Digital Advertising Fraud: Is it Time to Shift into Reverse?

Digital Advertising Fraud: Is it Time to Shift into Reverse?

Everyone wants their digital advertising to work like a car with an automatic transmission. Start the program, put it in drive and, voila, enjoy higher sales. Or, clicks. Attention. Followers. Fame. Fortune! In reality, it works a lot more like a manual transmission. A shift here, a shift there and an occasional killing of the clutch when the audience doesn’t respond to your ad at all. Folks like Oscar Maria, Casey Armstrong, Amanda Leon and others can speak to making shifts and trying various strategies for going forward.

However, as a growing amount of literature would indicate, often advertisers put the car into drive and it goes no where at all. A recent Ad Week article cited a figure of $7.0 billion in annual fraud in the digital advertising industry. A Harvard Business Review article last fall estimated that half of the digital marketing industry was fraudulent. A Bloomberg Business article reported that in a Heineken campaign, only 20% of the campaigns’ impressions were seen by real people.

The allure of digital advertising, of course, is obvious. Weeks ago while traveling in Africa before I had obtained a local SIM card I instinctively pulled out my phone four or five times on a cab ride, as if it would work. When I leave my phone at home, I still reach for it in my pocket, almost like a phantom limb. We are, in a word, addicted and it’s the place where an advertiser can find us.

Thus, avoiding digital advertising because of the fraud simply is not an option. So the question becomes how to avoid the scourge of fraud in the industry?

Amanda Leon suggested doing highly targeted ads in Facebook because its highly unlikely that the fake profiles will meet all of the audience criteria. She believed that a well targeted ad like the type that she runs for her clients would reduce the incidence of spending money on wasted impressions.

“Run ads with your end goal in mind,” Leon said, “and you will see better results.”

The experts in the Ad Week article suggested, among other things engaging third party verification services and negotiating contracts with the vendors (i.e. the publishers) that included contract clauses forbidding payment for fraudulent impressions.

Verification and tracking is sound advice for an advertiser of any size, but the part about negotiating contract language was more likely addressed to Ad Week’s targeted audience — large scale advertisers and the firms who represent them. Proctor & Gamble presumably can demand a customized advertising contract with even the largest digital publisher. But what about your more typical, small or medium sized business? The kinds of companies which turned to digital advertising because it was more accessible than traditional media channels?

These smaller companies are surely not negotiating exact terms in their advertising contracts and instead must accept whatever terms are being offered. The one advantage of smaller companies, however, is that usually ads are purchased using credit card accounts like VISA, MasterCard and American Express.

Under the Fair Credit Billing Act (FCBA) if advertisers believe they are the victim of fraud, then the advertiser can report the billing error on the statement within sixty days of receiving the statement. Rigby v. Fia Card Servs., N.A., 490 Fed. Appx. 230, 234 (11th Cir. Ala. 2012). Once the the creditor has been notified, the creditor must conduct an investigation. The creditor cannot deny a non-delivery assertion unless it conducts a reasonable investigation and determines that the property or services were actually delivered, mailed, or sent as agreed. Id. Thus, if the advertiser has carefully tracked and can demonstrate it did not receive actual human views, then the creditor should reverse the charges.

In practice, what I have seen is that creditors do not even comply with the spirit of the investigation requirement to review whether digital fraud has occurred. Advertisers may find themselves in the position then of proceeding to litigation or arbitration against the credit card company – and this needs to occur. Perversely, under the current regime publishers continue to benefit when bots “read” ads and advertisers should not bear the expense of those ads. Vague promises of continued improvement will probably satisfy trade journals, but human experience would suggest that the only real change will occur once the fraud hits the publishers in their pocketbooks. Credit card companies will not long sustain the costs of the investigations without passing it on to the publishers.

For small and medium sized advertiser then the advice is clear. Pay for your campaigns using a credit card, track the results and if there appears to be fraud, dispute the item with your credit card company.

Finally, all firms have the power to vote with their dollars. In this article I have addressed what to do if you want to put the car into reverse, but in certain circumstances, it might just be cause for another shift.

“We are currently advising several of our clients to avoid certain platforms,” said Oscar Maria, president of Direct Response Media, Inc. “We have had several campaigns where we simply do not believe a substantial portion of our impressions were to human viewers.”

Others are shifting away from platform ads entirely.

“I feel most comfortable sending clicks and driving to drive traffic via email, and email sponsorships or partnerships. While I can’t necessarily scale that as well as Adwords or Google Shopping, my trust on real traffic is highest there, plus conversions are often much higher,” said Casey Armstrong.

As I read Armstrong’s advice I realized that our discussions about the internet have always used terms from our driving nomenclature like traffic, speed and the so-called information super highway. For advertisers this lexicon should also include the term “dangerous neighborhood” because the reality is that robberies are occurring.

Drive carefully.

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