ago
Hello, I'm the author of the Moz piece and just wanted to respond. (No, I do not work for them -- I'm just a contributor.) 1. They do not sell marketing services. They sell marketing software. 2. I pitched my article to them, and they were very skeptical about the topic at first. Obviously, the issue can come across as very conspiratorial and sensational. But once I showed them all of my credible sources and citations and explained everything in-depth, they decided to publish the piece. 3. Again, I cannot speak for Moz, but my sense is that they will publish anything that they perceive to be very helpful and interesting for their audience -- digital marketers. They more that they do so, the more that their brand will grow among their audience and the more that people will visit the website to read the good articles.

lessthunk 11y ago

The smarter players measure and target accordingly. The rise of RTB and 3rd party companies or your own JS solutions let you cherry pick what you want, or you simply bid much lower (if at all) on traffic you consider not valuable. This is mostly a problem for unsophisticated players and exaggerated hype originating from players that support tracking view ability, etc.

mrweasel 11y ago
>This is mostly a problem for unsophisticated players Aren't most customers of online ads unsophisticated users? The solution could of cause be to let a professional online ad company run your buying, but then you still don't know what they're doing with your money. I believe that most of the people are running their online ad buys as if they where bus stops ads. That might be wrong to, but that's where the business needs to start.

paulpauper 11y ago

I'm sure fraud & waste exists in all mediums of advertising $7 billion over meany years, while it seems like a lot, is still just a small amount of the total advertising online market The figure may still be exaggerated and more research is needed. It could include things that are mistankingly called 'fraud' but instead if a misunderstanding of terminology In a free market, online advertising fraud would depress prices as advertisers pay less due to worse results. If advertisers were getting 100% human traffic, rates would go up, making the ads more expensive. So in the long-run it balances out. But on an individual level it sucks getting scammed.

sjscott80 11y ago

Hello, everyone! I'm the author -- and I'm completely amazed. Thanks to whoever submitted this, and thanks to all the upvoters! I'll be going through the comments and responding when necessary. Feel free to AMA! Oh, there seem to be a lot of interesting stories here from people who worked for ad companies and related firms. Feel free to post your comments on the original Moz article -- I'm sure the community there would love to hear about it.

oxfordbiochron 11y ago

Here's a video on our bot detection called BioChronometrics. Basically eliminates ad fraud. http://oxford-biochron.com/biochronometrics-a-look-under-the-hood/ http://oxford-biochron.com/biochronometrics-a-look-under-the...

vannevar 11y ago

Has anyone ever attempted to correlate the claimed activity with actual human behavior? You'd essentially survey a sample of people's online habits, extrapolate to the larger population, and compare that with a similar sampling/extrapolation of reported clicks and impressions. My guess is that the fraud rate would actually be closer to 90%. But as others have pointed out, the market eventually catches up and discounts the watered-down traffic.

stickfigure 11y ago

Who is buying ten-cents-per-impression ads? $0.10 CPM sure, but $0.10 CPI?