The Dark Underbelly of Online Advertising
The internet is a highly demanded medium for advertisers because of the size of its audience and the ability to target specific consumers. However, online advertising is filled with fraud and many issues that lead advertisers and consumers alike to question its legitimacy. In this article, Benjamin Edelman identifies many of the scams that sites perform in order to take advantage of advertisers and also provides insight into what can be done to improve the industry.
Publishers often charge advertisers mainly based off of how many times an ad is viewed by people on the website. This can lead to several exploitations. One way sites can take advantage of this situation is by rapidly switching ads, only showing them for a few seconds. When this occurs, viewers have very little time to click the ad, let alone view it. Meanwhile, the advertiser paid just as much for this as they would a longer display. Sites can also show many ads at the same time in which they often block out each other. If only parts of an ad are viewed, a consumer is much less likely to see the ad and interact with it. Sites that show many ads often offer advertisers a cheaper rate than other sites which entices them to join even though they are not likely to receive a decent payoff.
One possible solution to these issues is to charge by clicks instead of views but as we will see there are many ways to subvert this method as well. Click farms where companies hire people to simply click on ads increases the amount that advertisers have to pay without any additional benefit. Instead of people, sites can also easily set up botnets that fake ad clicks. Some advertisers are able to identify click fraud by analyzing their sales data in comparison to clicks. However, companies that sell their goods offline have no way of correlating the two and are thus very vulnerable. To avoid these scams, some advertisers only pay sites when a sale occurs (CPA or cost-per-action). However, sites can create fake click links from ads that create a cookie saying a user visited certain companies websites. If anytime in the future the user purchases from one of these websites the add they viewed will be credited for that purchase even though it was entirely unrelated, unwarrantedly costing the advertiser.
Edelman believes that advertisers have to devote more resources to analyzing the effectiveness of their ads opposed to the process of creating new and exciting advertisements. He also proposes that it would benefit advertisers to pay sites over a longer period of time so that if they are experiencing fraud, they won’t have already given over all their funds to the site. In my opinion, advertisers can try their best but because the internet is so unregulated and sites can easily avoid lawsuits or conflict, advertisers will continue to be taken advantage of, especially as the industry becomes increasingly monopolized by companies like Facebook and Google.
https://hbr.org/2009/11/dark-underbelly-of-online-ads.html