Lured by the promise of advertising they could be sure was being seen by the right people, marketers are now contending with a deep bag of tricks that includes Web-crawling robots, server-based "drone pools" and the pixel-size video sites that has them paying for dubious Internet traffic.
The story illustrates the depth of deception by showing how just one site, USFunVideos, stole from J.P. Morgan Chase, Minute Maid, smartphone maker HTC Corp, and others by running their ads on tiny sites each the size of a single pixel, all embedded on a website playing cooking videos.
As we pointed out in our earlier post, the extent of the fraud with online video is not new. It is well documented, and virtually unstoppable.
The Wall Street Journal story is interesting because it documents how little advertisers and agencies care that they are being screwed.
This is how the three companies reacted when told their video ads played on invisible players:
A spokesman for J.P. Morgan Chase acknowledged the company inadvertently paid for the spots to appear. A spokesman for HTC said its media agencies have "robust monitoring solutions in place" to guard against fraud. A Minute Maid spokeswoman said that "known fraud is automatically stripped out" of ads counted, and billed, to the company.
That last line from Minute Maid is reminiscent of Dick Cheney’s “known unknowns” versus “unknown knowns.” Of course they don’t pay for known fraud. They do end up paying for unknown fraud.
Mike Turcotte, a senior vice president at Zenith Media, which handles J.P. Morgan Chase's online advertising said that the USFunVideos incident represented a small amount of the bank's total ad budget but declined to give any figures, or say whether the bank had been reimbursed for the fraud.
Mr. Turcotte is being coy here. Fraud experts estimate that fraud is siphoning off at least 50% of the dollars going to online video.
Yet the message is, “Nothing to see here. No big deal. We’ve got this under control.”
But of course, none of these ads were supposed to be on this rogue site, none of these ads were seen, and none of the companies had been aware of the breach before The Journal discovered them.
Perhaps the most telling line in the WSJ story came from the Zenith Media VP who confessed:
"It's always a big deal when advertisers can't control where their ads end up in the supply chain.”
When advertisers buy a radio schedule, it runs on a real radio station with listeners. The buy is rarely handled by more than one or two intermediators, generally human.
These video ads are being bought through electronic auctions and automated systems, and often run on foreign web sites. USFunVideos appears to be a Slovakian web site.
The HTC ad traveled through three middlemen, including the ad network OneScreen and the ad-buying tech company TubeMogul.
J.P. Morgan Chase placed its ad through AOL Inc. 's Adap.tv, and they handed off the buy to three more firms before it ended up on the rogue site. There can be as many as nine intermediators involved by the time a video ad runs.
But here’s the kicker: These advertisers are paying upwards of $30 per thousand views, more than they would pay for much of prime TV, and considerably more than for a prime radio buy.
For the privilege of playing in a one pixel player on a Slovakian website.
These sorts of stories should make radio’s leaders livid. Major advertisers have been sold a bill of goods by digital stakeholders, and radio is doing virtually nothing to publicize the fraud and contrast it to radio's transparancy.
Where is the NAB? Where is the RAB?