The Interactive Advertising Bureau reported that as many as 36% of online advertising impressions were created by bots, meaning the ads were never seen by human eyes. With the digital media industry expected to grow to $50 billion this year, fraud is leeching the digital advertising ecosystem of billions of dollars in value.
Interestingly, this problem matters a lot less to certain types of advertisers. Specifically, those brands that are trying to use digital media to drive an online action (direct response) like a sale or a sign-up have less to worry about. Direct response advertisers don’t really care if their ads are seen – all they are concerned with is that their ads cause consumers to take the desired action. If they can spend $100 in digital advertising and make $200 in revenue, they don’t care what happens in between. This approach reflects a clear understanding of how those brands derive value from their investments. In many cases these advertisers don’t pay per impression (CPM), but instead only pay when the desired action is completed (CPA or CPL).
There is, however, another type of advertiser who should be extremely concerned about the recent estimates of fraud on the web. These are advertisers who expect their banners to have a latent impact, or an impact on less direct metrics like intent, awareness or favorability. The impression itself is where the impact is supposed to be made and, if more than one-third of their impressions are never seen by human eyes, they are missing out on a lot of the value they think they are getting.
The industry is buzzing about solutions, and there are plenty of companies coming forward claiming to help solve this enormous problem. But growing just as rapidly is the use of programmatic platforms to access inventory found on open marketplaces, or ad exchanges, where this type of fraud is next to impossible to prevent. In addition, even those companies that claim to be able to detect and prevent fraud will be the first to tell you that it is not a perfect system. Every time they come up with new technologies for detecting fraud, the bots find a new way of gaming it.
So what’s the solution? Here’s one: let’s kill the CPM for digital advertising. Let’s stop worrying about whether or not impressions are seen and instead buy against what really matters. In the case of brands that don’t care about online actions, let’s hold our media accountable to units of lift in those key metrics like intent and awareness. Cost per unit of lift could help brand advertisers achieve their goals in spite of the growing network of digital media fraud perpetrators.
If we kill the CPM, the digital media industry would suddenly find itself unable to sell worthless inventory. Anything created by bots would become impossibly inefficient at achieving clients’ goals, and therefore demand for such inventory would go away. If advertisers stop paying per impression, and instead began demanding to pay only when results are delivered, worthless impressions would cease being monetizable and therefore would find their way out of the digital media melting pot.
Until we can create a foolproof technology for preventing fraud, we must demand that sellers commit to align their goals with the brands they call partners. By doing so, and eliminating the demand for impressions that mean nothing to anyone, we’ll be one step closer to becoming a truly viable medium that commands its share of the marketing mix.