It's the Biggest Scandal in Tech (and no one's talking about it)

Phoenix Capital Research's picture

A truly massive scandal is brewing in Big Tech.

This scandal concerns the fact that 60% of advertising “clicks” are in fact NOT coming from humans; they are generated bots or automated algorithms that don’t buy anything. EVER.

If you don’t believe me, and think I’m just making this up, consider what Keith Weed had to say last month.

Weed is head of Marketing for the consumer goods giant Unilever. In this role, he oversees a marketing budget of $8+ BILLION per year. And here are his statements on the impact of bots in digital advertising.

With $8.4 billion in annual ad spend, the advertising industry pays attention when Unilever is unhappy. During the Cannes Lions Festival of Creativity, Unilever's chief marketing and communications officer Keith Weed outlined the three concerns that "keep him up at night."

"If you don't have your ad viewed, you are dead,” Weed told a Cannes audience on Wednesday.

He wants advertisers to "join up the dots in the digital industry." As Weed sees it, this ecosystem is corrupted. Some 60% of traffic online is bots. "We want to buy eyeballs of viewers not bots," says Weed. "If it is too good to be true, it probably is."

Source: Mediapost.

What does this mean?

The Tech Giants, Facebook and Alphabet (formerly Google), make the bulk of their money by charging advertisers a certain amount for every click the advertisers’ ads receive online.

The price that Facebook and Alphabet can charge for advertising space is based on the amount of web traffic that ads receive. The more traffic these ads receive, the HIGHER the prices Facebook and Alphabet can charge advertisers for ad space.

So if 60% of ALL AD CLICKS are in fact BOTS, not HUMANS, the reality is that these ad prices are in fact MASSIVELY overstated.

Again, if you think I’m making this up, consider that another consumer goods giant, Proctor and Gamble cut its online marketing budget by $100 million and found… ZERO IMPACT ON GROWTH.

Procter & Gamble Co. said that its move to cut more than $100 million in digital marketing spend in the June quarter had little impact on its business, proving that those digital ads were largely ineffective.

Almost all of the consumer product giant’s advertising cuts in the period came from digital, finance chief Jon Moeller said on its earnings call Thursday. The company targeted ads that could wind up on sites with fake traffic from software known as “bots,” or those with objectionable content.

Source: WSJ.

Again, Proctor and Gamble cut online advertising by $100 million and had ZERO impact on its results.

These are two massive companies both of which spent BILLIONS in advertising. And both of them are stating point blank that the value of digital advertising via companies like Facebook and Alphabet is MASSIVELY overstated.

What happens if these companies have to begin accurately pricing their ads? What happens if more advertising giants start pulling funding?

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Phoenix Capital Research

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zimboe's picture

Taking myself as one datum...

I have NEVER clicked on an ad except by accident. I find them irritating, insulting, and a thief of my precious bandwidth.

...

Bullshit expands to fill the bandwidth available.

gregga777's picture

It's called 'digital fraudvertising' for a really good reason.

Peter41's picture

Does Facebook and Alphabet appear to be in a bubble? Wait until this SHTF, baby, the shorts will clean up.

gmj's picture

I actually bought something from an ad.  But it wasn't impulse.  I was looking for a camera with both a viewfinder and movable LCD screen.  The search engines on the web don't work very well.  They only show you a tiny subset of what's out there.  Amazon search engine was very sensitive to the exact wording of the search.  So I kept watching the ads that started popping up all over my screen.  After about a week,  I found exactly what I wanted.  The number of different digital cameras on the market is unbelievable.  I thought smartphones were killing that market.

Mazzy's picture

Now here's the real story: it's not 60% bots....it's 99.6% bots.

GreatUncle's picture

Soon 100%, because AI will get you what you want, when you want etc. so the real decision maker is the AI.

Now does the AI get bribes and backhanders for pushing a favoured item and will the freebies be free robotic repairs.

 

TheRideNeverEnds's picture

"No refunds"
-M. Zuckerberg er al

Stupid goyim.

toady's picture

They totally fucked the internet. It really looked like it could be a wonderful tool for mankind.... all the information you could ever imagine at your fingertips!

Then they invented the tracking cookie. Turned it into a "advertising platform". Used it to collect information and build databases against everyone's  (except the corporations and governments) best interests.

Now it's more likely to be used against mankind than for it.

truthalwayswinsout's picture

It is really easy to tell if the click is a bot or a person. You can even create ads that tell you this so the really big question is why aren't these CROOKS in jail?

Joebloinvestor's picture

I was thinking of starting a "click farm".

esum's picture

did PG really cut its online ads by $100 million and said they noticed no effect on sales.... i believe it...

i shop for stuff i want or need ... and dont suddenly impulsively buy shit cause i see an add.. ring the bell.... dog drools ... ok so what do impulsive idiots buy.... veyrons... patek philippe watches... mega yachts.... marraiges with russian women.... sure they do

 

 

DjangoCat's picture

Ever notice how the targeted ads show up just after you have bought something.  Why would I buy it twice?  All bullshit.

BTW ZH policy of not interfering with adblockers is excellent.

Honest Sam's picture

I am and have been trying to remember what I have EVER bought becasue of any kind of advertising, and I cannot thimk of a single thing. Nothing. Ever.

Yet my Costco bill is enormous. My Whole Foods budget is blown in one visit.  

I don't understand how advertising isn't the biggest scam on earth. 

Has anyone here bought anything because of a TV or print ad?

runnymede's picture

"Has anyone here bought anything because of a TV or print ad?"

Guilty---Brazilian butt lift

Mazzy's picture

Print actually seems to be the way to go.  Do I buy less than 1% of what I see/read?  Yep.  But it's still, by far, the most effective.

Radio and TV ads make me want to NOT buy whatever is being sold, nor would I use the local contractors who advertise in any form other than word-of-mouth. 

Oh so your radio gimmick is that you remodel bathrooms but you DON'T use subcontractors?  Why would I want a wood-butcher or a tile cutter running my water lines or making electrical connections?  The reason subcontractors exist is because specialization is awesome!

And I don't have a TV, but I do often wonder what awful stuff gets promoted on there?  The last ad I remember was for an 8oz. (overly large) box of fried breadcrumbs coated in sugar marketed toward people's kids.  Oh yeah, just slap a cartoon character on the box and you get to charge $5 for those 8 ounces of fried bread and sugar (antibiotic + hormone laden cow milk not included).

Cash Is King's picture

Do Asian massage therapists count on late night TV?

Cash Is King's picture

Graham you ignorant slut!

This news is literally 8 years old! P&G announced it was going to slash its advertising budget in 2009 by 10b over the next decade because they saw no material pickup in sales on a percentage basis. So f@#*ing old man, Get with it! That was only 110 points or so ago. Nicely done!

 

Update:

Who down votes facts? Wake up and die right!

chrbur's picture

........Can you say RICO ????????..........They censor content they don't approve of, denying the producers of content their money........must be some law being broken........Time to get an Attorney General with balls....man, women or transgender.....................

logicalman's picture

Is the author suggesting the numbers are rigged?

Surely this won't be tolerated in the US!

DCFusor's picture

What's really at stake here is the sick ecosystem under which ads are currently sold and used.

Those adbrokers as a service that sell "your ad here" into slots on websites, such as this one and many others.

Adblockers work by noting content that doesn't come from the domain you surfed to.  Ads where the website owner did the work to actually host and embed them come right through - see for example, slashdot.org - one of the few things they do get right - 

Advertisers and web sites have delegated authority to these high speed trader-like ad space auction houses that puport to also put the ad in "the right places" for views, which is of course, BS.  Since the ad shown in a given slot on a given site might change very rapidly and different for each viewer, it has to come from the ad broker's server or someone delegated to that - but not the site domain (eg, in this case, not zerohedge.com).

Again, this is how an adblocker knows it's an ad, and how they know you're using one - a little script says "hmm, nothing's hitting the ad server for this guy on this site".

If sites would lift a finger and host their own ad content, after selling the space to advertisers, you know, like the old days, this wouldn't happen.  It does not mean the end of advertising agencies either - they'd just have to do the finger lifting themselves instead of the full automation - which as we know, isn't working anyway.

waspwench's picture

"What is really at stake here....." !!!!!!!

Unilever has an advertising budget of $8.4 billion. !!!!!!!

I do not watch TV.   I use adblocker.   I do not know where I would ever see a Unilever ad.   I do not recollect seeing a Unilever ad in just about forever.   I would see point-of-sale displays in a store, maybe. 

What really bothers me is that figure.   $8.4 billion spent annually on advertising.   There is something deeply disturbing about that, something sick, obscene, fantastic.

I cannot believe that spending that amount of money on advertising will increase their revenues by that amount.

Guess I am just a neanderthal.

michelp's picture

I feel the same resoning could be applied to TV viewing counts.

If the ACTUAL number of viewers were properly tallied- as opposed to guessed - there would be a quick turn-over in programming.

Problem is, in the US nobody can write an interesting 1/2 or hour long series anymore; its all police, war, mayhem or propaganda.

So back to mindless sports.

m.

DjangoCat's picture

Its all propaganda, propaganda, propaganda.  The dramas are all one big moral play supporting the MSM led worldview.  War on Terror, war on drugs.

I can't watch most of it anymore and I don't like sports.  So, here I am.

CRM114's picture

Always has been.

My school gave us two days analyses and commentary on the media in the 1970's - Conclusion: All Propaganda.

My grandfather was shouting "Propaganda!" at the radio in the 1930s.

runnymede's picture

There's a reason TV calls it programming----

cheech_wizard's picture

and the only ones that are remotely interesting come out of graphic novels... 

"Preacher" comes to mind... The first ten minutes of season 1 episode 6 is insane... One reviewer notes - "so we end up with a body count to rival a sports stadium"



hootowl's picture

.....or zombies, zombies, vampires, and more zombies.  and.....bloodthirsty ghouls, chainsaw massacres, zombies and vampires.  We've got a sick horde of writers in both Hollyweird and Jew York......and hordes of pedophile and homosexual actors, producers, and directors.  What can we expect.

Honest Sam's picture

Considering what gets greenlighted, it is probably a mistake to say "Nobody can write an interesting...." anymore. Those ih charge of creating properties, like Frasier, Seinfeld, and other smash long lasting hits have been sidelined in favor of those who are trying to grab the eyeballs of 12 yr olds. 

There are shirley writers, and producers who have good solid ideas for series TV that are not getting seen. The network programmers are probably drowning in good material they routinely ignore.

I wouldn't blame the writers as much as I would those who select programs based on something other than merit. A sampling of the racial and perversion oriented programs makes me wonder if the PC crowd has gotten too much power and are not even looking at properties that might just appeal to the huge majority.

"Modern Family", a big hit, has suffered over the last three seasons with declining quality as the kids have aged. The cuteness being driven from the show and not replaced.  I'm wondering if the next two seasons that have been greenlighted will get even worse.  

What the networks have is a 'failure to communicate' with the broader public. 

runnymede's picture

Gresham's law 101

Dumbing down of content to appeal to the stupid is no different than. Roman coinage debasement. The bad always pushes out the good. Part of the natural law of entropy. Humans are just playing their part and are too ignorant to understand any better. The vast majority anyway

Conscious Reviver's picture

The "natural law of entropy" might be bs. What powers the Sun?  They used to say it's like a giant hydrogen bomb going off, but it is not. The interior is cool. The exterior is hot. It is electric. Where does it get it's power from? No one knows.

runnymede's picture

Entropy is a fascinating study. Whether it applies everywhere in the universe, who could say? It certainly appears to be sacrosanct here. I'm always open to correction though. 

oldguyonBMXbike's picture

Their advertising targeting is useless anyways. I research my purchases well, but usually don't see ads for the thing I'm researching until after I already bought it. Then I'm inundated with ads for something I no longer need.

numapepi's picture

This article is absolutely true.

Two years ago I launched an advertising campaign via facebook and clisor. They charged me claiming thousands of hits, I looked up the Awestats and it was ALL FRAUD!!!!!! Out of the thousands they claimed only a few dozen actual visits to the site!!!!! ...and NO SALES!!!!

Since then I have not spent a penny advertising on any digital platform. I am not P&G and don't have unlimited money to hand out to billionaires. Do you?

oldguyonBMXbike's picture

This has been going on for 10+ years if not 20+

Google aka the government has been pulling a massive RICO scam on advertisers this whole time.

 

The only way to win is to go after their algorithms.

jmack's picture

if one of the faangs,  facebook or alphabet, show a sharp decline in revenues,  it will crash the market. there is no breadth  the market is the faangs, and if something like this scandal upsets that perception of "master of the universe" profitability,  the sheep will hit the panic button and rush for the exits, and it will cascade.  badly.

 

     But google and facebook are smart people.  I would not doubt if they are already selling the conglomerates on the idea of having their own bots  to push product placement in internet media.   Chat bots are already very dominant in customer service, next they will be making comments pushing their owners products...

      It is coming.

Consuelo's picture

 

 

"What happens if more advertising giants start pulling funding?"

Why, 'pink slip Fridays' of course.   Something I've been rather hoping for at FB and GOOG - with a sick sense of humor...    

Yeah, I could see a workforce reduction in both of those Farce companies of 60% - easily.   And not a moment too soon...

Anon2017's picture

And FB goes back to $35 a share.

gdpetti's picture

RObots aren't known for their buying habits, perhaps it's a lack of time off? You can see where this style of 'capitalism' is heading and fast.... the virus ends up consuming its host... essentially programmed suicide... not intentionally done, just lack of self-awareness. THat is what we are dealing with.... psychopathic led civilization... 'Political Ponerology'... happens every time in history, one civilization after the next.... what the 'Protocols' or 'Machiavellian'  tactics of statecraft don't destroy, their psycho tools of state do.

runnymede's picture

"You can see where this style of 'capitalism' is heading and fast.... the virus ends up consuming its host... essentially programmed suicide... not intentionally done, just lack of self-awareness. THat is what we are dealing with.... psychopathic led civilization... "


Disinterested triangulation is not for the faint of heart, which is why few do it. 

Zarbo's picture

Studying the nature of evil.

Peak Finance's picture

LOLZ!

See that blue trend line on the chart?

When the stock price hits that line, a "BOT" calls up the FED!

GOOGLE, Amazon, all the big tech guys are in bed with the Gov. Might as well be called  "Freddy Google" and "Fannie Amazon" 

medium giraffe's picture

This has been talked about for a while.  It really came to light when sites looked at preventing viewers from using an ad-blocker on their sites.  People just went to other sites and traffic died, causing a swift backtrack.  Whilst this was happening, corporations became increasingly aware that ad-block was actually having a negligable effect on revenue. 

There's really no need to sound so aroused, it's not the shocking breaking news you purport it to be.  The real news is that a little electronic protest by users has won a significant victory by simply boycotting the machine with ad-block.

a Smudge by any other name's picture

Click bots are nothing new. More recently ad blockers, script blockers and more lately this "article view" in browsers that strips almost everything but text content. A few years ago I figured this was gonna destroy the ad ecosystem. But again, after a while of NOBODY talking about it, it was kinda obvious what was happening.

Now watch for the really amazing part of this story as it evolves. TwitGoogFace stocks and valuations are gonna go UP.

At this point reality itself isn't as convincing as the media. Facts are what you use to lose an argument these days.

oldguyonBMXbike's picture

Until the physical attacks begin at least...

Jim Shoesesta's picture

The big scandal is anyone actually pays these morons for advice. 

Conscious Reviver's picture

Think of the digital ad spend as the tax/skim to conduct business in Mrrica demanded by the alphabet-cia-nsa-google-FB borg.