THE BLOG
11/19/2014 01:24 pm ET Updated Jan 19, 2015

Ad Fraud and Advertisers: Time to Pick Your Poison

Like most everyone on the publishing side of the digital media equation, kissing up to the advertising industry is one of my favorite pastimes. The way you are behaviorally targeting cross-platform, mmm...that's so good! Or, 'How you're driving CPMs down to squeeze value form your clients -- nobody does it like you!' But a new phrase I now find myself saying is: You are so brave leveraging your spend to push for click-fraud technology innovation! When, in reality, what I really want to say is, be careful what you wish for.

I was taught that the ultimate law of the universe is that you can't have it both ways. This brilliant overriding economic principle appears to translate to any ecosystem where supply and demand exists. In the case of user and click fraud, I can link to a growing number of articles placing the amount of 'make-believe' users on the web at 30-40 percent of total traffic. Unfortunately, and not directly anyone's fault, little thought is given to the economic repercussions of combatting this with click-fraud technology.

If advertisers do continue down the slippery slope of leveraging their spend in favor of click-fraud technology, they may be doing more harm than good. That may not be what the industry wants to hear, but it's the truth that they need to hear. Let me clarify: no one I have spoken to is directly in favor of user fraud. Yet quite ironically, none of them also want to be named as agreeing that the current click-fraud technology solutions are totally missing the point, creating more problems than they are worth. Whether the industry likes it or not, bots have drastically inflated total web traffic globally, essentially supporting the suppression of CPMs across the board. Eliminating bots, economically speaking, will dramatically drive down supply, creating the immediate skyrocket of CPM prices. I said it before and I'll say it again -- you can't have it both ways.

It's arguable that the pure existence and by product of bot traffic has, in part, espoused the transition of many ad dollars into the digital space. Because after all, digital is where the "eyeballs" are, or at least were they are most easily quantifiable. If the audience isn't actually there in the volume we once thought, the question then becomes where are they? Or even worse, do they actually even exist? If the audience is actually somewhere else, will that cause ad dollars to shift? If the audience purely doesn't exist, will the ad dollars just disappear?

These are all valid questions that don't exactly have an equally valid response. The one thing I'm certain of is that it would be unwise for the industry to be too eager to shift gears to mainstream acceptance of click-fraud technology. Besides being a technological stopgap, it is not a solution to the real problem and will drastically change supply and demand with very little recourse for publishers and ad tech companies. The first realistic step would be to put technology in place that can seamlessly parse together the content and ad experience in a programmatic fashion that is scalable. It would also require more transparent user stat and analytics standards. Once these two are matched together as intelligently as possible, then and only then will it be reasonable to address user fraud across the digital market, especially the burgeoning video market.

The reason comes down to incentive. If one part of industry is mostly manual and the other is programmatic, human intervention misaligns the economics behind catering to and monetizing users. The arguments that programmatic methodologies cannot be used to organize content are getting harder and harder to have with a straight face. Once the delivery of targeted content and ads are unified though automation, few on either side of the equation could contest the value. Increased CPMs coupled with the definitive targeting of niches eliminates the need for broad-based campaigns with no targeting consumption parameters (that usually drive CPMs down). In short, ad supply would go down--thanks to smarter targeting and user authentication weeding out questionable views. But with the dramatic increase in quality, the market will happily respond with higher demand-side pricing. Supply and demand meeting together in an unimpeded transaction with clear analytical transparency sounds like a pipedream, but it will be here sooner than we think. We just have to patient and allow for the environment needed for it to take hold.

The ultimate law of the universe is that you can't have it both ways, and this also applies to today's digital marketplace. Advertisers can't fight ad fraud while still maintaining low CPM rates -- at least not within the markets current state. Publishers can no longer sit, straight-faced, pretending that they are not observing massive consumption irregularities that they pin on "sticky content" or something "going viral." Oh, it's viral alright, but not in the good way. It's just that right now it leans towards to publisher's favor. Programmatic technology is the ultimate key to enabling the fight against ad fraud, click fraud, and most importantly, consumption fraud. Without embracing Programmatic's role in delivering content, the digital advertising industry will be setting itself up for failure.