The Online Ad-Fraud Game is Ending
The Market Ticker - Commentary on The Capital Markets
2017-06-26 09:39 by Karl Denninger
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The Online Ad-Fraud Game is Ending
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You'll have to look to find it, and the articles are behind paywalls.

They're not being trumpeted all over financial media -- but they should be.

What article?  That Unilever is threatening to pull online ad campaigns stating that they believe half or more of the "clicks" are fraud. It was in the UK media -- quietly -- this weekend.

In other words, robots click them -- not humans, who actually watch the ads.

This story ought to be front-page news.  It's not, and the financial media will not cover it the way it should.

Here's why it should be:

1. This is not new.  These issues have been known and talked about for more than a year.  It was news last year, and then it quietly "went away."  Gee, you don't think Zuckerpig laid into the financial media, do you?  Naw, nobody would ever to do that when if their little ad game blew up in their face the stock price of Facepig would be zero.  Consider that if half of the online advertising revenue is false then the actual value of said platforms is nil since their cost of operation exceeds the true human-generated revenue.  That makes all of these so-called "businesses" worthless.

2. Nobody has an incentive on a platform like Facebook, where posters do not get a cut of the revenue, to stick an army of robots out there and click the ads, except for Facebook itself.  This is decidedly not true for Google's "Adsense" platform of course, or Youtubes, or whoever else where publishers get a piece of pie.  There, if your traffic is high enough, there's an economic incentive to cheat.  For someone like me it's not because the amount of money involved is too small, but for someone with a site that's garnering tens or hundreds of thousands a month in payouts you can easily cover the cost of a robot or three (hundred) to generate some false traffic.

The problem of course is that there aren't that many people with a big enough take to be worth employing robots, other than those who deliberately set up sites to do this and have no organic traffic at all.  Those people ought to be easily identified and shut down within days, making such a strategy worthless since you won't get paid, if the sites in question cared to do so.

The problem is that all the incentives run the wrong way for the so-called "online advertising industry", unless they get caught and all of their businesses are destroyed.  Otherwise the incentive is to cheat or at least look the other way on purpose while others cheat especially if, as is being alleged and has been alleged for over a year the "cheats" are half or more of all of the clicks.

In that case the incentive to cheat is not just clear it's an imperative because without the "false" clicks none of these firms have a viable business at all, except for possibly Google, and even Google is selling at 3x any sort of rational valuation.

The others, if there's any truth to this, are literal zeros.

ALL OF THEM.

Ask your friends -- how many "real" ads do they view and click on any of these sites?  Can you find one person among your friends who actually does so and finds value in these ads?  Tell me folks -- isn't it true that essentially all of the ads you see are for things you already bought and thus don't need again?

"Machine learning" my ass.

You know what the truth is, but by God the "industry" and media will do their level damndest best to hide it, especially given the bubble valuations of everyone in this "business."

Before you say "oh, you can't be right about this; it would never go on that long" let me remind you about the late 1990s.  In 1997 multiple "DSL" providers were leasing "dry loops" from the telcos, putting in DSLAMs, and pulling backhauls from there to enable DSL to companies and homes.  Every single one of them wanted to "partner" with us, of course, with my company getting a cut of the revenue and providing the Internet service.  They all came in and made their pitches and I threw every one of them out after examining the numbers.  Why?  Because every single one of them had no prayer in Hell of ever making a profit and when they blew up it was going to blow back on my company since the customer would associate their loss of service with us, not them.  Every one of them, a few years later, blew up.  Every. Single. One.  It was instantly obvious on any sort of analysis of their businesses and cash flow that it was impossible for them to make a profit.  Yet not one was called out in the financial media or anywhere else and all were "strong buys" in the stock market.

And gee, look at the "online ad revenue based" stocks this morning -- all up, as is the market.  Isn't that fancy..... I wonder how they'd be doing this morning if CentralNevertruthBullCrap was to run a quick pencil-and-whiteboard analysis on the fact that if you cancel half the ad revenue all these so-called "ad revenue driven businesses" have negative operating cash flow and thus are zeros?

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User Info The Online Ad-Fraud Game is Ending in forum [Market-Ticker]
Aztrader
Posts: 7796
Incept: 2007-09-10

Scottsdale, AZ
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How can any advertiser police the clicks they get? Tried it once and after blowing $300 in 3 days with no orders shut it down. To easy for fraud.
Tickerguy
Posts: 149209
Incept: 2007-06-26
A True American Patriot!
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They can't and that's the problem. You are completely reliant on the ad provider's "policing" and so-called "anti-fraud" techniques while they have every incentive to let the fraud happen so long as they don't get caught because it increases THEIR revenue.

You paid for $300 of robot clicks, you see.....

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Winding it down.

Krzelune
Posts: 5737
Incept: 2007-10-08

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Nothing is free. And when people think its free someone is being ripped off.
Analog
Posts: 1423
Incept: 2010-12-29

arkansas ozarks
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Between the annoying internet popups, spam emails, and incessant telemarketers i'm ready for a "French Revolution Solution " to invasive marketeers.
Just cut their careers short at the guillotine.

Found my phone number at that family site you mentioned a couple days ago. That site ought to be punished for not bouncing their list against "Do Not Call" registry.
As you suggested i always press the button and waste their time.
We need a class action suit against telcom executives for allowing a public nuisance to exist on their 'common carriers' . Airlines don't let you harass their clientele when using their service.


Ticker and one other site, physicsforums, are the only two where my adblocker is turned off. (Are those "Russian Beauties" a legit ad or do i have a virus?)

Marketeers have just set the price too high. When i get that "Turn off your adblocker to enter site" message i immediately click out of it.

Same for TV. All i watch is Turner Classic Movies and PBS's Frontline Nature and Nova. We also plumbed Netflix into TV set for BBC Murder Mysteries, and Youtube for fun.

US spends more on advertising than on defense,
most of it psychologically programmed to make suggestible people feel needy and insecure.
TV writers' job is to deliver the audience to the commercial break in a psychologically receptive state of mind, no wonder the country's a mess. It's 1984 on steroids.

Ever watch that movie "Look Who's Back" where Hitler wakes up in 2014 Berlin?
Great indictment of TV . Look for it on Netflix

A well deserved crash, i say

a.

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Never trust a computer with anything important.
Als
Posts: 523
Incept: 2010-03-12

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Saw the same thing with Yelp over the winter. I spent $1600 got lots of clicks and FOUR phone calls that turned into actual clients. Almost all of the calls were from competitors of Yelp trying to sell me their services.

This was the third time over the last fifteen years that I went with internet advertising and got burned. I'll never do it again it has never worked for me.

When I went to leave Yelp they were doing everything they could to keep me. They said oh you need to put this and that up on your page. I did every single thing they suggested and it actually drove my traffic down on phone calls to my business. In the last month I got ZERO potential customers calling and every phone call was someone looking for me to advertise on their website.

I guess they figured if I was stupid enough to advertise through Yelp I was dumb enough to purchase their internet advertising services. Don't get me started on Google I get two or three phone calls a week wanting me to spend hundreds a month on their advertising program.

Never again will I do any advertising on the Internet with the exception of Valpak. I do direct mailing with them and I purchased the internet side also to complement my mailer. About 30%-40% of my business comes off people printing out the mailer and bringing it in or showing it to the employee on their phone.

I only do it because non of my competitors will spend the money, $41.50 a month, to be on the internet side. Like last week when Valpak sent out an Email blast on my industry there were only three of us listed and the closest of the other two was over twenty five miles away.
Johnnyb
Posts: 37
Incept: 2014-10-21

Tulsa, OK
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I may not be their main consumer, but, really, who is clicking on Facebook ads? Anyone? Or any ads at all? Anyone who uses the Internet on a regular basis has trained their eyes to simply skip over ads. So, even when they get played/shown, they are valueless. The two exceptions are (a) YouTube ads, which are more like TV (you are also more in a state of mind to be receptive to ads when watching TV than when actively looking for content), and (b) when it shows you something that you have looked at online but haven't bought (but then the worth is marginal, since I would have likely thought to buy it later on my own anyway).

I honestly think that in the next 5-10 years unpaid content on the Internet is going to have a sharp dropoff, as everybody realizes that advertisements on blogs, even popular ones, don't do jack squat. Then, every ad-supported site will have to either move behind a paywall or die. The winner will be the person who successfully invents a micropayment system to make it easier to seamlessly read the content you want across a number of sites.
Mekantor
Posts: 141
Incept: 2009-01-12

Houston, TX
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The times I've clicked on internet ads:
1. They expand between paragraphs as I try to scroll on a mobile device, sneaky!
2. I see an ad for a company I don't like and click on it just to give them an expense.
Aquapura
Posts: 627
Incept: 2012-04-19

South of Canada
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Anyone remember All Advantage back in the late 90's? As I recall their software put ads all over your browser but they paid you for the time you spent on the web. Not a day after a friend told me about it (believe he got a kicker if I signed up) I learned of a bot that would randomly move your pointer around the screen and game the system to make it seem like someone was surfing while instead they were doing anything but.

That's the day when I opened my eyes to the fallacy of our "information economy."

Nothing new here.

Flappingeagle
Posts: 2621
Incept: 2011-04-14

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Quote:
2. I see an ad for a company I don't like and click on it just to give them an expense.


Talk about hastening the crash, if most people did that "free content" would be gone in three months, or maybe one month. Maybe I will start doing the same myself.

That's a lot like me talking with the people from Cardholder Services when they call offering to lower my interest rate. Poor guys, I've had them try different numbers and expiration dates trying to get those numbers to work. After they start cussing me I ask to speak with Rachel.

Flap

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Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
No sign that housing, equities, or farmland are in a bubble- Yellen 11/14/13
Trying to leave the Rat Race to the rats...
Supertruckertom
Posts: 1306
Incept: 2010-11-07

USA
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Analog, the Russian Beauties think only rich old lonely white guys read The Market Ticker.

Ha!


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Preparing to go Hunting.
Pitz
Posts: 904
Incept: 2010-04-08

voluntary resigned
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I block most of the ads at my gateway. Friends come over with their laptops, iDevices, whatever. They remark at how much faster my Internet is, even though its a paltry 8mbit connection.

Not only do you have to pay for bandwidth to get *their* ads to your computer, but you have to buy faster hardware just to keep the browsing experience relatively okay.

So in a way, the advertisers are 'free-riding' on my investment in computer equipment when they attempt to involuntarily send me ads.

Once I figured out how to systemically block ads, that 'itch' to buy new hardware has disappeared. My 10-year-old laptop with 4gb RAM is still perfectly adequate for browsing the (ad-free) Internet.

If Google and Facebook want me to start looking at ads, the very least they could do is subsidize my purchase of a computer, and pay for a chunk of the monthly Internet connection. Otherwise they can bugger off.
Tickerguy
Posts: 149209
Incept: 2007-06-26
A True American Patriot!
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That too.

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Winding it down.
Aztrader
Posts: 7796
Incept: 2007-09-10

Scottsdale, AZ
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Google and Facebook have mastered the scam by selling "sponsored ads" that do the same thing. Just google any product and Amazon's ad will show up at the top. All of Amazon's Prime crap soaks up the first page for that product on their site. They are trying to force vendors into prime with a 25% haircut just to get their products found.
Tickerguy
Posts: 149209
Incept: 2007-06-26
A True American Patriot!
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Quote:
They are trying to force vendors into prime with a 25% haircut just to get their products found.

Yep.

Eventually someone is going to blow them up -- either legally through anti-trust, or via less-legal means through some sort of interference, whether digitally or otherwise.

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Winding it down.
Reluctantdebtor
Posts: 284
Incept: 2010-03-05

ohio
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I can't be the only person with multiple layers of adblockers, popup killers, and various specific, more specialized blockers in each browser. There are no ads unless I whitelist a page. The microscopic number of ads on non-whitelisted sites that slip through are, of course, never clicked.
(right now an ad on this page is urging me to call "my" senator but showing a senator from another state)
Lumpeninvestor
Posts: 2735
Incept: 2007-10-16

98072, USSA
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My son (9) watches a lot of youtube vids from some experienced "youtubers". They produce game-play videos that are just long enough to avoid the forced ad break mid-video. Except that recently, I noticed more ads showing up and my son confirmed that the mid-video ads seem to come at shorter intervals. I could see this as a tone-deaf response by an ad focused company to get more revenue in the short term at the expense of offending viewers in the long term. meanwhile, I've started downloading the vids and having him run playback from a local disk; no ads at all that way.
Flappingeagle
Posts: 2621
Incept: 2011-04-14

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Quote:
I block most of the ads at my gateway.


Could you expound on that please? I would like to block a lot of the ads coming into my house as well.

Flap

----------
Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
No sign that housing, equities, or farmland are in a bubble- Yellen 11/14/13
Trying to leave the Rat Race to the rats...
Tickerguy
Posts: 149209
Incept: 2007-06-26
A True American Patriot!
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There are a number of ways to do this.

One of the easiest if you have a Linux or FreeBSD gateway host is to run "unbound" with an overloaded list of domains that all point to 127.0.0.1.

Any lookup of an "ad source" returns your local host which of course doesn't answer, thus the ad doesn't show up and generates no traffic.

This is not very hard to set up; you then have your DHCP server advertise that device as the domain resolver, and you're all done.

To get the source data you can look at Gavin Brown's work -- he has a couple of perl scripts that will generate the base, then a little bit of sed processing will turn that into the "overload" file for you.

This is one of the reasons I argue that the existing "locked down" view of various devices (like phones) is outright fraud. If I can run my own code on said handset I can trivially run unbound on there (or simply add an /etc/hosts file!) and do the same thing on my PHONE. Bingo -- no ads, or damn few anyway.

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Winding it down.

Little_eddie
Posts: 1062
Incept: 2009-04-30

Delaware
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I run Pi-hole on a Raspberry Pi3, it's my main DNS server so it shuts down most all ads coming into the system and when I'm out and have my VPN running on my phone.

https://pi-hole.net/


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Banks and governments depends on the real producers of the economythe people (workers) and the industrial corporations. IF these stop producing, both the banks and governments fall flat. (Gail Tverberg)
Bodhi
Posts: 106
Incept: 2008-02-23

Georgia
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Quote:
(or simply add an /etc/hosts file!)


I make use of the Windows hosts file to block offending ads, websites, trackers, etc. It's taken a while to build the database, but now hardly anything gets through on my desktop PC's.
Uwe
Posts: 8262
Incept: 2009-01-03
A True American Patriot!
24091
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Some things make no sense.

Google used to offer a very useful paid product called "Site Search". If you've got a big site, particularly one that spans several domains (a main site, a forum, a wiki, etc) it was a pretty cool way to offer your site's visitors high-quality, ad-free, site-specific search results. Google charged by the "block" of queries run. 150,000 queries cost $750. A block used to last me about 6-8 months, so I was spending $1200-$1500 a year with them.

So what did they do a couple of months ago? They discontinued the service. It's now reverted to the free "Custom Search", which is of course, ad-supported.

Wut? They'd rather show my visitors ads than have me pay them actual money?

I'm not keen on my visitors seeing random ads in my site's search results, but I have yet to find a good replacement. When I do, Google gets nothing from my site; not the money I used to pay them, nor the ability to show my visitors ads.








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"I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free because I know that I alone am morally responsible for everything I do." -- Robert Heinlein
Idiom
Posts: 102
Incept: 2015-02-20

New Zealand
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Question.

Does Net Neutrality prevent an ISP from disseminating routers that block ads by DNS by default?

If nobody missed them, I suppose an ISP could block ads further up the food chain.

Join our ISP for an ad free internet?
Tickerguy
Posts: 149209
Incept: 2007-06-26
A True American Patriot!
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Quote:
Does Net Neutrality prevent an ISP from disseminating routers that block ads by DNS by default?

No.

That's not packet filtering. Further, an ISP could offer a choice.

Were I running one today I'd offer a user control panel switch and when you got your address over DHCP you would get either the "unfilted" DNS server IP numbers or the ones with the ad sites I "know about" filtered out.

You choose, as the customer.

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Winding it down.
Tickerguy
Posts: 149209
Incept: 2007-06-26
A True American Patriot!
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Winding it down.
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