Are You Paying For Ads That Nobody Sees?

If you buy online display ads through an ad agency, ad network, or other intermediary, you are not getting what you pay for. The results you do get may be worth the price that you pay, but in planning an online ad campaign you should never rely on the “cost per impression” figures you’re quoted. The real CPI, in terms of ads that human eyeballs see, may be ten times higher. Here’s the ugly truth…

Is Online Advertising Worthwhile?

The Internet Advertising Bureau, a trade group founded in 1996 to set standards and definitions for online advertising, defines an ad “impression” thus: a measurement of responses from an ad delivery system to an ad request from the user’s browser.

Note that human beings, prospects and customers have nothing to do with this definition. It simply means that an ad-serving machine answered a request from a Web browser. Whether a person is looking at that browser window to see the ad is irrelevant. In fact, an “impression” may be billed even though an ad is never delivered to a browser!

“Broken” ads may be billed to clients as impressions, even though the ad server’s response to the browser is “I can’t find that ad” or “here is the wrong ad.”

Bot traffic affects advertisers

Bot traffic generates billable but bogus impressions. Whenever a hacker’s automated program (bot) visits a Web site to probe for vulnerabilities, plant spam, or inject malware into a site, it generates an ad “impression.” The Atlantic magazine estimated in December, 2013, that over 60 percent of Web traffic is generated by bots.

Alleged fraud accounts for 25 percent of online ad impressions, according to a 2013 article in Adweek.

According to Web traffic analyzer Comscore, only 15 percent of ad impressions are actually requested by a human being. Comscore then adds the gloomy news that 54 percent of those ads are not viewable by a human being. That means about 8 percent of ad impressions end up putting an ad on a screen that a human being is looking at in a manner that the human is actually able to see it!

Let’s Do Some Math…

So, if you’re paying $0.10 per impression, it actually costs you $0.10/0.08 = $1.25 for each ad that a human can see and click upon. Then, of course, there’s the abysmal click-through rate for which online ads are notorious.

As I mentioned above, paying $1.25 per legitimate impression may be worthwhile. But don’t use the bogus $0.10 CPI in your ROI projections.

The ugliest part of all this is that ad agents, ad networks, and the publishers who charge for ads on their sites know exactly how bogus “cost per impression” is, but don’t want to talk about it. Samuel J. Scott, Director of Marketing & Communications for log analytics startup, writes on,

“No marketing agency wants clients to know that 92% of its display advertising spend is wasted. No advertising manager wants the CMO to know that only 8% of the company’s ads are reaching people at 100% cost. No CMO wants the CEO to know that 92% of the entire ad budget is being flushed down the digital toilet.”

Scott also alleges that the entire online ad industry is rife with fraud, kickbacks, and bribery payments to keep the whole scheme running smoothly for the profit of insiders. He estimates that online ad fraud costs businesses $7.5 billion per year.

Try This…

Scott recommend that marketers stop buying cost-per-impression campaigns, factor bogus impressions into their ROI calculations, and insist on full disclosure of actual, viewable deliveries of ads when negotiating with ad sellers.

Perhaps his best recommendation is to eliminate the allegedly corrupt middlemen and buy ads directly from major publisher Web sites. The downside of that is finding the right sites on which to spend your ad dollars. That can take a lot of time, and might end up being a hit-or-miss proposition. But you’ll only know if it’s worthwhile if you try.

Of course, your course of action depends on your current ROI (return on investment). If you’re spending $1 and reaping $2 in sales, you should probably mortgage your house and dump as much money as possible into that effort. But if the returns you’re seeing on your online display ads are paltry (or negative), then a course correction is in order.

Are you advertising via cost-per-impression ad markets online? Your thoughts on this topic are welcome. Post your comment or question below…

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