Bots, Fraud and Pixels: 11 Digital Insights From IAB’s Vivek Shah

We recently had the pleasure of chatting with Vivek Shah, CEO of Ziff Davis, about the state of digital advertising and his new role as chairman of the Interactive Advertising Bureau (IAB). Here are 11 things he says all marketers must know when it comes to digital media and how fraudulent web traffic (36% of all traffic is fake) is devaluing digital media.

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Vivek Shah, CEO Ziff Davis, Chairman IAB

1. What’s the potential of digital media?

The opportunity is immense. Digital media has always held this incredible promise of “almost perfection” when it comes to targeting, optimizing and delivering advertising. It’s advertising that’s literally a foot away from the consumer.

The ability to deliver messages — whether the format is display advertising, video advertising or native advertising — THAT close to the consumer, in a lean experience: That’s why the promise is great.

But there is still a gap between today’s reality and that promise.

2. Where are we in the shift from traditional to digital spending?

There’s a shift of consumer consumption to digital media. When you look at all the statistics about how much time people spend with digital media — whether desktop, mobile phone or tablet — the numbers are extraordinary and continue to grow at very healthy rates, particularly outside of the United States. I think marketers recognize that they’re going to follow consumers.

What I’m actually surprised about is that after 20 years digital media spending is still not there. Digital advertising and digital media are not in fact the lead when you look at where marketers choose to spend their money.

And when you think about the targeting capabilities of advertising and marketing within digital media, you’d think digital would get a disproportionate share of the pie. Yet digital spending is under-indexing compared to the amount of time spent in digital.

3. What’s holding back digital spend?

I think some marketers have serious questions around the efficacy of the ad product itself. Whether it’s issues relating to fraud around traffic, the perceived weakness in creative in digital media and advertising, the clutter of ad placements or the absence of solid metrics, many marketers are staying on the sidelines or don’t see digital as the core of their marketing mix.

On the other hand, television advertising is a proven, known, understood medium, without the arguments about ratings and delivery of advertising and effectiveness. And the creative is generally much better.

Until the issues with digital get solved, a lot of people are going to continue to look at digital media less as a brand-building vehicle (which covers the majority of advertising spend) and more as a replacement for direct-response advertising. I think that counts for much of what has shifted to digital, whether that’s telemarketing, direct marketing or lead generation, which have certainly moved at an incredible pace. But I still think there’s a question among marketers as to whether you can build a brand online. Obviously I think you can. I think the capabilities are immense. But I understand why some marketers are hesitant.

4. What are the “virtues and vices” of programmatic buying of digital media?

The virtues of programmatic buying are: price transparency, streamlining what has historically been a very labor intensive practice and the ability to apply user data to targeting at scale. These are significant virtues.

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“A ‘Crisis’ in Online Ads” Wall Street Journal, March 23 2014.

The single greatest vice of programmatic buying is that it has an alarming amount of fraudulent and literally non-human traffic and impressions. It’s the single biggest issue not only within programmatic but the biggest issue within the digital supply chain.

What we have are sellers seeking financial advantage through the arbitrage of non-human traffic. For example: bots that create non-human traffic, or the setting up of bogus websites that are the beneficiaries of that non-human traffic, which are introduced to the world of ad exchanges and programmatic advertising where intermediaries buy them on behalf of their clients and mark them up for profit. It’s cheap, it looks great and the performance [appears] great. The very instruments that manufactured the impression can also manufacture performance like clicks and attribution.

And that to me is the single biggest thing. It’s unregulated. It is completely unaudited. Anybody can sell their inventory through fraudulent means.

5. How can media buyers curb fraud?

Buy from reputable sources. The thing that amazes me in the digital media space versus any other part of the media ecosystem is that in every other part of the media ecosystem you only buy from reputable sources. In the digital media ecosystem it feels like people gladly buy from unknown sources.

The solution is easy. There’s plenty of great inventory — direct, programmatic, programmatic premium, video — available from established names, such as comScore 100 entities. Now, their inventory will come appropriately priced but, at the end of the day, you should buy from people you know, who can vet those ecosystems for you.

We need to go back to the idea that the brand at the top of the page does matter. The content surrounding the marketing message — whether it’s native video, display, search — does matter. Environment, brand, trust, reputation matter, and we ought to pay for it. That is completely lost among many digital ad agencies and media buyers because they’re just trying to make a spreadsheet work.

6. How can marketers distinguish between the responsible and the rogues?

All buyers of exchange-based inventory, which includes agencies, trading desks, re-targeters, buying platforms: Don’t be willing to be defrauded! Don’t accept the performance as a legitimate explanation for fraudulent activity. It’s not right. It’s a betrayal of the client. It’s an ethical issue.

What I would say to a client is: You need to manage your expectations and temper them and not create the very environment in which all that matters is performance by saying to your agency, “This is what we demand and we don’t care how you get it.” Clients must take responsibility not to demand the impossible or demand their agencies deliver programs built on non-human, fraudulent traffic.

And then for clients who are aware of these issues: Don’t become overly concerned about viewability. The problem is that they think the issue is that their ads are not being viewed because they’re below the fold. That’s peanuts. What we’re talking about is bot traffic. That’s the real issue. What we don’t want is a world of viewable bot traffic. Just because an ad is viewable doesn’t mean it’s human. Agencies that understand these issues need to discuss them with clients or prospective clients — educate them.

Agencies must get clients to understand their approach, their process. They have to explain that they may not be the cheapest option but they’re going to guarantee real results. Not manufactured results. Because, ultimately, that’s all the chief executive of the client organization cares about.

7. What can brands do to narrow the gap?

I’ve been surprised by the relatively low adoption rates of larger impact ad units. When clients engage with a bigger palette they get a higher portion of what I’ll call the “ad-to-edit pixel ratio,” which allows them to get far more mindshare and be a lot more creative, typically getting 100% share of most of the page.

The average Web page has 40 seconds of time spent on page. To divide 40 seconds on more than one advertiser, and its content, is ridiculous.

If I could wave a magic wand we would live in a world where impressions were a function of time and not pages viewed, where advertising would never compete with other advertising and where the palette would allow for real creativity.

8. Dynamic creative: Does it work?

I think it works for direct response, but I’d be careful. In order to do great storytelling in digital advertising, it may be hard to “componentize” it. Often what happens with dynamic creative is it turns into a template, and the template may not be as magical as something that is not templatized. I’d be careful to ensure that dynamic creative works for brand advertising in a way that is emotional and that tells the story.

Great advertising has always been about storytelling, so you’ve got to find that balance. Think of the storytelling ads during the Olympics that took athletes from today all the way back to when they were children. That’s great storytelling. It’s the kind of the thing that can happen digitally.

So, yes, dynamic creative has a place. If you’re a re-targeter and somebody has abandoned his shopping cart, it’s great if you can deliver advertising related to what was in that cart as a possible discount. Of course that’s going to work, and of course that’s an important role in our overall digital marketing mix. That makes a lot of sense. But I don’t think that’s the backbone of a brand’s value proposition. It’s just one component.

9. Auditing: Should we have some type of auditing system for digital media?

Yes. We need some kind of traffic quality scorecard that can give buyers confidence in what they’re buying. That’s what pink sheets aimed to do in the print business: cut out most notions of just manufacturing circulation.

This problem of discerning traffic quality has exploded in the past two years because of the ability to monetize junk through exchanges.
If the exchanges created some sort of minimum listing standard, then not anyone could sell. This might shrink the amount of inventory, but then you’re probably getting rid of the BAD inventory in the process. And if that results in price increases, so be it. Because it’s really not a price increase when you think about it. What you’re doing is not wasting your money anymore.

I don’t ever look at CPM. I’m not sure the unit price matters. To me it’s how much did you spend and what did you get for it. If I spent $1,000 dollars, did I get $1,200 dollars of value, $500 dollars of value or $200 dollars of value?

10. Where should certification happen within the digital ecosystem?

I think certification has to happen among publishers, ad networks (exchanges) and agencies.

Publishers who sell their own inventory, who sell other people’s inventory, who trade in programmatic channels, should clearly outline to agencies the nature of their own traffic and the nature of their partners’ traffic.

Exchanges ought to tighten their rules about who’s allowed to sell on their platforms.

Agencies might want to deploy their own verification or fraud detection elements. If all the players — the sellers, the intermediaries and the buyers — attack the problem, it might be messy but we’ll very quickly eliminate a lion’s share of the noise.

11. How do we find the middle ground between marketers’ fear of fraud and cavalier digital spend?

We go back to where we started. This is such an incredible medium and a special opportunity for marketers to reach consumers, despite the issues with fraud and measurement.

Sometimes digital media is held to this incredible standard. The print world had its pink sheets, but everyone still tried to figure out loopholes. And, putting the pink sheets aside, I could never tell you if somebody even opened the magazines, let alone looked at an ad, or if it made an impact. Yet billions of dollars still flow through print and television, which can’t answer any of those questions.

Agencies and marketers who believe in and understand effective, transparent, programmatic, digital marketing — and who can offer their clients digital solutions while telling them the truth about how digital marketing works — will have a real competitive advantage. And that’s the most important thing.