Buyer beware with online advertising (review of Bob Hoffman’s Adscam)

Best of luck to the rest of us if big name brands like Nike, Adidas and Starbucks are in the dark when it comes to buying online ads.

The companies thought they were advertising on USA Today’s website.

But Gannett Publishing – which owns USA Today – accidentally placed billions of digital ads in its smaller community news sites for nine months.

“Not a single brand noticed that their ads were not where they were supposed to be,” says Bob Hoffman, author of Adscam: How Online Advertising Gave Birth to One of History’s Greatest Frauds, and Became a Threat to Democracy.

“Not a single media buyer noticed that their ads were misplaced. And for nine months we can only assume that these ‘sophisticated’ advertisers were receiving fictious reports about the nature of their programmatic buy.”

But at least the ads ran somewhere.

If you’re buying online ads, you’ve likely been scammed with fake audiences, websites and clicks. Online ad fraud is estimated at $60 billion a year, with crooks siphoning off 20 per cent of online ad budgets. That’s bigger than credit card fraud even though the credit card business is 10 times the size of online advertising. By 2025, it’s expected that online ad fraud will trail only drug trafficking as the largest source of criminal income.

“Ad fraud is one of the largest frauds in the history of the world,” says Hoffman.

Why all the fraud? Adtech is so complicated that no one really knows how it works, says Hoffman. Adtech tracks everywhere we go online. When we visit a website, ad space is instantly auctioned off.  Some websites charge a premium while others take less than penny. With hundreds of thousands of websites, it’s tough to know which site is legit and which is fake and which sites you’d your business to be associated with.

“Instead of reaching Bob Hoffman by running their ad on The New York Times website, where it might cost $1 to reach Bob, advertisers can track Bob to binkinibeachbabes.com, a much lower quality website, where they can run the same ad and it may cost them only a nickel,” says Hoffman.

“The only problem is that bikinibeachbabes.com may not be a real website, and Bob Hoffman may not be a real person.” And those nickles can quickly add up.

So why does no one seem to care?  

Hoffman quotes a former ad executive who says “it’s in nobody’s interest for digital ad numbers to be true as long as they’re good. No one will question the efficacy of the numbers because they love showing the CEO (who understands nothing about marketing) that we gained x number of followers, reached an additional y people and z more people saw our content. Everybody is in on the con. None of the involved parties want anyone to examine the numbers as long as they’re good. It’s pathetic.”

Chase Bank ran the numbers and decided something didn’t add up. The bank was buying ads on more than 400,000 sites every month. The bank cut back to 5,000 sites and saw no difference in performance. “An astounding number of the sites they were buying programmatically were worthless,” says Hoffman.

“On the surface, the value proposition of ad tech – reaching the highest quality eyeballs at the cheapest possible locations – is an appealing proposition. But advertising has probably never experienced a wider gap between promise and reality. This has led to all kinds of expensive and dangerous consequences. “

Hoffman says those consequences include a cesspool of corruption, an ocean of fraud and the degrading and devaluing of legitimate online publishers, news media and journalism.

“And it has played a major role in driving a perilous wedge into our culture,” says Hoffman. “Other than that, it’s great.”

So what’s the solution? Ban tracking, says Hoffman. Stop letting companies spy on us online and don’t let them sell, trade or give away our personal and private information. And if you’re buying online advertising, spend it where you can see it.

Jay Robb is the communications manager at McMaster University’s Faculty of Science, lives in Hamilton and has reviewed business books for the Hamilton Spectator since 1999.

Published by

Jay Robb

I've reviewed more than 500 business books for the Hamilton Spectator since 1999 and worked in public relations since 1993.

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