The great and the good recently came together at Advertising Week with a number of sessions focussing on ad blocking, including on the Guardian stage with Ad Blocking: A New Deal or a Modern Day Protection Racket?
The panel promised a ‘provocative deep dive debate into the issues on how the industry is addressing ad-blocking, and its implications for the future of digital advertising’. But while we fixate on the perpetual back-and-forth of this, ‘the most contentious subject in digital advertising’, we inadvertently bypass the symptom of a bigger and more unrelenting issue – ad fraud.
Although the ad blocking debate has a place – it shouldn’t have the limelight. Through irrelevancy, the ‘stalker effect’ (poorly executed retargeting) and lousy creative messaging, the industry has lost touch with its audience, and ad blocking is our wake up call. While the problem has been a long time coming, the media is failing to ask hard questions about a much greater threat.
When I established Unanimis and co-founded OpenX, fraud was one of the biggest issues plaguing advertisers and publishers, and following a five-year hiatus from the industry, I am shocked to find it still blighting the industry.
The numbers are indicative of how sizeable a problem ad fraud is today. While the Internet Advertising Bureau (IAB) reported UK display advertising revenues hit £1.31 billion last year, research from Integral Ad Science found that over £277 million of this was swallowed up by fraudulent advertising. No other industry would accept this, yet advertising has turned a blind eye for 20 years.
Ad fraud has grown, mostly due to increased sophistication of the technological capabilities of fraudsters themselves. Whereas previously there were tell-tale signs, fraudulent activity is now harder to detect and control.
Speaking to independent ad tech companies, it is clear that ad fraud is rampant and more damaging than ad blocking. Indeed, it is my opinion that the ad blocking debate is acting as a sideshow, perhaps purposely thrust into the limelight to detract attention away from fraud.
So, why such negligence? Sadly, the current ad tech ecosystem is inherently flawed. Few incentives exist for anyone who doesn’t directly occupy the buy and sell sides, to fight for change. When ad exchanges get paid for every ad served, there is little impetus for a costly clean-up. You can’t dispute that the industry is trying to disarm the fraudsters, but there is little talk about how much work is being done, or how severe the problem actually is.
Two years ago, I attended a conference where the head of a major agency-trading group claimed that ad fraud wasn’t a problem. I can’t judge whether they truly believed this, were misinformed, or if other factors were at play, but this example of a very public dismissal from a high-profile representative, just shows just how deep the ignorance runs.
Digital marketing is a push-pull channel, and while there is such dependency on its middlemen, many feel unable to raise the issue. Who wants to bite the hand that feeds? It is the economics of this system, where fear outweighs control, that cause a desperate inertia.
The financial success of a handful of companies has made them supranational organisations. They have become states of their own right – and sadly – the fear of losing influence and revenue from smaller companies who rely on these giants, is paradoxically self-defeating.
The long-term implications of inaction are not dissimilar to that of the recent FIFA scandal, where after 20 years of corruption, it took an outside force, with no affiliation to the organisation, to shake things up. And though some might say this is the only solution – even the preferred solution – for ad tech, I don’t agree.
TV took more than 50 years to achieve 50 per cent market penetration. For digital, it was only seven, and any heavy-handed management of this system from an outside body would have negative ramifications on the trading relationships and innovation that have made it so fruitful.
Arriving at the big question, ‘So how do we sort this out?’ we come full circle to focus on which stories make headlines. The media chose to centre its spotlight on ad blocking, but we need all eyes on fraud – and the heart of the problem.
The media (and government) haven’t been speaking to enough of the small to medium-sized ad tech companies, and they need to, because those are the source of the only independent voice on the issue. None of these companies have big enough pockets, or enough lawyers to speak out in public, so they must look to exposure from another source.
Eventually, with enough autonomous attestation, someone will be able to join up the dots and trigger change.