You can order just about anything with the click of a button these days: food, shoes, exotic animals, digital video ads. You can even snag some national ad time on broadcast TV, thanks to NBCUniversal, which is now offering software-based commercial buys. That's one of the ways the ad business is growing more automated by the day, supplanting those long, “Mad Men”-style booze-soaked sales brunches the industry is known for.
But this ease of ordering comes at a steep cost — $7.2 billion, by one estimate. That’s how much money the digital ad industry lost to fake views in 2015, according to a study on digital ad fraud from the cybersecurity firm WhiteOps.
“Advertising was always hard. Now it’s really hard,” says Brett Wilson, CEO of TubeMogul, a global ad-selling firm.
The hockey-stick rise in online video viewing has proved irresistible to digital charlatans (located mostly in China and other Asian countries), who create entire networks of fake viewers, or bots, to siphon away ad dollars. They take advertisers’ money and deliver them the online equivalent of empty calories. And the more valuable an audience — for example, Hispanic viewers of an episode of NBC comedy “Superstore” on nbc.com — the more likely the advertiser will get a passel of bots instead of the human viewers they paid for.
TubeMogul has devised a potential solution. The company, which offers software that enables buyers to purchase digital and regular TV ads, has partnered with WhiteOps to sniff out nonhuman “viewers”; when the company detects fake impressions, TubeMogul will automatically issue a refund to the advertiser, instead of waiting for the advertiser to request one.
“We’re finally giving advertisers the technology and the control and the ability to actually measure these issues and block them,” Wilson says.
“Makegoods,” advertising parlance for credits given to advertisers as a form of compensation when something goes wrong with their ad buy, have long been a function of the advertiser-buyer relationship. But the automated nature of digital ads has rendered the process messier and more difficult to track. This is not to say advertisers have been content to watch their money swirl down a bot drain in the past. For as long as media buyers and clients have been aware of ad fraud, they’ve been asking sellers to make them whole.
“We brought the idea of digital makegoods to our clients before they even knew to ask for it,” says Jonathan Adams, chief digital officer, Americas, for the ad agency Maxus. The difference is that make-up impressions weren’t automatically doled out. You had to take the time to argue and come to an agreement with the seller.
What changed? Ads in long-form videos, which command premium prices that sometimes rival those on traditional TV. That higher pricetag comes with much more risk to buyers who want to reach young viewers online — as opposed to the safety of a ratings-guaranteed TV ad buy.
Moreover, the distinction between “traditional TV” and “online video” is rapidly becoming moot. “We as consumers just think of it as ‘video,’ regardless of where you watch it,” Wilson says, and Adams confirms that Madison Avenue feels the same way.
Part of the reason it’s taken so long to merge TV and digital sales sensibilities is that the issue has come to a head in just the last couple years, as traditional media companies — especially producers of big, expensive TV series — look to wring as much money as they can out of their video. CBS reckons it makes about $4 in monthly ad revenue from each subscriber to its ad-supported streaming service CBS All Access; that’s the same amount Hulu says it makes, as well.
And the easier and safer it is for advertisers to serve up hot, steaming creative, the less likely consumers will have to make up for any shortfall in ad dollars by paying higher subscription fees.
“We would be foolish not to target people based on how they actually consume media,” says Adams.