There are two outrageous scams going on simultaneously in adland. They are interconnected and both are related to banner (or display) advertising.
The first scam is the unscrupulous selling of online display ads.
The second is the tacit cover-up of frauds perpetrated by online ad networks and ad exchanges.
First, the sales scam.
- A recent study by comScore, reported in The Wall Street Journal last week, found that 54% of display ads paid for by advertisers between May 2012 and February 2013 never appeared in front of a live human being.
- Even the ads that "appeared" weren't always visible. Among the ads that actually "appeared," the criteria the research company used for considering an ad "visible" was ludicrous. If half the pixels were viewable for one second, the ad was counted as "visible." The industry itself, as represented by the Interactive Advertising Bureau (IAB), has no standard for determining if an ad is "visible." The issue with "visibility" occurs because a banner ad that may technically "appear" on a page may not be visible to a person who does not scroll up or down to that portion of the page, or the ad may not load while the person is viewing that portion of the page.
But that's not the most disturbing part. If companies want to piss away their money on worthless crap, that's their business. If they're too stupid to know what they're buying, they deserve what they get.
The disturbing part is the tacit cover-up.
Can you imagine the outcry if it was found that gas pumps were showing 20 gallons pumped when they were only pumping 10 gallons?
Can you imagine the riots that would occur if it was found that banks were embezzling half the money from their depositors?
That is exactly what is going on in the world of display advertising. Half of what is being paid for is apparently being stolen. And of that which is not being stolen, an unknown amount is apparently worthless. And nobody seems to give a damn.
Nobody's been fired. Nobody's been sued. Nobody's gone to jail.
Incompetent, greedy agencies, and crooked online ad hustlers are just going about their business as if they hadn't screwed advertisers out of billions of dollars. Pathetically clueless CMOs are keeping their heads down and pretending they don't know.
Where's the outrage? Why are the victims of this fraud not holding their agencies responsible? Why is the press not reporting on this? Why isn't this front page news in every trade journal and website?
This is the biggest advertising story of the decade, and it's being buried.
The day after The Journal ran their story, I checked Ad Age and Adweek. I couldn't find a single mention of it. I found stories about hot dog eating contests, and Rupert Murdoch's divorce, but not a peep about the multi-billion dollar swindle being perpetrated on advertisers. (In fairness, Adweek has done some quality reporting on this story. But their reporting has put the size of the fraud at about 5% of what it may actually be.)
Here's why nobody wants to know too much.
How does an agency answer a client who asks, "You mean more than half the money you were supposed to be custodian of was embezzled from me and you knew nothing about it?"
How does an ad network answer, "You mean all those clicks and eyeballs you promised me never existed, and you knew nothing about it?"
How does a CMO answer his management when they ask, "You mean these people screwed us out of hundreds of thousands (millions?) of dollars in banner ads and you had no idea what you were buying?"
Everyone is in jeopardy and everyone is in "protect" mode. Everyone wants to maintain deniability. Nobody wants to know too much.
If display advertising were to suffer the disgrace it deserves, imagine the fallout.
Imagine the damage to agency holding companies whose "trading desks" are buying online media at one price, marking it up, and selling it to their clients at a higher price. The justification? They're "adding value." How's that for a laugh?
Imagine the damage to Facebook, which at last report gets over 80% of its revenue from display.
Imagine the damage to online publishers whose bogus, inflated numbers probably constitute their margin of profit.
If the comScore findings are correct and projectable, it means that of the 14 billion dollars spent on display advertising last year in America, 7.5 billion was worthless and constituted some degree of fraud or misrepresentation.
Last month, before this study came out, I wrote...
"Everything about online advertising is corrupt... The promises are corrupt. The data is corrupt. The suppliers are corrupt. And the buying and selling is corrupt...This industry is in desperate need of investigation."Will the advertising industry be successful in its ongoing attempts ignore or bury this story? I don't think so. Soon enough someone big, smart and influential is going to realize what's going on and all hell will break loose.