Measuring the "content on the page" is hopelessly ambiguous and easy to scam.
Even trying to price just based on how many other ad networks there are is problematic. For each additional ad network the value of each ad goes down. Even adding a second one may cut the value more than in half compared to exclusivity, because if the user sees the other network's ads first and they don't appear relevant they may not even look at yours, and a user who sees a larger number of ads may not look closely at any of them.
If the price offered for any non-exclusive placement is more of a reduction over the price offered for exclusivity than the amount gained from the other ad network(s), how is that any different in practice than requiring exclusivity?
>Measuring the "content on the page" is hopelessly ambiguous and easy to scam.
Is it?
It seems pretty simple to audit your 10,000 largest ad-spend domains and check to see if they're actually just ad fraud. You'd need maybe 300 person-hours to do so, at an overhead-in cost of, let's high-ball it, 100$/hr, which puts you at a cost of $30,000.
If you mean the process is impossible to automate, then don't try to automate it. You can catch 99% of fraud with very low-effort manual review in most industries. That Google doesn't do it doesn't speak to the inability to get it done. It speaks to their unwillingness.
In short: exclusivity is there to choke out other ad networks.
>If the price offered for any non-exclusive placement is more of a reduction over the price offered for exclusivity than the amount gained from the other ad network(s), how is that any different in practice than requiring exclusivity?
The comparison you're making in the last paragraph is a common mistake in examining competition scenarios. The comparison isn't between pricing between the market leader and the incumbents following the anti-competitive behavior. It's the comparison between the prices we would have had no anti-competitive behavior existed in the first place.
> It seems pretty simple to audit your 10,000 largest ad-spend domains and check to see if they're actually just ad fraud. You'd need maybe 300 person-hours to do so, at an overhead-in cost of, let's high-ball it, 100$/hr, which puts you at a cost of $30,000.
You're figuring 10k domains in 300 hours, or 1.8min per domain. It's way more expensive than this, and it's an adversarial system. If you have rules about how spammy a site can be and still show your ads many sites are going to try and get as close to the boundary as possible without going over. This means it takes substantial effort to figure out which side of it they're on.
Then, the spammier sites run many different domains with multiple accounts, which means they're not that likely to show up as top domains. Spammy sites also can "cloak" so they show up one way to a reviewer at the ad network and another way to a real site visitor.
Manual inspection is definitely a valuable tool, and is something that ad networks use, but that a process like you described would catch 99% of fraud is massively optimistic.
(Disclosure: I work at Google on ad stuff, but not this sort of ad stuff. Speaking for myself and not the company.)
>It's way more expensive than this, and it's an adversarial system
Sure, but I've overstated the hourly costs by an order of magnitude. You can get body shops to do this work very inexpensively.
Making a call as to whether or not they're over the line isn't difficult; you flag the clear bullshit calls and leave the borderline ones after making the contractual terms more conservative than your in practice review would accept.
>Then, the spammier sites run many different domains with multiple accounts, which means they're not that likely to show up as top domains
Sure, but we both know your distribution of revenue isn't difficult to parse, nor is auditing methodology difficult.
We have active fraudsters at the top of the iOS and Play stores. The issue isn't that you don't know how best to cast the net to grab everyone. It's that you don't cast it at all to grab anyone.
>but that a process like you described would catch 99% of fraud is massively optimistic.
Not really. Most fraudsters are terrible. Sure a few will slip through the cracks, but that's the case in every industry. That's not an excuse to do nothing. It's especially not an excuse when the dichotomy being pushed here is that the difficulty underlies a need for illegal anti-competitive behavior.
> We have active fraudsters at the top of the iOS and Play stores. The issue isn't that you don't know how best to cast the net to grab everyone. It's that you don't cast it at all to grab anyone.
What apps are you thinking of? My guess is that they're apps that are being really careful to stay just inside the bounds of the store policies.
> That's not an excuse to do nothing.
I'm confused why you think ad networks are doing nothing?
> the dichotomy being pushed here is that the difficulty underlies a need for illegal anti-competitive behavior.
I wasn't trying to defend that. I just saw your "it's pretty simple to..." and as someone close to the issue wanted to explain ways it's not that simple.
>I wasn't trying to defend that. I just saw your "it's pretty simple to..." and as someone close to the issue wanted to explain ways it's not that simple.
Oh, I thought you were the original poster I was replying to. Sorry about that. Regardless, it's not actually all that complicated at all. Catching all fraud is almost impossible. Catching 90-99% is dead simple. If you don't like my quick and dirty breakdown, make another - the problem's size needs to be 4 orders of magnitude larger before the cost implications become a concern.
That said, there's a very consistent pattern at play here: Organizations and groups that refuse to take action on the basis that they can't catch everything are consistently those that intentionally look the other way in respect of fraud, and digital advertising has a bad rep in this area for a reason: most networks ignore as much fraud as they can get away with.
In any event, locking out other networks doesn't change the fact that the excuse provided for exclusivity is about how many containers are around, not how many networks can bid on that inventory. The rationale for the illegal activity doesn't address the problem at all.
> It seems pretty simple to audit your 10,000 largest ad-spend domains and check to see if they're actually just ad fraud.
It's not just a matter of fraud. The website could be CNN, but if they're filling their pages with a thousand different ads, none of the individual ads is going to be worth paying for, even if the page also contains legitimate content.
And the thing that's impossible to measure is content volume. If you have one morsel on the page that drives traffic to it, you can easily add arbitrarily more to the bottom that is arguably "content" in order to make the ratio of ads to "content" be whatever you like. At that point you're trying to measure content quality, which is inherently subjective.
> The comparison you're making in the last paragraph is a common mistake in examining competition scenarios. The comparison isn't between pricing between the market leader and the incumbents following the anti-competitive behavior. It's the comparison between the prices we would have had no anti-competitive behavior existed in the first place.
That's not what I'm saying.
Suppose we do a test. If a page has one ad on it, 0.5% of page visitors buy the product. If it has two ads on it, 0.2% of page visitors buy each advertiser's product, because the extra clutter causes people to pay less attention to both of them.
So then your ad network prices that way. If the site puts your ad on their page with no others, you pay them 5 credits. If they put your ad on their page with someone else's, you pay 2 credits. If they want to use three ad networks then you pay 1 credit and it goes down from there. Just paying proportional to the value of the ad to the advertiser.
Now nobody is going to put two ad networks on the page, because they'd get 2 credits from each ad network (total of 4) instead of getting 5 credits from one. Even if it was 4 vs. 2, you might as well save yourself the transaction costs of using the second network.
The reason exclusivity is worth more isn't that there is less competition so you can charge more, it's that if you clutter up the page with more ads, their value falls off faster than their volume makes up for it.
Moreover, suppose that isn't the case. Showing more ads would produce more value, at least until some threshold number of ads is shown. Then the first ad network would just offer to display more ads on your page and pay you appropriately more for them.
You still end up with only one ad network -- whichever one will pay you the most per unit. The only way two ad networks end up on the same page is by reaching the point that the highest paying ad network knows showing more ads won't produce more advertiser value, and then scamming them by showing more anyway.
Even trying to price just based on how many other ad networks there are is problematic. For each additional ad network the value of each ad goes down. Even adding a second one may cut the value more than in half compared to exclusivity, because if the user sees the other network's ads first and they don't appear relevant they may not even look at yours, and a user who sees a larger number of ads may not look closely at any of them.
If the price offered for any non-exclusive placement is more of a reduction over the price offered for exclusivity than the amount gained from the other ad network(s), how is that any different in practice than requiring exclusivity?