By Reid Tatoris, Co-Founder, Are You A Human
Often, when we talk about fraud in our industry, it quickly spirals into the blame game with scared publishers on one side, angry advertisers on the other. But when advertisers get angry, publishers only get defensive with publishers pointing the finger at exchanges, who point the finger at agencies/advertisers saying they only care about price. It’s a vicious cycle and no one in the value chain wins.
It’s no secret that the online ad game is corrupted. And, it’s no wonder many want to clean things up, but are simply too afraid to be the first mover because of all the finger pointing to fix it. Ad networks have little incentive to clean up their exchanges first, because they get a cut of every transaction, and cleaning up their traffic sources would lower revenues. Publishers don’t want to see penny-per-click prices disappear, because then their revenues would plummet and, more importantly, so would their traffic stats. Ad buyers know that their clients want the cheapest rates possible and the largest reach. At the end of it, it’s brands and businesses that get scammed, wasting millions of dollars on bogus, pointless and ineffective advertising.
But in reality, both sides are victims with both sides being stolen from and lied to. Everyone in the value chain knows that we have a terribly broken and inefficient system, but yet it’s still nearly impossible to have a conversation with advertisers/agencies, publishers, and exchanges without all the finger pointing. They’re all being victimized by a broken system that allows waste to be created inadvertently and adding no value whatsoever.
To understand how the digital advertising industry can attract more dollars and stop the finger pointing, it’s important to take a look at the issues that have inhibited the development of the medium to date, and why there’s reason to be quite optimistic about its future:
Last year, Google reported that 56.1 percent of all ads served were not measured viewable by humans. It also said that as much as half of publisher traffic is from bots. This represents a projected $6 billion-plus in wasted ad spend this year.
In fact, the system is so broken that, for some publishers, knowingly buying traffic that comes from bots is part of their business model. An anonymous publishing executive, who claimed to be buying up to $35,000 worth of traffic per day, recently told Digiday that for publishers running an arbitrage model, all that matters is profit; quality of traffic does not factor into the equation. And, for publishers and ad networks, buying cheap, fake traffic is an easy way to make a profit in an environment with increasingly low margins.
Many believe that if online ad fraud persists in this manner, Facebook and Google will further cement their positions, at the expense of other cheaper ad networks. Why you ask? Because with Facebook and Google’s near monopolies on search and social and their treasure trove of first-party user-data that goes along with it, they can demand increasingly higher rates.
First-party data is from a brand’s own users or customers. Third-party data is anonymous information obtained about users to augment or substitute for first-party data. It can be, for instance, anonymous profiles about people who drive a car, based on cookie-tracked visits to car sites and other behavioral data. But, let’s not overlook the fact that cookies and related data can also be fraudulent too.
While acknowledging that first-party data can be quite useful, former Forbes CEO Jim Spanfeller recently cited conversations with data scientists who privately confided that third-party data lacks usefulness. One such expert, he said, contended that third-party data can have a 50 percent accuracy rate — but just for gender.
If all of this is true, then what high-quality publishers need to do is leverage their own first-party data in much the same way Google or Facebook does. Specifically, publishers need to authenticate their sites traffic as real human traffic, thus allowing advertisers to only pay for in-view ads that get in front of real people, publishers will command higher rates and make more money.
Furthermore, if we create ads that are delivered efficiently, while removing waste and fake sites, advertisers will ultimately reach far more actual human eyeballs with a lower budget. And, if this logic holds up (which it will) and digital advertising becomes more efficient and less wasteful, more money will move over from TV, in which case every publisher, agency, exchange, data provider, and digital marketer will make more money,
Now I ask – who doesn’t want to make more money?