Good news: Online advertising “bot” fraud is down 10%. Bad news: It still amounts to $6.5 billion annually.

Ad spending continues with quite-healthy growth, being forecast to increase by about 10% in 2017 according to a studied released this month by the Association of National Advertisers.

At the same time, there’s similarly positive news from digital advertising security firm White Ops on the ad fraud front. Its Bot Baseline Report, which analyzes the digital advertising activities of ANA members, is forecasting that economic losses due to bot fraud will decline by approximately 10% this year.

And yet … even with the expected decline, bot fraud is still expected to amount to a whopping $6.5 billion in economic losses.

The White Ops report found that traffic sourcing — that is, purchasing traffic from inorganic sources — remains the single biggest risk factor for fraud.

On the other hand, mobile fraud was considerably lower than expected.  Moreover, fraud in programmatic media buys is no longer particularly riskier than general market buys, thanks to improved filtration controls and procedures at media agencies.

Meanwhile, a new study conducted by Fraudlogix, and fraud detection company which monitors ad traffic for sell-side companies, finds that the majority of ad fraud is concentrated within a very small percentage of sources within the real-time bidding programmatic market.

The Fraudlogix study analyzed ~1.3 billion impressions from nearly 60,000 sources over a month-long period earlier this year. Interestingly, sites with more than 90% fraudulent impressions represented only about 1% of publishers, even while they contributed ~11% of the market’s impressions.

While Fraudlogix found nearly 19% of all impressions overall to be “fake,” its fraudulent behavior does not represent the industry as a whole. According to its analysis, just 3% of sources are causing more than two-thirds of the ad fraud.  [Fraudlogix defines a fake impression as one which generates ad traffic through means such as bots, scripts, click-farms or hijacked devices.]

As Fraudlogix CEO Hagai Schechter has remarked, “Our industry has a 3% fraud problem, and if we can clamp down on that, everyone but the criminals will be much better for it.”

That’s probably easier said than done, however. Many of the culprits are “ghost” newsfeed sites.  These sites are often used for nefarious purposes because they’re programmed to update automatically, making the sites seem “content-fresh” without publishers having to maintain them via human labor.

Characteristics of these “ghost sites” include cookie-cutter design templates … private domain registrations … and Alexa rankings way down in the doldrums. And yet they generate millions of impressions each day.

The bottom line is that the fraud problem remains huge.  Three percent of sources might be a small percentage figure, but that still means thousands of sources causing a ton of ad fraud.

What would be interesting to consider is having traffic providers submit to periodic random tests to determine the authenticity of their traffic. Such testing could then establish ratings – some sort of real/faux ranking.

And just like in the old print publications world, traffic providers that won’t consent to be audited would immediately become suspect in the eyes of those paying for the advertising.  Wouldn’t that development be a nice one …

If there’s a drumbeat among B-to-B marketing professionals, it’s grousing about cross-channel marketing attribution.

If there’s one common complaint among business-to-business marketing professionals, it’s about how difficult it is to measure and attribute the results of their campaigns across marketing channels.

Now, a new survey of marketing professionals conducted Demand Gen (sponsored by marketing forecasting firm BrightFunnel) shows that nothing has particularly changed in recent times.

The survey sample isn’t large (around 200 respondents), but the findings are quite clear.  Only around 4 in 10 of the respondents believe that they can measure marketing pipeline influences. As to why this is the case, the following issues were cited most often:

  • Inability to measure and track activity between buyer stages: ~51% of respondents
  • The data is a mess: ~42%
  • Lack of good reporting: ~42%
  • Not sure which key performance indicators are the important ones to measure: ~15%

And in turn, a lack of resources was cited by nearly half of the respondents as to why they face the problems above and can’t seem to tackle them properly.

As for how B-to-B marketers are attempting to track and report their campaign results these days, it’s the usual practices we’ve been working with for a decade or more:

  • Tracking web traffic: ~95%
  • E-mail open/clickthrough rates: ~94%
  • Contact acquisition and web query forms completed: ~86%
  • Organic search results: ~77%
  • Paid search results: ~76%
  • Social media engagements/shares: ~60%

None of these hit the bullseye when it comes to marketing attribution, and that’s what makes it particularly difficult to find out what marketers really want to know:

  • Marketing ROI by channel
  • Cross-channel engagement
  • Customer lifetime value

It seems that a lot of this remains wait-and-wish-for for many B-to-B marketers …

The full report from Demand Gen, which contains additional research data, is available to download here.

Putting the best face forward at Twitter.

tdWhen business results look disappointing, one can certainly sympathize with the efforts of company management to explain it away in the most innocuous of terms.

This may be what’s behind Twitter CEO Jack Dorsey’s description of his company’s 2016 performance as “transformative” – whatever that means.

Falling short of industry analysts’ forecasts yet again, Twitter experienced a revenue increase of only about 1% year-over-year during 2016.

Monthly active users didn’t look much better either, with the total number barely budging.

While I have no actual proof, one explanation of tepid active user growth may be that Twitter became the de facto “place for politics” in the 2016 U.S. Presidential election — which didn’t actually end in November and continues apace even today.

Simply put, for many people, politics isn’t their cup of tea — certainly not on a 24/7/365 diet, ad nauseum.

Quite telling, too, was the fact that advertising revenue showed an absolute decline during the 4th Quarter, dropping below $640 million for the period.

Even more disturbing for investors, the company’s explanation about the steps Twitter is taking to address its performance shortfalls smacks of vacuousness, to wit this statement from CEO Dorsey:

“While revenue growth continues to lag audience growth, we are applying the same focused approach that drove audience growth to our revenue product portfolio, focusing on our strengths and the real-time nature of our service.”

“This will take time, but we’re moving fast to show results,” Dorsey continued, rather unconvincingly.

One bright spot in the otherwise disappointing company results is that revenues from international operations – about 39% of total overall revenues – climbed ~12% during the year, as compared to a ~5% revenue drop domestically.

Overall however, industry watchers are predicting more in the way of bad rather than good news in 2017. Principal analyst Debra Aho Williamson at digital media market research firm eMarketer put it this way:

“Twitter is losing traction fast. It is starting to shed once-promising products such as Vine, and [to] sell off parts of its business such as its Fabric app development platform.  At the same time, some surveys indicate that Twitter is becoming less integral to advertisers’ spending plans.  That doesn’t bode well for future ad revenue growth.”

With a prognosis like that, can the next big drop in Twitter’s share price be far behind?

What do you think?

Clickthrough rates on web banner advertising actually rise! (But they’re still subterranean.)

bbThe headlines last week were near-breathless, announcing that North American clickthrough rates for web banner advertising are rising!

And that’s true on the face of it: According to a new analysis by advertising management company Sizmek based on billions of online ad impressions, the average engagement (clickthrough) rate on a standard banner ad has actually increased.

It’s risen all the way up to 0.14%.

It means that for a standard banner ad, for every 1,000 times it’s served, 1.4 engagements happen.

Here’s what that also means: Don’t bank your business success on online display advertising.

Of course, there are more ways to advertise online than by using standard banner ads. So-called “rich media” ads – ones that incorporate animation and/or sound – perform substantially better.

But it’s all relative, because “substantially better” in this case means that in North America, achieving an average of 2.1 engagements for every 1,000 times a rich media ad is served.

The situation is even worse than these figures imply, actually. When one considers the incidences when viewers accidentally click through on an ad thanks to an errant mouse or a fat finger, even “one out of a thousand” for engagement isn’t really correct.

The Sizmek analysis found that banner ads in certain industries perform better than those in others. Among the “winners” (if one could characterize it that way) are electronic products, apparel, and other retail advertising.

At the bottom?  Automotive, jobs and careers and, ironically, tech and internet advertising.

A glimmer of hope in this continuing saga of hopeless news is in-stream video which, according to the Sizmek study, is generating far higher engagement levels of 1.5% or greater, depending on the degree of interactivity.

But I can’t help but wonder: As the novelty of these newer ad innovations inevitably wears off, won’t we see the same phenomenon occurring over time wherein audiences will become as “blind” to these ads as they are to the standard banner ad today?

As the years roll by and the effectiveness of online banner advertising continues to underwhelm in overwhelming ways, the “drive towards zero” seems to be the relentless theme. I seriously doubt we’re going to see a reversal of that.

Downsizing hits America’s most prestigious business media properties.

bwsjThis past week, the business media world was buzzing about the inadvertent release of information concerning pending layoffs at Barron’s magazine, thanks to editor-in-chief Ed Finn mistakenly hitting “reply all” on a message intended for just one person.

But the more interesting news is what’s happening right now with two of America’s most important national print publishing properties: Barron’s and The Wall Street Journal.

Up until now, it was thought that a select handful of America’s largest and most pervasive publications with national reach and reputation would be the ones least susceptible to problems befalling the industry regarding declining advertising revenues and changing news consumption habits.

At or near the top of the list of those rarefied properties were these two publications for sure.

But now we know a different reality — or at least a more complicated one. WSJ editor-in-chief Gerard Baker announced last week that the publication is seeking a “substantial number” of employee buyouts to limit the extent of involuntary layoffs that will need to happen otherwise.

The WSJ buyout offer been extended to all news employees worldwide – managerial and non-managerial – and includes a lucrative voluntary severance benefit that’s 1.5 times larger than the company’s standard buyout package.

WSJ employees will need to make up their minds quickly, as the buyout offer is good only until the end of October.

wsjbAs for Barron’s, its situation became public only after the Ed Finn memo was received in the New York City newsroom of The Wall Street Journal in error.  The Finn memo, which had been intended for Dow Jones Media Group publisher Almar Latour, speculates on how The Wall Street Journal’s announcement might affect an upcoming round of layoffs at Barron’s.

That bit was “new news” to pretty much everyone.

Aside from the “drama” of news scoops happening because of unintentional actions, the bigger question is this: What do these layoffs and buyouts portend?  Is it the end of the adjustments – or just the beginning?

Clues to that answer come in Gerard Baker’s memo, where he reveals that The Wall Street Journal has “begun an extensive review of operations as part of a broader transformation program.”

Let’s see what kind of “silver bullet” business strategy they end up devising – and whether it will have its intended effect.

The ad blocking phenomenon: It’s all about human nature.

noadThe rapid rise in consumer adoption of ad blocking software is threatening the traditional advertising model for publishers. For some, it seems like a topsy-turvy world where none of the old assumptions or the old rules apply.

But author and MarComm über-thought leader Gord Hotchkiss reminds us that the consumer behaviors we are witnesses are as old as the hills.

In a recent MediaPost column titled “Why Our Brains Are Blocking Ads,” Hotchkiss points out that the environment for online ads is vastly different from the environment where traditional advertising flourished for decades – primarily in magazines, newspapers and television.

Gord Hotchkiss
Gord Hotchkiss

He notes that in the past, the majority of people’s interaction with advertising was done while our brains were in “idling” mode – meaning that they had no specific task at hand. Instead, people were looking for something to capture their attention within a TV program, a newspaper or magazine article.

Hotchkiss contends that in such an environment, the brain is in an “accepting” state and thus is more open to advertising messages:

“We were looking for something interesting, we were primed to be in a positive frame of mind, and our brains could easily handle the contextual switches required to consider an ad and its message.”

Contrast this to the delivery of most digital advertising in today’s world, which is happening when people are in more of a “foraging” mode – involved in a task to find information and answers with our attention focused on that task.

In such an environment, advertising isn’t only a distraction; often, it’s a source of frustration. As Hotchkiss notes:

“The reason we’re blocking [digital] ads is that in the context those ads are being delivered, irrelevant ads are – quite literally – painful. Even relevant ads have a very high threshold to get over.”

Hotchkiss concludes that the rapid rise of ad blocking adoption isn’t about the technology per se.  It has to do with the hardwiring of our brains.  New technologies haven’t caused fundamental changes in human behavior – they’ve simply enabled new behaviors that weren’t an option before.

adbAs is becoming increasingly obvious, the implications for the advertising business are huge:  Ad blocking software is projected to lower digital ad revenues by more than $40 billion in 2016 alone, according to estimates by digital data research firm eMarketer.

Looking back on it, actually it seems like it was all so inevitable.

Ad fraud: It’s worse than you think.

It isn’t so much the size of the problem, but rather its implications.

affaA recently published report by White Ops, a digital advertising security and fraud detection company, reveals that the source of most online ad fraud in the United States isn’t large data centers, but rather millions of infected browsers in devices owned by people like you and me.

This is an important finding, because when bots run in browsers, they appear as “real people” to most advertising analytics and many fraud detection systems.

As a result, they are more difficult to detect and much harder to stop.

These fraudulent bots that look like “people” visit publishers, which serve ads to them and collect revenues.

faaf

Of course, once detected, the value of these “bot-bound” ads plummets in the bidding markets.  But is it really a self-correcting problem?   Hardly.

The challenge is that even as those browsers are being detected and rejected as the source of fraudulent traffic, new browsers are being infected and attracting top-dollar ad revenue just as quickly.

It may be that only 3% of all browsers account for well over half of the entire fraud activity by dollar volume … but that 3% is changing all the time.

Even worse, White Ops reports that access to these infected browsers is happening on a “black market” of sorts, where one can buy the right to direct a browser-resident bot to visit a website and generate fraudulent revenues.

… to the tune of billions of dollars every year.  According to ad traffic platform developer eZanga, advertisers are wasting more than $6 billion every year in fraudulent advertising spending.  For some advertisers involved in programmatic buying, fake impressions and clicks represent a majority of their revenue outlay — even as much as 70%.

The solution to this mess in online advertising is hard to see. It isn’t something as “simple and elegant” as blacklisting fake sites, because the fraudsters are dynamically building websites from stolen content, creating (and deleting) hundreds of them every minute.

They’ve taken the very attributes of the worldwide web which make it so easy and useful … and have thrown them back in our faces.

Virus protection software? To these fraudsters, it’s a joke.  Most anti-virus resources cannot even hope to keep pace.  Indeed, some of them have been hacked themselves – their code stolen and made available on the so-called “deep web.”  Is it any wonder that so many Internet-connected devices – from smartphones to home automation systems – contain weaknesses that make them subject to attack?

The problems would go away almost overnight if all infected devices were cut off from the Internet. But we all know that this is an impossibility; no one is going to throw the baby out with the bathwater.

It might help if more people in the ad industry would be willing to admit that there is a big problem, as well as to be more amenable to involve federal law enforcement in attacking it.  But I’m not sure even that would make all that much difference.

There’s no doubt we’ve built a Frankenstein-like monster.  But it’s one we love as well as hate.  Good luck squaring that circle!