Commentary

Advertisers' Access To Justice

To settle in, let’s briefly wrap our heads around what various people mean when they talk about “supply chain problems” and “ad fraud.”

There are various misdeeds to consider. These may include, but are not limited, to: 

  • Actions by media suppliers and agencies that subvert the intent of advertisers’ contracts.
  • Out-and-out theft of ad dollars by creating fake publishers that create fake inventory bought by real advertisers and shown to fake consumers (bots).
  • Schemes by fraud networks involving infected browsers, ad injection, adware, fake websites, etc. Basically, more fake inventory or clicks.
  • Arm twisting via a buyer’s mandated consulting deals.
  • The simple nonpayment of bills by people who know that serial liability terms protect them from collection. 
  • Intentional subversion of technical protocols to create impressions that misrepresent where they came from — geo-position and publisher spoofing, for example. 

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What these have in common is that advertisers pay hard-earned money, from their shrinking margins, for advertising, and they may not receive what they negotiated for. The financial damage is considerable, but no one knows how much of it is illegal. 

Legislation is two decades behind the internet. What’s the penalty for infecting millions of browsers with ad injection software? Until last month, zero, apparently. And don’t blame “digital.” Blame greed. 

In November, the FBI arrested several cybercriminals for ad fraud. Finally, but it’s just a start. 

For technology-derived theft alone, estimates of loss range from $6 billion to $15 billion per year in the U.S., and higher. (I saw $50 billion the other day).  For perspective, $15 billion annually is roughly equivalent to 5,000 average bank robberies PER DAY.  How do you think the FBI would respond if there were suddenly 5,000 bank robberies per day? Not well, we imagine. 

Further, monies that evaporate into the supply chain could be as high as 20% of digital media spend, per Ad Fin, a company that analyzes server log data on behalf of advertisers. 

This has gone on for decades, but mitigation has been absent. Apologists ruled, saying things like “It’s a rounding error,” “It’s priced into the rate,” “No, harm no foul,” “Advertisers will not pay us to fix it, so why should we?,” “There has always been waste.” My favorite: “Define transparency!!” 

Ad fraud is the perfect crime! It relies on the idea that victims will be embarrassed or in denial, and middlemen will want to leave well enough alone. Advertisers say, “Give me proof!” — but creating evidence costs money. Catch-22. Advertisers are the only parties that can get the proof. 

There are oblique angles of defense: For example, what if the ill-gotten $15 (or $50!) billion funded organized crime and terrorist groups? Worried? 

How much certainty do you need to act?  Certainly, the hubbub over placing ads on terrorist training videos (which paid terrorists less than the cost of an rpg round per year) sets the standard. Why ignore $15 billion that disappears into the criminal ecosystem? Why assume none of it funds terrorists? 

How is it that advertisers settle, even as their precious earnings are diverted to thieves?

You’ve been robbed, OK? You should call the police. 

Finally, something happened.

About four years ago, the Association of National Advertisers hired global bad-ass private investigators (K2) to track down the truth regarding at least some of the issues, mainly “non-transparent” business practices.  The investigators did their work, and verified what whistle-blowers had been saying. 

Three years on, something else happened. Some real law enforcement stepped up: the FBI. Cue sound of trumpets. You can read about one aspect of the investigation here. 

Last quarter, in response, the ANA said: “ANA members are not obligated to cooperate with the FBI,” and “have the option to ‘do nothing.’”

Whaaaaat!? I’m sure the ANA legal team mandated that posture, so, no blame, but still, common sense might suggest a different response.  

As a counterbalance, someone should make a statement like this: We encourage all advertisers and their agents to cooperate fully with, or even proactively support, the FBI investigation. If you don’t, the FBI won’t get enough evidence to convict anyone of anything, and nothing will change. 

Advertisers, you finally got some help. The bad guys outspend and out-think the average bureaucracy. Sorry, but true. 

What makes you think that public statements decrying lack of transparency will change their behavior? Who is on your side, really? Answer: the law. The sheriff’s in town, y’all. Consider yourselves fortunate.

6 comments about "Advertisers' Access To Justice".
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  1. Joshua Chasin from comScore, December 6, 2018 at 2:48 p.m.

    Good one, T-Mac.

  2. Bill Duggan from ANA, December 7, 2018 at 9:08 a.m.

    Last month ANA and Reed Smith (our outside counsel) released, "Media Buying 2018 -- Transparency at a Crossroads." As a result of the FBI's request for ANA to inform its members about its investigation into non-transparent media buying practices, the paper provides a historical perspective of the transparency issues in the industry and outlines the options that advertisers have to cooperate (or not) with the FBI. The paper highlights that the FBI is looking for "meaningful cooperation" from advertisers and outlines the steps in conducting a fraud investigation. From that very extensive 19 page paper it is simply unfair and misleading to say in this article, ... the ANA said "ANA members are not obligated to cooperate with the FBI," and "have the option to do nothing."  Whaaaaat? I'm sure the ANA legal team mandated that posture, so, no blame, but still, common sense might suggest a different response. Overall, except for this, a good opinion piece Ted, and we appreciate your advocacy. 

  3. Andrew Susman from Emoto, December 7, 2018 at 1:24 p.m.

    As Connecticut says  "Don't let your silence, SILENCE THOSE AROUND YOU."  SEE SOMETHING SAY SOMETHING."

  4. Ted Mcconnell from Lucid Llc. replied, December 7, 2018 at 1:42 p.m.

    Thanks for your comment Bill. you will note the ANA comes off the hero in the Article. And the quote you are objecting to was among the few points made as reported in Ad Exchanger, here:https://adexchanger.com/agencies/ana-confirms-fbi-criminal-investigation-on-ad-transparency/ on October 10th. It was a quote from Bob L. I do not know if he was quoting from the Paper you cite. I was shocked when I read it. I believe the ANA would have encouraged cooperation except for a Legal posture, but I did not want to let it pass. It takes a huge effort to catch these criminals, as you know, and the last thing we need is advertisers thinking they don't need to cooperate. I am sorry that the ANA lawyers kept you from stating your true position (if that is indeed why Bob said that), but it is very important to enable, rather than discourage cooperation in this matter. Without enforcement, your outstanding efforts will be significantly blunted. 

  5. Douglas Wood from Reed Smith LLP, December 9, 2018 at 7:03 p.m.

    The ANA has been leading the initiative to restore transparency and trust in the advertising industry for years.  In the more than four decades I have focused on advertising and marketing law, I have never seen trust at as low a level as it is today.  Nor is it getting better as more revelations of a lack of both transparency and candor come forward, including the FBI investigation.  This is a serious investigation.  No one should take it lightly.  However, absent a subpoena compelling someone to talk to the FBI and cooperate in the investigation, coming forward is a decision a potential witness can make at his or her discretion.  Thus, the advice in the White Paper was correct and appropriate.  That said, anyone who believes he or she has information that may assist the FBI should seriously consider cooperating.  It is the right thing to do.

  6. Andrew Susman from Emoto replied, December 12, 2018 at 3:10 p.m.


    Well said, Doug.

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