The Fraud of Digital Advertising

Click Rates

Advertisers spend the most money on digital advertising ($111 billion per year).  Digital advertising spend is the fastest growing advertising segment.  Google and Facebook control 90% of digital advertising.  60% of digital advertising is fraud.  George Simpson in his article, Is Ad Fraud Inevitable? writes,. “Agencies and brands simply write off fraud as the cost of doing business online. That is, until someone comes along and says, you know, you’re wasting 60 cents of every dollar, or calculating that every ad dollar lost to fraud costs.”

So today’s research fact reveals after the fraud comes the CLICK.  Overall consumers click .09%. (See the above chart)

We can now create a digital advertising algorithm to help us understand what is going on:

  • Pay to reach 1,000 shoppers online
  • 60% fraud = reach 400 shoppers
  • .09% click
  • REACH – .36 shoppers after spending to reach 1,000
  • Pay $45 per click.  Not sale.  Not customer. But click.

Local Media:  Local media has tried to compete by switching to digital advertising.  This has proven to be a catastrophic mistake.  Local media trying to compete digital advertising is like the local high school basketball player trying to play against LeBron James, the NBA superstar.

Local media

 

Internet Trends & Analysis

Each year Mary Meeker reports on Internet Trends and often predicts what can be expected in the coming years.  This year is no exception.

1. U.S. adults spent 5.9 hours per day on digital media in 2017, up from 5.6 hours the year before. Some 3.3 of those hours were spent on mobile.

ANALYSIS: The more time people spend online the more power the tech giants gain. Recent articles (The Tech Giants Covert Actions) show the main focus of the tech giants is 24/7 surveillance, censorship, and manipulation. The tech giants engage in these three things to drive revenues. They want to know everything people in order to sell targeted advertising. They censor companies and ideas because they seek to promote products, businesses and ideas that support their global revenue agendas. They manipulate in order convince shoppers to spend more time and money on the products they promote and to view the advertisers who pay them to appear on their platforms.

2. Voice-controlled products like Amazon Echo are taking off. The Echo’s installed base in the U.S. grew from 20 million in the third quarter of 2017 to more than 30 million in the fourth quarter.

ANALYSIS: Voice-controlled products all share one common feature – they limited their response to queries to those companies that are paying the most to the tech giant offering them. Voice-controlled products are NOT benign. The tech giants goal is to make people more passive and therefore susceptible to their surveillance, censorship, and manipulation

3. Tech companies are becoming a larger part of U.S. business. In April, they accounted for 25 percent of U.S. market capitalization. They are also responsible for a growing share of corporate R&D and capital spending.

ANALYSIS: The tech giants are already monopolies. Like all monopolies they cannot help but want to grow.

4. E-commerce sales growth is continuing to accelerate. It grew 16 percent in the U.S. in 2017, up from 14 percent in 2016. Amazon is taking a bigger share of those sales at 28 percent last year. Conversely, physical retail sales are continuing to decline.

ANALYSIS: Just think of the growth of online sales as a loss of local business sales. Ditto for Amazon’s share.

5. Big tech is competing on more fronts. Google is expanding from an ads platform to a commerce platform via Google Home Ordering. Amazon is moving into advertising.

ANALYSIS: Refer to the innate philosophy of all monopolies. These five points are interwoven. The bigger tech giants become the more capital they have to expand into new services and products which leads to people spending more time online. The more they expand the greater their surveillance, censorship, and manipulation. The cherry on top is voice-controlled products whose sole function is to support the revenue goals of the tech giants selling them.