This Thanksgiving we give thanks to Google and Facebook for patrolling the internet from fake news. This is an amazing feat considering it took only one month. It’s amazing how fast these internet juggernauts can fix such difficult problems. This leads one to believe ad fraud is a simple problem to fix.
An eclipse is a very rare occurrence. Ancient myths say earthquakes happen, volcanoes erupt, or aliens appear. Other myths say it drives man crazy. Today we see Google giving refunds back to their clients for their many years of massive ad fraud.
This is a very good move on Googles part to temporarily keep regulators at bay. The massive ad fraud problem they have is now shifting from Googles liability to the publishers. This is similar to how credit card companies make their merchants pro active with credit card fraud and the fee which is charged to them. Keep in mind, this shift is only for the Google Network Members. Google Properties will still have massive ad fraud.
By shifting the ad fraud refund to publishers, Google is now trying to show the appearance of a “real exchange“. Exchanges are known to be unbiased between multiple buyers and sellers. A very important characteristic exchanges have is one that acts as a third party without taking proprietary positions or making markets as we see with Google. Google fails at that part by front running ads. Also, exchanges exercise power between it’s members conduct as we see with Google enforcing refunds for ad fraud among it’s members. This gives Google the upper hand.
But…..don’t be fooled. This new refund is only coming from Googles Network Members and not from Google properties such as Google Search, Youtube, Google App, Gmail, Google Maps, and Google Play. Note below on Google’s most recent 2017 Q2 report that Google Network Members contributes to only about 19% of it’s Google Advertising Revenue. What this means is, the Google Network Members line will decrease in the future and Google will focus on increasing it’s main business that doesn’t have to give refunds back. Google properties accounts for 81% of its ad revenues.
What are advertisers and Google Network Members supposed to do?
From an advertisers point of view, an advertiser should only use Google Network Members that opt into the refund program. The advertiser must use technology such as SecureAd to show proof of fraud and collect the GLCID which is required from Google. We are seeing more advertisers and ad agencies being proactive with ad fraud. The reasoning is to show value and transparency to their higher ups for what they are doing in this ever changing adtech ecosystem.
From the publisher’s point of view which are the Google Network Members, they are going to want to make sure they have publisher analytics in place for when Google requests a refund back. The publisher analytics are very important because it will verify any discrepancies that may arise between the advertiser, Google, and the publisher.
A note should be made, Google will refund the “Platform Fee” which is around 7-10% of total purchase. This is peanuts for the revenue juggernaut.
Solar anomalies can cause unnecessary hysteria and make fools of people. While many ended up in the emergency room for putting sunscreen on their eyeballs, Google continues to burn it’s clients and eclipse regulators.
Our Chief Marketing Officer William Scheckel was recently interviewed by Equities titled “Digital Ad Fraud is a $20 billion Issue. Here’s How to Stop It”. The interview drives home the importance of protecting digital assets such as digital ads from bots. The bad actors want your dollars. Value creation is seen directly in ROI on how effective digital assets are protected.
My favorite scene from the movie “Trading Places” with Eddie Murphy as Billy Ray Valentine and Dan Aykroyd as Lewis Winthorpe III is the ending in the Comex Commodities Exchange Center (CCEC) Orange Juice pits. The scene:
Valentine: Oh you see, I made Lewis a bet here. Lewis made me a bet that we both couldn’t get rich and put you both in the poor house at the same time. He didn’t think we could do it. I won.
Lewis: I lost… One Dollar!
Valentine: Thank you Lewis.
Lewis: After you.
Valentine: Certainly. (Lewis laughing.)
Exchange Floor Official: Margin call, gentlemen.
Mortimer Duke: Why you can’t expect…
President of Exchange: You know the rules. All accounts to be settled at the end of the day’s trading, without exception.
This last statement from the President of the Exchange to both Dukes is why futures work. Most importantly real orange juice (OJ) will be delivered. I mentioned “real” because in adtech, we see different types of fraud delivered.
The futures contracts represent real orange juice. The buyers aren’t expecting fake orange juice. When delivery occurs, real orange juice is really delivered. In adtech its much more different. The term fake adtech is real. End of month ad stuffing is seen with publishers “marking the close” a term from Wall St which is a form of market manipulation. This marking the close is done by ad bots which are artificially generating revenue for the publishers on the advertisers dime.
Other types of fraud exist in adtech which is why a futures market in adtech is very difficult to make. The problem is a buyer of a contract really expects real orange juice. In adtech a buyer doesn’t know what they are buying.
Futures is a way for a farmer to hedge their crops for unforeseen events in weather. They’d rather get paid now and push the future risk off to somebody else. Other buyers or speculators provide liquidity for this sale.
In adtech, we are in a new dawn of super fast changing news. Publishers want to get paid but also have risk from the latest news scandal and an advertiser dropping them as a result of the scandal. This is risk publishers would gladly like to eliminate. If both parties trust what will be delivered, a new market will be created in adtech.
Transparency meaning real ads viewed or clicked by a human is the last step needed for futures on digital ads.
Math as a kid was about counting on your fingers. I forgot which grade it was but it lasted for a few years till multiplication arrived. The good ole days. Keep those memories fresh.
Recently we are seeing math problems that can be solved on our fingers in adtech. The Wall St Journal (WSJ) just figured out that by abandoning Google, they instantly increased their conversion analytics. What a miracle! Eliminate bots and your conversions increase.
This is the type of value creation that advertising and marketing departments get giant bonuses for. Simply by blocking Googles search, the WSJ was able to increase the rate of visitors converting into paying clients. Although the WSJ dropped 44 percent of it’s fake traffic from Google, the conversions increased. This truly shows how many bots Google has. This is basic level math.
Lets see how this works again. By shutting off Google traffic, you increase conversions because instead of trying to convert a robot to a paying human, you eliminate the bot and only serve to real humans. Interesting concept…
I hope everyone enjoyed the long 4th of July weekend!! While you were watching fireworks, bot fraud was also exploding. Check out the Chinese ad agency Yingmob and their new mobile botnet “HummingBad” similar to “BreakingBad” raking in $300k in revenue per month by clicking ads. I wonder what Heisenberg would think of this? As mentioned last month, in “Who’s Your Daddy”, you better know your fraud bots and who they are coming from.
Also, I wanted to invite you to a new Ad group I organize. If you want to meet other Ad Professionals and throw back some cocktails like Mad Men/Women please join LA Ad Pros here.