While the world sings paens about digital advertising and every marketer wants a slice of the pie, Harvard’s Benjamin Edelman says beware
If you thought that the word scam in advertising is only about ‘December advertising’, or the art of creating ads for award fests, Benjamin Edelman will tell you that you are “sadly mistaken”. The assistant professor of business administration at the Harvard Business School has been at the vanguard of exposing advertising frauds in the digital world. In India for a symposium organised by the International Advertising Association, Edelman talks to BE about the big bad side of digital advertising
You say that your task is to ensure that advertisers get what they are promised and what they are paying for. Does it mean that online customers are not getting a fair deal?
It could certainly be better. There is enough reason to believe that digital advertisers are getting overcharged, that too for work that’s not actually performed. Many advertisers have no idea that these scams are possible and they are certainly not aware that they are affected.
What are some instances that point to the lack of online advertising accountability?
Here’s a common example of a real advertising scam. Advertisers buy display advertisements or banner ads on websites and it’s very important for viewers to see the ad. Many times the advertiser pays each time the ad is seen (pay per impression). But what if the ad was shown in an invisible window, where the ad is not seen by the viewer? I have come across websites with more than 100 invisible windows downloading invisible ads and charging advertisers as if the user had seen the ad. Think about what that means. The site might actually show three visible ads but charge for showing 103 ads. As a result the site gets paid several times more than they deserve. Think about a scenario where an advertiser pays per impression, and the site actually shows a million impressions. If the advertisers think that their ads were seen by a million people, they’re sadly mistaken.
And what are the not so common forms of scams?
They load software like spyware on a user’s computer and track what the user is viewing without his/her knowledge. Here is a real example. Go to, say, Dell’s website to buy a laptop. As soon as you are about to click ‘add to basket’ the spyware in your computer covers up the Dell Website completely with a list of ads. One of those ads will say ‘Dell Official Site get 30% off + a laser printer, click here’. Most customers click on that and the customer comes back to the ‘add to basket’ feature. Even as life came back to normal for the customer, what happens to Dell? One of Google’s partners had probably taken the Google ad and put it on the spyware pop-up that gets triggered when the user is already on the verge of making a purchase. That’s a scam. Because when Dell eventually looks at its tracking data, they will think that the user clicked the ad first and then came to make a purchase, when in reality the opposite is what happened. The entire marketing exercise will look great to Dell with probably 20 per cent of their visitors going on to make a purchase.
Web Of Lies
Next time, Dell probably makes a higher bid and may send Google a box of chocolates for being excellent. Because Dell does not realise that it could have sold as many laptops without paying Google anything. It’s jumping to the conclusion that it sold those laptops thanks to the ad, when in reality it probably sold them because of its brand repute or thanks to the TV ad. This is real and not hypothetical. And it happens to many big advertisers because big companies get more traffic on their sites and you can steal from them without getting noticed. These tactics are not dependent on location of a company. Anyone who buys ads from Google is potentially at risk.
When users search for a certain brand its competitor ads invariably pop up on the side. What are consequences for both brands?
When users search for a certain trademark and receive ads from the competitor of that trademark, it’s highly opportunistic. In most countries it’s illegal. In most of Europe, barring the UK, it’s illegal. Google has lost many cases in these countries and has changed its policies. My view is that such ads are bad for both companies and consumers. When consumers type a particular brand there is a reasonable expectation that every link on that page is going to be responsive to what they asked. It’s terrible for the trademark as they have spent a considerable amount of time and money in building their brand, so that consumers go online and ask directly for them. And what happened? Competition sucks away the consumer. Another fall out of this is that more the demand for a certain keyword, prices go up very sharply.
What are the common mistakes that advertisers make in the digital place?
The most common mistake made by advertisers is in assuming perfection and honesty. In traditional media, advertisers trusted newspapers when they said they have a circulation of say 100,000 copies. Not that people read every page and every column on all days. But fundamentally, newspapers are honest in telling you what they can offer. Newspapers have a reputation to protect. If they lied about circulation, eventually someone would find out.
Not so online. If a website lies about the number of hits and cheats, it can change to a new name and do it all over again. Websites have much less skin in the game and less reputation to protect.
How do advertisers ensure that they are protected?
Stay away from small sites and unheard of sites. If they cheat, you can’t do much about it. One of my US clients was cheated by a website in Lebanon. You cannot sue to recover $20,000 from Lebanon. Closing yourself to doing business away from home is a closed notion. But if you do business with a partner who’s far away, pay them more slowly, after a 60-90 day delay. If you catch them in that timeframe, you can save that money. The truth is, honest publishers wouldn’t mind waiting for 90 days.
Advertising networks pay digital publishers too quickly. Some of them even get paid twice every week. Companies don’t even pay employees like that. My analysis is that everyone is getting cheated. The only difference is by how much. For transaction oriented advertisers, where ads are linked to the final transaction, an average of 10-15% of advertising spends is being wasted. That might not look huge, but it’s that kind of money that can straightaway go to your bottomline. It’s reasonable to save 10% on advertising costs without any loss of effectiveness on advertising.
What lessons can Indian advertisers take away from other markets?
If you look at the US market, what jumps out is that advertising networks are spending advertiser money figuring out where to show the ad and are not careful about spending money in the right place and avoiding fraud. These ad networks play fast and lose. Imagine many ways to fix this problem. For example, the top 20 advertisers should form an association and demand from ad networks that they provide a better guarantee, so they get what they are supposed to get. This almost sounds like a union of advertisers demanding accountability, transparency and itemised billing. In the online space, there is a huge benefit in getting systems like these in place. The time to do it is now, in the early stages. Once things solidify, it will be very difficult to change long established practices.
Source : The Economic times, " Brand Equity ", By Prasad Sangameshwaran
