Another Day, More Digital Fraud

Screen Shot 2017-11-22 at 8.46.37 AMHow many of your ad tech and mar tech technology providers called you in September and October and said “Hey, we’re seeing some odd things happening and we think maybe there’s some new fraud taking place. Maybe you should cut back your buys at X, Y, Z.”

Yeah, I thought it would rhyme with “hero.”

Turns out that yet another scheme to defraud advertisers, HyphBot, was spun up in August and which was stealing maybe $500K per day. You have to ask yourself–why didn’t any of your technology providers alert you? Either they’re complicit or they’re stupid.

My money’s on both. Your technology “partners” don’t want to tell you about the fraud, because that means you’d spend less on digital advertising and that’s less fees. Less fees means less avocado toast, and that’s a bad thing. That makes them complicit.

A digression: If your technology provider only provides technology for a fee, and always gets the upside (the fee) while not participating in the downside, they’re a vendor. Never let them use the word “partner.” When you hear the word “partner” in that case, grab your wallet.

What makes them stupid is that they’re protecting the upside (the fee) and not willing to have skin in the game on the downside. In other words, all the risk for fraud and waste is on the client. And that’s just dumb, long-term. Why? Because somebody else is going to look out for the best interest of the client. As much as I hate to say this, ultimately it’ll be the big consulting firms that look out for the client. Your CEO will ask his buddy– a partner at Deloitte, Accenture, or PwC– if there’s a problem he should be thinking about.

The sound you just heard was that of ad tech and mar tech hucksters getting double-tapped by an engagement manager who won’t hesitate to tell your CEO that the “..aaS” API-based, transactional service offers no value, and it easy to game.

So the technology geniuses on the west coast are complicit in stealing your money, and too stupid to look out for you. What should you do about it, as you enter peak season? A few tips:

  • Read and understand Adform’s paper on HyphBot
  • Ask your digital marketers and ad agencies to prove how they did/did not get caught by this (plan 3 hours for the meeting and demand details)
  • Hire Shailin Dhar or Augustine Fou (two bright and ethical guys) to look at what you’re doing and then implement what they say
  • If you’re mucking in the programmatic cesspool (and you probably have to), hire Wayne Blodwell (a bright and ethical guy) to set up your programmatic strategy and process correctly
  • Don’t trust anybody in ad tech or mar tech until proven otherwise

Takeaway: Your ad tech and mar tech vendors, who insist on calling themselves “partners” aren’t on your side. Hire your own independent auditors. Demand accountability. Assume fraud in digital.

By the way, Happy Thanksgiving!

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Black Friday Narrative: The Retail Apocalypse (The Data Says…)

Screen Shot 2017-11-21 at 8.52.39 AMI was searching Linkedin last evening and read a comment from somebody about how “Black Friday sales have been down the last few years.”

The comment came with no facts to back the assertion, and it fit neatly into the “e-commerce is causing a retail apocalypse” narrative that we’re seeing and will see when the weekend sales are written up on Monday morning. I thought the comment might have been lazy acceptance of a story, so I thought it was time to do my own research.

Screen Shot 2017-11-21 at 8.58.23 AM
First, retail holiday season retail sales are continuing to increase, per the NRF with their forecast for this year pegged at a gain of 3.6 to 4% as compared to last year. OK, maybe the NRF has an agenda, as they are an association of retailers who generally stand to lose if online sales continue to grow.

If you’re going to grow the quarterly sales, you’re going to do it on Black Friday, when a substantial fraction of all Q4 sales are made.

I figured that online sales were probably growing a lot more quickly than offline sales, if my own household’s expenditures are any indication. (Of course, that’s n=1, always a red flag.)

So I took a look at the data from the U.S. Census bureau, which tracks seasonally adjusted retail sales, and splits up those sales between e-commerce and traditional retail. Do they have the breakdown perfect? No, but it’s probably directionally correct. Here’s what the quarterly data looks like. I’ve highlighted the traditional retail Q4 sales in green.

Screen Shot 2017-11-21 at 8.50.29 AM

You’ll notice that that the size of the red bar–the online sales–is indeed increasing rapidly, particularly in the last few years. Going back to Q4 2011, here’s maximum, minimum and average QoQ growth rates:

  • All retail:  Max 2.4%, Min (1.0%), Average .9%
  • Offline: Max 2.3%, Min (1.3%), Average .7%
  • E-commerce: Max 6.0%, Min 1.7%, Average 3.5%

Over the same period (going back to Q4 2011), the YoY changes for ecommerce have averaged 14.7% and been as much as 17.6% (Q4 2011 vs Q4 2010). There is no question that ecommerce sales (Amazon) will continue to grow dramatically, aided by Amazon’s increasing ability to cross-subsidize from the AWS business and the advantages of not needing to collect tax in many municipalities.

But there’s something about rapid growth from a small (zero) base. Here’s how much of your retail dollar is spent online for the holiday quarter, going back to 2011:

  • Q4 2016: $0.08
  • Q4 2015: $0.07
  • Q4 2014: $0.07
  • Q4 2013: $0.06
  • Q4 2012: $0.06
  • Q4 2011: $0.05

Different than the “sky is falling” narrative, isn’t it? My guess is that the share of holiday spending spent online this year as compared to last year will increase once again by 14-15% as it has the last several years. But that still means that >90% of everything sold in the U.S. will come out of a brick and mortar store in Q4 2017.

Black Friday isn’t dying, even if it’s becoming less important. Retail isn’t dead, even if the narrative says so. And customers still like to touch a lot of what they buy, before they buy it, even if that doesn’t fit the tech narrative.

Takeaway: When you see easy stories, question them. Do primary research. Run your own numbers. Draw your own conclusions. And win.

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Thanksgiving Project: Security and Privacy

Screen Shot 2017-11-16 at 8.29.00 AMNext week, as you’re doing your annual IT work for parents, in-laws, aunts and uncles, take a few minutes and talk about protecting privacy and improving their cybersecurity.

This Motherboard article, recommended by Bruce Schneier, is a great place to start. Will it provide perfect privacy and security? No, but it’s a good start for your loved ones.

At a bare minimum I recommend:

  • Installing an ad blocker (yes, I’m a marketer and yes, I use one)
  • good paid VPN on both desktop and phones
  • Removing personal information from social media such as birthdays and “likes” of topics which can de-anonymize you (which means everything)
  • Change social media default post settings to friends only
  • Encrypting the hard drive
  • Update the OS and applications
  • Install (or use) a password manager

You can do the above during the end of the Lions game and still be finished in time to catch the Cowboys.

Happy Thanksgiving!

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GroupM Shines Light on Middlemen

Screen Shot 2017-11-15 at 8.01.55 AMBravo to Group M for starting to shine the light on the adtech middlemen who reduce our working media to, at times, a pittance. Advertisers need to demand more of this behavior from our agencies. Here’s the report I want for every publisher and every placement, for a hypothetical $100 spend:

Net to publisher*                   $30   30%
Agency fees, variable            $10   10%
Agency fees, fixed                  $ 2     2%
Ad tech 1                                  $10   10%
Ad tech 2                                  $10   10%
etc.

Summing to 100%. Once you, as the advertiser, understand this exactly, you can begin looking at the best ways to slim the ad tech fees through a testing program. I’ll bet some of the tech you’re using either doesn’t work or can be renegotiated to a significantly lower rate.

Takeaway: If the supply chain isn’t transparent to you, you’re being taken. Demand proper accounting of how your dollars are being spent. Study the reports and test to see what value is added by each vendor. And win.

* Your agency agreement provides for no kickbacks to your agency, right?

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Want Salient Fake News? Next Gen TV is the Ticket

Prediction: If you think it’s easy to use social media advertising to–I don’t know–sway elections via (small) bags of rubles, wait till you see what we get pumped into our homes via Next Gen TV.

Full-motion, beautiful imagery, and powerful, targeted messages. Very profitable, of course, totally fake, and basically unregulated by anybody.

Takeaway: I’m not sure anymore.

 

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Peer-to-Peer Disinformation

Paywalled, but interesting article at New York Times today on Renee DiResta’s work on peer-to-peer disinformation and how social media can be gamed to lead one into an echo chamber where vaccines can cause autism, planes distribute chemicals via chemtrails, and where an election can be influenced.

It got me thinking about peer-to-peer disinformation in the adtech and martech world. How much of what we hear as “real-life results” is just the sound of BS echoing off the walls? And how do you avoid being influenced by disinformation?

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Adtech Social Engineering

Looks like some of the shady players in adtech (a large group from which to choose) are resorting to social engineering to get around ads.txt. What should you add to ads.txt? Nothing.

By the way, I think an ads.txt file can be a sign of desperation and point you to sources that you should monitor for fraud more carefully. Check out Salon.com‘s. Wow. As I write this, even the hinky Thrive Plus is in there.

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ABD (Always Be De-Averaging), ads.txt Edition

Screen Shot 2017-11-01 at 8.42.54 AMNow that ads.txt is getting traction, with about 44% (and growing) of the top 10,000 domains using it, you’ve got some homework in your future.

Here’s the assignment: Pull together your campaign data at the source (e.g. somedomain.com) and “source/source” i.e. where you actually bought the inventory. At the source / source/source level gather the following:

  • Impression volume
  • Clicks
  • Costs
  • Attributed sales (both MTA and last-click)
  • Attribution source (view-through, click-through)
  • Fraud data from your fraud vendors
  • Time-of-day data for impressions and clicks

I hope you can see where this is going: You’re now going to check to see which of the authorized sources for publisher data are playing fast and loose with what they’re selling you. You might see it in CTR index rates that are ridiculously high, odd distribution of impressions in the middle of night, and so on.

Two, pre-coffee hypotheses occur to me:

  • The more authorized sources in a publisher’s ads.txt file, the greater the likelihood that you’ll see source/sources with bizarre-looking metrics and higher fraudulent traffic.
  • The more heavily you optimize for CPM at the publisher level, the more likely your dollars tilt toward the sketchier–but still approved–resellers.

You’ll have your own hypotheses that will vary based on your digital buying strategy. And I think the above hypotheses will be easier to see when you split out your analysis at display vs. video.

As a fellow CMO is fond of saying “The average is a lie.”

Takeaway: Always de-average, even if it takes a long time. Make sure you collect your data in a way that allows you to de-average, even if it takes a long time. This will cost money, which is OK. Then, ABD (Always Be De-averaging). And win.

P.S. Coffee’s kicked in. Check my post on source level triage for some tips on how to use your findings.

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Where’s the Bottom of the Barrel?

Screen Shot 2017-10-31 at 8.59.37 AMThis quote from an un-named programmatic specialist at a media company is telling:

If you want our $1 to $2 inventory that’s on the open exchange, we’re glad you are interested in it, but you aren’t going to get much value out of 300 x 250 display ads at the bottom of the site.

In other words, the stuff the doesn’t get sold direct or via PMP is the dreck.

Should you still buy programmatically? Sure, as long as you know what you’re buying and that what you think you’re buying is what you’re actually buying. (These are two very different things.)

But make no mistake about it–the ad tech world is in the business of creating ever-bigger barrels with more gunk at the bottom.

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On the Radar

Screen Shot 2017-10-24 at 10.55.13 PMOut of nowhere, something appears on your radar. You’re not sure how long it’s been there.

You can get upset that you never noticed it before, because it might have changed the last decision.

Or you can acknowledge that you now have new information, which might change the next decision.

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