QUICK READ: According to the Ad Contrarian “the ISBA found that only 12% of ad dollars tossed into the programmatic were traceable end-to-end. With over $300 billion invested annually in online advertising, and 80% of it run through the programmatic black box, the amount of money unaccounted for is staggering”. “Less than 60 percent of web traffic is human”:
This week the ANA (Association of National Advertisers) decided to find out how its members have been getting screwed out of billions of dollars by the programmatic ads. The ANA estimates global programmatic ad spending is “on track to exceed $200 billion,” but that “only 40% to 60% of digital dollars invested by advertisers find their way to publishers” due to the so-called “ad tax” of ad-tech middlemen taking a variety of cuts that ostensibly enable or add value to programmatic advertising buys.
The IAB report shows many encouraging statistics for the world of programmatic advertising, including Advertisers that invest more than 41% of their display budget into programmatic leaped from 55% in 2019 to 70% in 2020. 54% of agencies now purchase over 41% of their video programmatically. Up from 50% in 2019.
It’s about time!
I have been warning clients bout programmatic ads for a long time. My analysis showed widespread fraud and money being thrown away, but brand-dead agency people are still shoveling money into programmatic ads. It’s a clear indication that marketers don’t understand online marketing.
What marketers don’t fully embrace is the correlation between online ad creative and metrics. The better the creative, the better the metrics. Online ads need to be tested and optimized as metrics are reviewed in real-time. Unfortunately, marketers see online as an “add-on” and seldom feel that online warrants the attention of offline ads.
“Fraud is priced in” is one of the most common reasons cited by marketers and media agencies to justify continuing to buy digital media, despite knowing there is ad fraud. They’re OK with there being ad fraud, because they got lower prices. But this misconception is causing marketers to spend even more on fake ads on fraudulent sites and apps.
The main types of advertising fraud you are likely to encounter in digital advertising.
- Malicious bots – bots that spam, click ads, impersonate humans and carry out attacks.
- Domain spoofing – faking a website name or email domain to fool users.
- Location fraud – falsifying location data to trick advert vendors of the ‘users’ location.
- Pixel stuffing – cramming an entire ad into a one-pixel space and charging the full amount.
- Ad stacking – overlaying multiple ads at once and charging for fraudulent impressions.
- Cookie stuffing – dropping multiple affiliate cookies onto a user’s browsers to claim commission.
Online marketing is a specialty with a lot of different tactics but they can all be measured in real-time if brands have the headcount. There will always be ripoffs but it’s your agency’s job to ensure that your ad dollars don’t go down the toilet.