
Banner “Fraud” Doesn’t Matter - nkurz
https://medium.com/@RickWebb/banner-fraud-doesn-t-matter-fc84413fe59c
======
TomGullen
If you've got a team of smart people willing to drop $500k on a banner
campaign and you can accurately measure the results and it's still worth it
with all the fraud, good for you.

If you're a mom and pop store looking to spend $500 on advertisements they
should be made aware there's a good chance they will be defrauded unless they
know what they are doing.

~~~
moron4hire
This is really important. I really believe small-time projects have _no_
business buying advertising online. It's just so incredibly low value that to
scale it to meaningful results takes a lot more money than a person or small
group of people bootstrapping their project on a shoestring can muster.

For example: my wife has written a sci-fi novel. You can buy an eBook or
paperback on Amazon. We would have to spend a few thousand dollars a month to
acquire a single, purchasing reader. In contrast, I can drop around $100 on a
booth at a book fair and sell 50 copies in about 8 hours. And we get almost
all of those people to sign up for the mailing list (and almost all of them
remember their email address well enough and have good enough handwriting to
ensure it's a valid address). I don't get any chance to reconnect with my
paying customers with just Amazon.

No, I'm sure it doesn't scale as well, but we don't have anywhere near the
money it would take to scale online advertising to even those low of sales
numbers. But we have a large enough margin on the paperback (we're self
publishing and print-on-demand has gotten pretty cheap) that we typically
break even for the combined print/booth costs. Similarly, growing the mailing
list for when we finish editing the next book (which will be any day now) has
been a lot easier in-person.

From the article:

    
    
        We use them to measure the efficacy of campaigns we run our way, using our metrics. 
        We’ll spend a million bucks on a literal f**k ton of banners (I mean, just billions
        of the things, it’s crazy). And then we’ll do targeted brand sentiment and purchase-
        intent surveys using our internal peeps, online along with companies like Nielsen and
        Foresee, and offline with a bunch of (really quite awesome) companies you’ve never
        heard of. Then we’ll see whether the banners moved the needle, and if they did (and
        they often do), we’re happy.
    

In other words, if you're not already successful, this article isn't for you.

~~~
fweespeech
As easy as it might be for some people to buy into your narrative, on HN, it
realllllly isn't true.

The basic statistics to calculate the RoI on a banner ad spend isn't
particularly difficult when you have a software dev/web dev available.

No matter how much click/impression fraud there is...you are trying to track
_conversions_ not _clicks /impressions_ at that scale.

If I know I spend $500 and get 10 sales, it isn't a statistically valid sample
_but_ its pretty clear if I break even on that $500...I should keep doing it
since its essentially free marketing. Similarly, if I'm willing to eat $N per
customer acquired via marketing, the same is true as long as $50/customer is
equal to or less than my margin per sale + $N. "Sale" in this context is
tracking what exactly those 10 people bought over the lifetime of them being a
customer, generally.

The only real thing the "already successful" people have is a bunch of smoke
and mirrors that honestly doesn't have verifiable value that they use to
bullshit clients. Conversion rate is _literally_ the only statistic that is
verifiable, cost effective to verify, and able to give you a concrete idea of
whether or not the RoI of the campaign is worth it.

We have an on staff statistician and his primary job is just automating the
conversion rate calculations, the return-per-ad-campaign, etc. We spend enough
money its worth hiring a staff statistician to do that but honestly any
programmer with a book on statistics would 90% as good.

~~~
moron4hire
I _am_ talking about ROI. If you're bootstrapping a project, I doubt you can
get a good enough ROI in online advertising for your first 100 sales. If I had
the kind of money to make online advertising work for the conversion rates
I've seen on my projects, I wouldn't be trying to start a business in the
first place.

If you were starting a project on your own, tomorrow, and the only money you
had was the money in your own savings, what would you do? You said $500 gets
you 10 sales. Where? How?

~~~
fweespeech
The math is the same whether you have a company going through $500 a month in
marketing or $5 million a month.

Yes, if your conversion rate doesn't make sense for you, don't do it.

I'm not going to go arguing how to make $500 into 10 sales. It depends on what
you are selling, what the competition is bidding for ads, your lifetime value
of a customer, etc.

But you asked _how_ you can go to $500 -> 10 sales?

2500/30 = ~83.3 clicks/day

$.20 * 2500 = $500 :: 2500 clicks

2500 * .004 = 10 :: 10 sales @ .4% conversion rate

This is really not a strange/weird/unusual scenario for a combination of 20+
low competition CPC ads on Bing, Google, etc. Given small budgets, that is
what you'd aim for as you don't have the money to compete with the high cost
keyword bidders.

I'm confused why you think that is hard to achieve?

These numbers aren't particularly optimistic given most people aim/expect a
~1% conversion rate, so if it was .8%, you could double your CPC, etc.

~~~
moron4hire
I'm not disputing your formula, I'm disputing your inputs. It's the part
you've explicitly dismissed that is the problem. You can't say "our $5
million/month spend for 100,000 users proves that you could spend $50/mo and
get 1 user."

You keep throwing theoreticals around, inventing numbers to match your
narrative. "If horses were 10 feet tall, then we'd be able to ford this
river." A 10 foot tall horse is called an elephant, and we can't afford
elephants. How do we ford this river with the one horse we have? And your
answer is, "well, if animals were 5 times larger than they usually are, then I
don't understand how you don't understand."

I'm saying it doesn't scale linearly.

~~~
fweespeech
...yes its actually easier with less money as 83 clicks a day is all you need
so you aren't competing with high cost keywords which tends to start being
unavoidable somewhere past 100+ clicks/day.

And yes, I've done this with $500/month as the spend. If you go through my
comment history you'll notice I used to work entirely with small businesses as
a contractor which I've mentioned at least a couple times I believe.

I wouldn't use up-to-date hypotheticals from my current job given its a scale
almost no one on HN would operate at. :/

I'm not really sure what your conviction this isn't possible comes from?

Obviously, $50/month/sale is not going to work out for a book that sells for
$10 but that is a different problem.

------
jaawn
I hadn't considered this article's perspective before, but I think it is very
compelling. A lot of commenters (and likely readers) are probably focusing
heavily on the perceived impact of the "fraud" of reporting X amount of
impressions and/or clicks, when only Y amount of them were "real." They feel
like they are paying for X but only getting Y. I think the simple point this
article effectively made is that ad companies have continuously reduced prices
so that their clients are actually only paying for Y, or at least they are
benefiting from a discount which observes the uncertainty.

I think the basic assumption has been that, even though we know the total
number of "impressions" is exaggerated, the number is correlated with the
"real" number. So long as that assumption is usually true, this is no more a
case of fraud than Airlines' reward "miles".

To be fair though, larger clients who blanket the web with ads for a campaign
have the advantage of spreading the risk over a large number of websites and
times. The people most impacted by impression-based ad runs are those who can
only afford the smallest campaigns.

~~~
stevesearer
Publishers should also attempt to learn how their readers interact with
advertising as a way to better educate potential advertisers.

Most of the advertising on my site is not for products available for online
purchase and my readers are architects and designers looking for inspiration
for future design projects. So whenever a company inquires about advertising I
try to find out their goals - branding, online sales, etc... If it is to drive
online sales, I believe it is my responsibility to let them know that those
campaigns perform terribly.

At that point, they can decide what to do, but at least they won't and
shouldn't be surprised or feel taken advantage of if the campaign doesn't
perform in a way I told them it wouldn't.

------
Barraketh
As someone currently working on fighting advertising fraud, the article
premise is wrong. Specifically, there is a significant amount of wasted money
that currently goes to fraudsters (usually through RTB exchanges). If we are
able to eliminate all of them, then that wasted money will be left to split
amongst the legitimate players, which is good for everyone. So yes, CPMs will
go up, but the value of each impression will go up even more.

~~~
matt_morgan
He does say that. He just doesn't trust you to get the price right. I.e., he
believes that in "fixing" advertising fraud, the CPM will go up more than the
value will go up.

------
kjjw
"Honestly, at first when that article got posted I thought you were going to
talk about something else: like maybe how the entire dream of the internet is
a bit of a fraud for advertisers in general."

Dream of the internet (presumably they mean dream of the web) was not
initially one of advertisement.

~~~
anon1385
It's interesting to look back on how idealistic the early web was:
[http://www.arachnoid.com/freezone/](http://www.arachnoid.com/freezone/)

I think it's actually still the case that the best quality content on the
internet isn't on commercial sites.

------
cowpig
That's a lot of condescending language and he's basically trying to make the
point that he doesn't care about banner fraud because most of the cost is
shouldered by people who produce content and not the companies who are paying
for advertising.

------
soneca
I am not in the online advertising business (one side or another), much less
in the banner business. But that was a horrible, patronizing text to read. I
couldn't pass the first half, which is sad, because it look like an
interesting point.

The author somehow felt that the ones talking about the problem with banners
were being arrogant assuming that the buying industry didn't know that for
ages, so his answer to this was: 'I will be even more arrogant, more
patronizing than they ever could be!!'.

Really, that was a boring read.

------
sudioStudio64
I detest advertising. It's literally designed to undermine reason and supplant
critical evaluation of ones needs and priorities.

As for web advertising, maybe I was the last person on the planet to figure
this out but sometime late last year the web just became unusable on most
popular news sites. Popover ads that come up before you can read the content
and multiple large ads inline with the content and that "no mans land" on the
right.

I seriously hope there is a way to make MS Edge default to the "reading view".

~~~
moron4hire
No, people want to buy things, and there are a lot of things competing for
their attention. Advertising, at its most basic, is just how we inform
potential customers that we even exist.

Yes, some (a lot? Most?) advertisers get way out of hand. But advertising is
not itself evil. It's a tool that may or may not be misused.

~~~
sago
> It's ... designed to ... supplant critical evaluation of ones needs....

> No, people want to buy things

That's rather the point. The desire to buy things is driven not by critical
evaluation of need, but by psychological trickery that falsely associates
buying stuff with a whole range of actual needs.

If ads promoted critical evaluation of a person's needs in relation to
available products, that would be a different thing entirely. It is quaint,
but I can't help think naive to suggest that the core of advertising is
informing customers, and the psychological trickery is 'misuse'.

~~~
moron4hire
So it's been psychological trickery that has led people to think, "gee, I'd
really like a nice novel to read right now" Or, "boy, I could really go for a
fun video game to play"?

How else are consumers going to find out about products? There's no world
product registry where products get evaluated on their merits and ranked
objectively. There's no such thing as "if you build it, they will come". Even
putting a big sign on the front of your building "Joe's Diner" is a form of
advertising. Otherwise, people will walk by without any notion that there is
food there they might want.

There's no such thing as "If you build it, they will come."

~~~
sago
I'm not sure why you think that counters my point.

As I said, if most advertising were about the critical evaluation of needs
that would be different.

Instead, you're more likely to get boobs advertising your video game, or butts
advertising your deodorant. Because sex sells, the key word being 'sells', not
'informs'.

------
nostromo
This article talks a lot about how low click rates don't matter -- but that
wasn't the issue brought up by the WSJ. The key take away is that, even if you
ignore clicks, impressions are twice as expensive as your reporting suggests.

[http://www.wsj.com/articles/SB100014241278873249040045785371...](http://www.wsj.com/articles/SB10001424127887324904004578537131312357490)

> An astounding 54% of online display ads shown in "thousands" of campaigns
> measured by comScore Inc. between May of 2012 and February of this year
> weren't seen by anyone, according to a study completed last month.

> Don't confuse "weren't seen" with "ignored." These ads simply weren't seen,
> the result of technical glitches, user habits and fraud.

------
ErikHuisman
Banners might be awesome but banner fraud isn't. Banner fraud is funding the
people we want off the internet. So it still needs to be fixed.

~~~
dmarti
Exactly.

Ad fraud is not just a waste of energy (like TV ads playing to no viewers). It
supports bad stuff on the Internet at the expense of good stuff.

* Ad fraud is now the number one malware payload.

* Low-quality impressions show up on copyright infringement, comment spam, and other problem pages.

* When advertisers buy programmatically on markets that include both legit and fraudulent inventory, publishers pay for fraud in the form of lower CPMs.

More in response to the original article: [http://blog.aloodo.org/posts/thank-
you-for-supporting-fraud/](http://blog.aloodo.org/posts/thank-you-for-
supporting-fraud/)

------
forgetsusername
The fact that no user really enjoys banner advertising occupying their screen
real estate, and that most of this advertising can be prevented from
displaying with a simply installed browser plugin, makes the whole online
advertising economy seem rather tenuous. And yet, some of the largest
companies on the planet derive most of their value from it.

~~~
jaawn
I don't think this is necessarily true. Attractive, non-animated banner ads
are my "favorite" type of online advertising to encounter. Standard AdSense
text ads are ugly and add so much clutter to the page because of the added
text.

If ads were usually like this, instead of resource-heavy Flash ads or ugly
AdSense ads, I probably wouldn't use any ad blocking software. Static image
banner ads are probably the _only_ online advertising I have ever clicked or
taken notice of.

------
jcrei
Banners these days are good for "Brand awareness" and not good for generating
traffic for a website or to deliver actual actions on a site (purchase, sign-
up, etc). Having said that, it is also true that banner fatigue is a real
thing, and that lots of people already "tune out" of the traditional banner
areas on sites.

------
gergo_v
Disclosure: I also work for a company that specializes in fighting advertising
fraud.

I think this is either willful ignorance or a complete misunderstanding of the
fraud ecosystem. It's not about click through rates by a long shot.

But since the OP's main argument seems to be how the bigger ecosystem of
online advertising already accounts for fraud, let's take that further. With
this attitude, he's effectively saying that:

\- They're okay with indirectly sponsoring the spread of viruses and trojans
(rationale being: it's cheap!)

\- They're okay with paying some dudes with some smart scripts (eg. the fraud
mechanisms) the same amount of money as hard-working content creators and
publishers

\- And they don't care enough about the budget either. Accountability is
apparently a fairy tale in this context?

The industry is under heavy fire regarding this subject as it is, and I'm not
sure whether this attitude is going to further the conversation.

------
eridal
There's a subtle difference measuring who saw a road billboard and a website
banner. On the former you must spend your own resources, on the later it's
paid from your visitors' wallet (internet connection + power + cpu time)

------
JoshTriplett
I can't help but wonder why all advertisers don't switch to payment by click-
through-and-buy, rather than just by click or impression. You can't fake that.

~~~
brandnewlow
Ad networks won't go for it outside of very specific and narrow use cases
(high-end ecommerce) because they don't have control over the quality of the
landing page, a crucial element in whether the user converts or not.

~~~
hamax
Exactly. Ad networks will optimize for cost per acquisition but won't charge
based on it since they don't control that part of the pipeline.

If advertiser's landing page is down for example, the loss shouldn't fell on
the ad network.

~~~
moron4hire
It's not really a "loss" though. It's not like there is a significant marginal
cost to serving static content.

~~~
hamax
Ad network can mean many different things.

In case of facebook where their ad network controls the whole process (SSP +
Exchange + DSP) they would only lose, besides the infrastructure cost, the
opportunity to make money by serving another ad.

But for the majority of ad serving world it's not that simple. If you're for
example a DSP and buy ad impressions from exchanges via real time bidding, you
have to pay for the impression even if you can't charge the advertisers for
it. So you lose money twice. You don't serve another ad which would make you
money and you have to pay for an ad that won't be paid for by the advertiser.

~~~
moron4hire
Meh, crocodile tears. If they shouldn't have to pay in the rare case that my
site is down, then I shouldn't have to pay in the more-common-than-not case
that there is no real person behind the click. And note that I have an
incentive to keep my site up, whereas they apparently have no incentive to
keep click-fraud down, evidenced by the fact that it's more than 50% of the
case.

------
stevenh
Where can we read the confessions he's responding to?

------
tempodox
_Methinks thou doth protest too much._

This is wrong. It should be: _thou dost protest too much_. Just saying.

~~~
tempodox
Oh, correcting grammatical mistakes is worth downvotes now? Off course, it's
so much more positive to not comment errors. And that's not a typo.

