Ad fraud is stealing billions from the US media industry

Ad fraud is stealing billions from the US media industry

Summary: As much as $18 billion a year could be lost to advertising fraud...why isn't the media industry up in arms?

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TOPICS: Emerging Tech
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Suzanne Vranica at the Wall Street Journal reported that between $6 billion and $18 billion is stolen every year in the US  because of ad fraud.  The Secret About Online Ad Traffic: One-Third Is Bogus - WSJ.com

The fraudsters erect sites with phony traffic and collect payments from advertisers through the middlemen who aggregate space across many sites and resell the space for most Web publishers. 

Advertising is by far the largest revenue source for the news industry, reports Pew in its most recent State of The Media report released this week. It accounts for 69% of total revenues. If some of the lost billions in ad fraud were redirected here, it would make a massive difference.

Look at the $250m each pledged by Jeff Bezos and Pierre Omidyar for their media ventures, and how those relatively small sums have raised optimism about the future of journalism. While at least $6 billion a year is lost to advertising fraud in the US alone. What if one half of that money flowed into legitimate news sites? It would have an extraordinary effect on the industry. 

Low quality content = low performing advertising

Advertisers do better on trusted media with high quality content.  That’s why they’ll pay more for top newspapers and magazines.It’s in their interest to support a healthy, and growing media industry that’s producing high quality media content.

I’m shocked that the media industry hasn’t noticed this huge loss of revenues and isn’t outraged by the fraud, which is coming out of their pockets.

And I’m shocked that the journalism publications aren’t writing about this issue because it directly affects their profession. Follow the money and you’ll get the story yet journalism in the US seems inept with numbers especially numbers that directly relate to revenues that support the business of their work. 

Trust in  media…

There should be a trusted media ad network that only places ads on legitimate professional media sites. It’s not difficult to do. There’s only a limited number of legitimate online publications that have a history of consistent publishing and professional staff; it would not take much to check and verify each one.

The large media companies should group themselves and include smaller, legitimate sites in a “Trusted Media Ad Network - Where your ads are seen by real people.” It would have great auditing technologies, setting a standard that others would be forced to follow — further eliminating fraud and capturing more ad money for legitimate sites.

It would allow the newspaper ad group to sell large swathes of media across many regions. Pew Research reports that newspapers can’t compete against Google, or Facebook for advertising because they offer larger geographies. The Trusted Media Ad Network would level the playing field.

But does the ad industry want to admit that programmatic ad buying, and lack of audit technologies, have caused a multi-billion a year fraud problem? Do media buyers want to admit that they’ve been throwing away ad money without accounting for it properly? 

Brand loyalty…

There’s an opportunity here for large brands to band together and pledge only to support professional media sites with their advertising budgets. It’ll save them from wasting huge sums of money and at the same time, it’ll raise the performance of their ads because more ad money will be available to increase the quality of content on real media sites.

It’ll create a virtuous cycle and help towards building a healthy media industry.

It’s a win for society, too. We need a professional media class to watch over the powerful and the powerless.

Topic: Emerging Tech

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6 comments
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  • Agreed

    I agree with the author, altough even in a broader context.
    Media lose ad dollars because of ad blockers. Ad blockers are only popular because these same media companies have popup ads, autoplay video ads (hidden from view and with sound!), and the occasional ad that tries to install malware even when it isn't clicked on. There are many otherwise reputable news sites that cannot be reasonably used without an adblocker.

    A voluntary industry standard on how prominent ads are displayed, what ads can do (no custom code by any advertiser allowed, ever) is desperately needed, unless these sites want to continue indirectly advertising for ad blockers. Having a couple of the big companies get together and rolling their own platform would be a step in that direction, as it would force the smaller ones to follow suit or suffer a competitive disadvantage.
    Sacr
    • Popups, autoplay, malware

      Also data mining. I wouldn't mind unobtrusive text ads, but I can't trust even those when they could be coupled with tracking cookies, Flash objects, web bugs, and God knows what other crap they're trying to install. I distinguish this from malware (for the most part) because its intended purpose is not to do harm, but it's still intrusive and unwanted.

      The ad companies really shot themselves in the foot by killing the "do not track" initiative.
      Ginevra
  • Ad Blockers are Popular

    Because they block ads. All ads. Nobody wants to see any ads, not just the obnoxious ads. Ads are a bad way to pay for content. Why? Because the content provider's customer is the advertiser not the user of the content. Content is produced based on what will appeal to advertisers instead of the needs of the user.

    The Golden Rule is always true, "Those with the gold make the rules." Advertisers have the gold and, consequently control the web.

    What the web needs is a great micropayment system, what we have is a bad/broken advertising system.
    txscott
    • I've got a feeling...

      ...that neither subscriptions nor micropayments will be of much interest to the average person using adblock. If a site starts doing either of those things - even if it removes all advertising to do so - people will balk. As long as there's a free alternative, people will choose it.

      Some people want free no matter who has to pay for it on the other end.
      luke mayson
  • Self interests trumps all

    Greed holds all the markets control factors at bay and big companies are the worst offenders.
    sickntired44
  • Someday ,,,,,,,,,

    We will get advertising that we want. Sounds strange but there are products and services out there that I'd like to know more about. In the meantime, I have to put up with all the remaining pile of merde that is of no interest to me at all. Mute button please.
    trm1945