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John Wanamaker Was Right! How Fraud Wastes Your Digital Ad Dollars

John Wanamaker Was Right! How Fraud Wastes Your Digital Ad Dollars on Marketing Horizons

Bot-generated fraud on digital advertising will waste $42 billion by 2022, according to Jupiter Research. A shocking sum. Our guest, Dr. Augustine Fou, explains why and how ad fraud is perpetrated, and what can be done about it. Listen in to learn how we marketers must change our thinking about ad metrics, and update our media buying strategies altogether.

Cyndi Greenglass: In the last 10 years, we have moved from human-to-human ad networks to programmatic ad networks. This created the opportunity for ad fraud. Marketers have been focused on spending all the money we're given for digital media, and we're relying heavily on vanity metrics so we're exacerbating the problem with that fraud. Did I explain the core situation here for our listeners?

Dr. Fou: Yes, that's a really great way to summarize it in a nutshell. I've been observing this industry for many years, and in the early days of digital advertising, the advertisers—the buyers of the ad—would go to real publishers. But in the last 10 years, the buyers no longer have to go to the publishers to buy the ads because the idea is that they can now place their ads across millions upon millions of sites by buying through an exchange very much like Wall Street. Wall Street connects the buyers and sellers of shares of stock, and the programmatic ad exchanges now connect the buyers and sellers of ad impressions. When you disassociate the buyer from the seller, you now have the possibility of hundreds of thousands of fake sites.

Ruth Stevens: What can marketers do about this?

Dr. Fou: If you think about the vanity metrics that they're currently reporting on—the number of impressions, the low CPM prices and the number of clicks—all of those are conveniently and easily done by bots. There are a finite number of humans on earth visiting a finite number of websites generating a finite number of page views. In the real world the way the ads are supposed to be created is when a visitor visits a page like New York Times, then the ads loads. With programmatic exchanges, the bots can deliberately load lots and lots of webpages on fake sites and therefore cause a lot of the ad impressions so it's almost like creating ad inventory out of thin air. That's how we can generate so many more billions of impressions than was ever possible before, because human audiences don't grow or contract very quickly. They grow very slowly, but bots can actually generate the billions upon billions of impressions that the marketers want to buy. On top of that, they can do it at very low CPM prices, because the fake sites, unlike the real newspaper sites or magazine publishers, don't have to create content. They don't have the cost of real writers, journalists or editors to create content, because that's not their intent. They're not trying to create useful content for humans. All they're doing is creating websites, for the purpose of generating as many ad impressions as possible, so in that way we're also giving them the second thing they want, which is low CPM prices. On the surface, the agencies love this as well because they can tell their clients, the big advertisers, we got more impressions meaning they think they got a lot more reach and we got you better prices.

Cyndi Greenglass: What kind of fraud are we are we perpetrating here?

Dr. Fou: The fraud primarily affects CPM and CPC. These are display ads and video ads that are purchased on a CPM or cost per thousand basis. They also can affect search ads which are purchased on a cost per click basis. The bots can not only create the ad impressions, but they can also click on them.

Cyndi Greenglass: What metrics should we be measuring?

Dr. Fou: The key thing is to move away from the vanity metrics or the quantity metrics because the bots can generate tens of billions of impressions. I always look at whether the marketer uses look back windows. The reason for that is it tells me that they are focused on incremental. The key problem with a lot of digital marketing is that for the largest of advertisers are never dark in terms of advertising. They always have some form of advertising going on. The question becomes cause and effect. Did the digital campaigns actually drive any incremental sales?  Which means sales that would not be there in the absence of the digital marketing. The reason I ask this is some of the marketers did run their own experiments during 2020. Some of them did pause digital spent and to their surprise there was no change in business outcomes. If that were the case, whether it was due to ad fraud or not, those dollars were not being productive for them. It didn't drive incremental sales for them. There might have been a better way or better place for them to invest those dollars. For me, there should be a focus on business outcomes. If they have a look back window that tells me that they’re looking instrumentality so they can actually see the cause and effect of the digital marketing.

Ruth Stevens: Why would compliance with the new privacy standards eliminate or reduce the existence of the bots?

Dr. Fou: The bots are currently pretending to be audiences that marketers want to target. One of the fundamental premises of digital marketing is that you can target an individual. You can target the right individual at the right time, and it requires the collection of data so that you can tell who they are and what they like. The way ad tech companies do that is by looking at what websites the people visited. By using tracking cookies they can look at the collection of websites that you visited and knowing that website browsing history, they are inferring who you are and what you like. Now there's several layers of data there. First the collection of the data, meaning which websites the person visited. The second is the inference of who they are and what they like. In each of those levels, there are errors. Long story short, there's now increasing research that shows that the targeting and the data collected is not terribly accurate. way this ties in with ad fraud is that the bots can now deliberately visit a collection of websites. For example, when I started working with pharmaceutical companies, I learned that bots love to visit New England Journal of Medicine and other medical journals and in doing so make themselves appear to be doctors so when the pharmaceutical companies want to target ads to doctors they're happily paying higher CPM. The bots can now earn a higher CPM because they can pretend to be doctors versus normal consumers and so that's allowed an entire category of fraud to flourish. With those targeting parameters, due to the enforcement of privacy regulations, fraud is a little bit muted going forward.

Cyndi Greenglass: What else should we be looking to do that's going to create a more productive ecosystem and less ad fraud?

Dr. Fou: I think it's a fundamental change in philosophy. A lot of advertisers are still doing digital marketing. With TV advertising, there is the belief that if we buy larger quantities of ads that's going to give bigger reach and frequency. In TV that works, because if you get your ad in front of more people they become aware of your products and they can buy it. In digital, everyone is so over-saturated with advertising. Humans use ad blockers to protect themselves because there are too many ads. For advertisers, I’d implore them to change their mindset from the TV advertising mindset of reach and frequency. That's kind of like pushing a message out and you're just shouting with a megaphone. Modern consumers are too smart for that. I suggest search marketing, which means that people will go online and type in a search term when they want to look for something. I think a lot of the marketers might be under investing in search and what I call pull marketing. When I talk about search, not only is it the right time, meaning it's the time that the person is typing in the search they're looking for, they even told you what they're looking for because they typed in the key word. That person is searching for information they need to find you, and if they can't find you and you have no content ready to go, they're going to find your competitors.

Key Takeaways/Three Little Piggies

  • We've had our eyes opened to the extent of the fraud that takes place in digital marketing.
  • We need to think differently, change our philosophy and stop acting like we're buying television media and going for just reach and frequency. We should think more about pull marketing. Stop “shouting” and balance out our push marketing outreach with more of a pull marketing strategy around search in specific.
  • More privacy laws are being reinforced now. Legislation is actually taking its toll on the bad actors, so if they don't see that they can perpetrate this fraud easily, they're going to move on to some other easy way to perpetrate it. With cookies eventually going away we're going to have to become smarter as marketers because we won't have the same ability to identify individuals or fake intent.

Marketing Communications Today presents Horizons, it’s forward-thinking, looking ahead, through the front windshield and beyond, into the marketing future. Join Cyndi and Ruth bi-weekly for new ideas, technologies, tools and strategies that are emerging to help marketers navigate over the marketing horizon.

Meet our guest

Dr. Fou

Dr. Fou has been on the front lines of digital marketing for 25 years. It is from that vantage point that he studied and documented the nexus of cybercrime and ad fraud. As an investigator, Dr. Fou assists government and regulatory bodies; as a consultant he helps clients strengthen cybersecurity, and mitigate threats and risks, including the flow of ad dollars that fund further criminal activity.

Dr. Fou was the former Group Chief Digital Officer of Omnicom's Healthcare Consultancy Group, a $100 million group of 8 agencies serving pharma, medical device, and healthcare clients. Dr. Fou also taught digital strategy and integrated marketing at Rutgers University and NYU's School of Continuing and Professional Studies.

Dr. Fou completed his PhD at MIT in Materials Science and Engineering at the age of 23. He started his career with McKinsey & Company and previously served as SVP, digital strategy lead at McCann/MRM Worldwide.

Meet the hosts

Cyndi Greenglass

Cyndi W. Greenglass is a founding partner and Senior Vice President Strategic Solutions at Diamond Communication Solutions, a data driven communications firm specializing in Healthcare, Financial Services and direct response solutions and an adjunct instructor in the Data Marketing Communications online master’s degree program from WVU.

Greenglass has twice been named into the Top 100 Influential BTB Marketers by Crain’s BtoB Magazine and was the 2012 CADM Chicago Direct Marketer of the Year. Greenglass is a member of the Executive Management team at Diamond Marketing Solutions where she is responsible for the strategic planning process, participates in strategic acquisitions, and manages the agency services division.

Ruth Stevens

Ruth P. Stevens consults on customer acquisition and retention, for business-to-business clients. Ruth serves on the boards of directors of the HIMMS Media Group, and the Business Information Industry Association. She is a trustee of Princeton-In-Asia, past chair of the Business-to-Business Council of the DMA, and past president of the Direct Marketing Club of New York.

Ruth was named one of the 100 Most Influential People in Business Marketing by Crain’s BtoB magazine, and one of 20 Women to Watch by the Sales Lead Management Association. She serves as a mentor to fledgling companies at the ERA business accelerator in New York City.

Interested in growing your career with a master's degree in Data, Digital or Integrated Marketing Communications? Request more information today!

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