October 19, 2016

Agencies Profiting From Online Ad Fraud

We know that fraud is a major problem for online advertisers. But we don't know how big a problem it is. Estimates range from 2% to 90% -- which is another way of saying we have no fucking idea.

The ANA (Association of National Advertisers) estimates that ad fraud will cost marketers $7.2 billion this year. But this estimate is based on assumptions that are imprecise at best. If any of the assumptions baked into this estimate is incorrect or inaccurate, the number could go up or down dramatically.

The $7.2 billion number represents about 5% of worldwide online ad spending. To give you an example of how fuzzy this number is, the WFA (World Federation of Advertisers) says that the actual amount of fraud could easily be 30% -- or six times this.

Believe it or not, if fraud accounts for just 10% of the online advertising system, in 9 years ad fraud will be the second largest source of criminal activity in the world, second only to drug trafficking.

And ad fraud carries with it almost no risk. According to Hewlett-Packard Enterprises, ad fraud has a higher payout potential and lower risk factor than any other type of online crime.

The scary part is that according to knowledgeable people, organized crime is not yet a major player in ad fraud. With so much money there for the taking, it is only a matter of time.

We might assume that the big gainers from online ad fraud are the criminals themselves. But according to the WFA, the group that gains the most is actually the legitimate marketing industry.

Below you'll see a chart which shows how money flows through the ad fraud "ecosystem." I'm not going to pretend for a minute that I understand all this stuff, but the key point is that most of the money that is being extracted from advertisers as a result of ad fraud is done by the marketing industry before the crooks enter the picture (click on the chart to read it better.)

The more skin an agency or agency holding company has in the "money-flow" chain (e.g., agency of record; trading desk; DSP; ad tech provider, etc) the greater is its potential for revenue derived indirectly from ad fraud.

In fact, as far as agencies and other marketing entities are concerned, fraud seems to add to their revenue stream.

This is not to say that agencies or marketing companies are complicit in ad fraud, but it is to say that they are inadvertently some of its biggest beneficiaries.

One can only wonder how much more seriously ad fraud remediation would be taken if the unintentional beneficiaries were being punished instead of rewarded.

October 13, 2016

The 3 Stages Of Online Advertising

I believe that long after I’ve left the advertising world for a better one, people will look back and say that the era of online advertising could be divided into 3 stages.

Stage 1: "Fools Rush In"

This is the stage we’ve been in for the past 10 years. Tens of billions of dollars have been flushed down the digi-drain by marginal marketing meatheads trying desperately not to fall behind the stampeding herd in the pursuit of up-to-the-minuteness.

Egged on by bumbling amateurs… oops, sorry…online experts, they have thrown every dollar they could find at the mythical “brand advocate” who was sitting at home exhausted after her Herculean “customer journey” just waiting to express her “brand love” to cyberworld once she received the bat signal in the form of a Twitter post.

It would be wonderful if this stage could continue forever because it's been a lot of laughs. But I’m afraid it’s had its day.

Stage 2: "Wait A Minute"

A US Senator named Everett Dirksen once said the three most important words in the English language are "wait a minute." We are about to transition into the “wait a minute” stage.

All the marketing geniuses and their agency enablers are no longer going to have free rein to piss money away on infantile digital daydreams.

Suddenly, c-suite lemmings who were pressuring marketing departments for more and more delusional online schemes, are starting to say, “Hold it. What are we getting for all this money?”

The numbers, metrics, and data that just one year ago were proof of how amazing the web is are suddenly morphing into proof of how fucked up it is.

We are just at the beginning of this stage and it’s not going to be nearly as entertaining as the first stage when “the stupider the better” was the rule (Tell us your Philadelphia Cream Cheese story!)

Instead we’re going to be slowly tortured by dueling flavors of data-death. It's going to be painful.

Stage 3: "Oh, Now I Get It"

Sometime in the future — could be 2 weeks from now or 10 years — someone’s going to figure out how to use the web for advertising in a sensible way.

There will be numbers we can trust, people we can trust, and results we can trust.

When you see this happen, please drop me a line.

October 11, 2016

The Walking Dead

As we've all been told a thousand times by marketing and media geniuses, television is dead. Here are a few examples:
Business Insider: "The Death Of TV As We've Known It Is Finally Here"

Forbes: "Why Television Is Dead"

Politico: "TV Is Dead. Now What?"
Tragically, here at the Ketel One Conference Center overlooking the campus of The Ad Contrarian world headquarters, we've been a little negligent recently in chronicling the death of television. So today we're going to do a little catching up.

Nielsen just released its Total Audience Report for the second quarter of 2016, so let's have a look at how the dead are doing:

    •    On average, adults 18+ spent 4 hours and 9 minutes a day watching live television.

    •    This is over 4 times as much time as they spent online on a laptop or desktop 

    •    It is over twice as much time as they spent connected on a smartphone

    •    They also spent more time listening to radio (almost twice as much) as they did online on a laptop or desktop 

    •    They spent more time listening to radio than they did connected on a smart phone.

Of course, listening to our chattering experts you'd never know any of these facts because... well, let's be honest here... because mostly all they're capable of doing is listening to each other babble and then repeating it.

OK, so maybe TV isn't quite dead yet but it's certainly dying quickly, right? Here's proof:
Business Insider, "TV Is Dying, And Here Are The Stats To Prove It."

The Motley Fool: "It's Official. The TV Industry Is Dying."

Money, Inc: "Need Proof That Cable TV Is Dying? This One Stat Trumps Them All."
Except... live TV viewing fell from 4 hours and 11 minutes last year to an alarming 4 hours and 9 minutes this year.

Personally, I'd like to die at this rate.

When you consider the quantity and range of incredible new media options that are available, there is one crystal clear truth that the clueless lemmings in the marketing and media world have completely misread -- the stunning resilience of television.