Observation #1: Click fraud is a problem. In working with ad networks, smart marketers should be wary of cost-per-click (CPC) pricing models. For years, lower quality publishers have taken liberties with click traffic. Some "incentivize" clicks (e.g. clicks translate into customer credit for free online game play); others may have simply paid people to repeatedly click on ads. Regardless, this results in highly unqualified traffic to an advertiser's site. More recently, fraudulent clicks have migrated to paid search through the spread of click-bots, which can create scores of clicks in mere seconds. These click-bots increasingly attack image advertisements also, and unknowing advertisers may be overpaying by 20 or more percent if they are being charged on a straight cost-per-click pricing model.
The easiest way to correct for this problem is simply to avoid CPC pricing models entirely, and opt instead for cost-per-thousand impressions (CPM) or cost-per-action (CPA) buys. Alternatively, advertisers who employ a third-party ad serving solution can negotiate deals priced on cost-per unique visitor, and allow the ad server to de-dupe fraudulent clicks.
Observation #2: You may not have control over where your ads are running. Many ad networks derive the majority of their traffic from a long tail of lower quality, smaller publishers. Typically, such publishers can join the ad network by visiting an automated Web interface and signing up to be a partner. In the absence of effective supervision, quality advertisers can subsequently discover that their ads have been trafficked to undesirable sites that are inconsistent with their brand.
Smart marketers ensure that they have full visibility into the sites on which they may potentially advertise, and demand veto power over any undesirable content before their advertisements are ever trafficked. At a minimum, these rights should be written into a contract; more preferable is the use of a systematic opt-out process.
Observation #3: Spyware and Adware: You may be advertising on it! Of great concern is the fact that some major ad networks, in search of increased relevance and better results, currently partner with adware and spyware programs. At the same time advertisers lament the existence of such entities, their ads may actually be running on these platforms. Spyware is illegal and advertisers interested in adware should look at several areas when evaluating these opportunities, including consumer awareness, open disclosure about data usage, respect for consumer privacy, and ease of removal.
Smart marketers recognize the liability associated with utilizing these programs and avoid networks which make use of these tactics.
Observation #4: Unless you have international operations, avoid foreign cookies. American Web surfers are not the only visitors to American Web sites. Fifteen to 20 percent of impressions are requested by users surfing from outside the United States. While these international surfers may still click on ads, they are not the target customers of many advertisers. Lacking appropriate agreements (which typically prohibit or limit foreign impressions) with their publisher partners, some ad networks may be fulfilling your media buy by advertising to surfers outside of the country.
Smart marketers choose networks that can block foreign impressions and/or buy on a CPA basis in order to pay only for valid results.
There's another old saying, "You're judged by the company you keep." In the online world, advertisers are judged by what they buy. By choosing reckless partners, advertisers run the risk of damaging their brand, encountering unplanned legal liability, and wasting valuable advertising dollars. Smart marketers spurn such risks, and choose only reputable and ethical business partners.