BadMen: How Advertising Went From a Minor Inconvenience to a Major Menace

by Bob Hoffman

In this concise, informative, hilariously irreverent, and brutally honest book, former advertising agency CEO Bob Hoffman explains why ad tech is bad for advertisers, publishers, and consumers. He also calls on advertisers to stop enabling this menace.

“Surveillance marketing is powered largely by advertisers through the tracking of our movements on the web. This is called ‘ad tech.’”

“Ad tech drives money to the worst online publishers. Ad tech’s value proposition is this: we will find you the highest quality eyeballs at the cheapest possible locations. Ad tech can do this because your web browser and mobile platform are vulnerable to a problem called ‘data leakage’ where your activity on a trusted site is revealed to other companies… If you’re a quality online publisher, ad tech is stealing money from you by following your valuable audience to the crappiest website they can be found on, and serving them ads there instead of on your site.”

FRAUD

There are two main types of ad fraud: bogus traffic and bogus clicks. “Oxford BioChronometrics a cyber-security firm in the U.K., says fraud can sometimes be as high as 90%.” But nobody really knows because there is no transparency in the system. “According to the World Federation of Advertisers, by 2025 ad fraud may be the second largest source of criminal income on the planet, after drug trafficking.”

AGENCY CONFLICTS OF INTEREST

“Ad agency holding companies have invested heavily in ad tech. There is suspicion that their enthusiasm for online advertising may be driven substantially by self-interest rather than the interest of their clients.” John Mandel, former CEO of Mediacom, said: “Have you ever wondered why fees to agencies have gone down and yet the declared profits to these agencies are up?”

“After being hounded by one of its biggest clients (Toyota) Dentsu [the world’s fifth largest agency network] finally admitted that for about 5 years they have been guilty of screwing clients out of millions by engaging in online buying trickery. As the scandal grew, over 600 cases involving over 100 Dentsu clients were being investigated.”

“If agencies are supposed to be the experts on the effective use of media dollars, how can it be that they were the last to know about all these problems? Is it possible? Does it even pass the smell test? The answer is no.”

GOOGLE/FACEBOOK

“Google and Facebook completely dominate the internet. There has never been a duopoly that so dominated a medium. And was so free of governmental restraint. Or self-restraint, for that matter… According to Pivotal Research Group, in the third quarter of 2016, 99% of all new online ad revenue went to [Google and Facebook]. The US online ad industry grew 22% in 2016. But outside of the duopoly the growth rate was about 0.”

“It was discovered that for two years Facebook had been reporting a grossly inflated measure of the time people spent watching videos on Facebook’s site—inflating their numbers by as much as 80%.”

“Remember, like Google, Facebook refuses to accept industry standards. They haven’t allowed impartial third parties to fully audit their numbers. Regardless of the excuses, there was only one logical explanation for these guys not allowing full third-party auditing—because their numbers must have been bullshit. Well, now we know they were bullshit.”

“In June of 2017 it was revealed that Google is not just following us online, they are also tracking us in the physical world. They are stalking us through our credit card transactions to see when and where we shop and what we are buying… Who gave credit card companies permission to sell our purchasing information to Google?”

ADVERTISERS

Hoffman explains how 97% of ad spending is siphoned off by ad-tech middlemen, traffic fraud, click fraud, unviewable ads, and so forth. “Clients have absolutely no idea what they’re doing… How can they continue to ignore the overwhelming amount of evidence that is coming at them daily that shows they are being fucked blind?”

“The ad-tech supply chain is supposed to produce ‘precision targeting’ which is purported to increase the productivity of your ad dollars. In fact, according to a study by Dr. Augustine Fou, it does the opposite… Buying directly from quality publishers increases the productivity of display advertising by at least seven times and perhaps as much as 27 times compared to buying through a programmatic exchange.”

Procter & Gamble, the world’s largest advertiser, isn’t playing along anymore. In July of 2016, “P&G announced that it was ending its ‘precision targeted’ ad program with Facebook.” The company moved over a third of its advertising spending on line and its sales actually dropped by 8%, or about six billion dollars. “In July of 2017, Procter & Gamble announced that it had eliminated about $140 million of online display advertising from its most recent advertising effort and saw no ill effect.”

CONSUMERS

Consumers are fed up, too. “Over 600 million web-connected devices are now armed with ad blockers. According to Doc Searles author of The Cluetrain Manifesto and The Intention Economy, this is the largest boycott of anything in the history of humanity.”

DESTRUCTION OF NEWS MEDIA

“One of the most dangerous outcomes of this has been the corruption of the news industry… A fake news story (generally lead by a ‘clickbait’ headline) runs on a social media platform, attracts traffic and clicks, which signals programmatic systems to buy advertising on the site… A second corruption of journalism is the development and acceptance of ‘native advertising’… Despite its euphemistically lovely name, native advertising is nothing but advertising disguised as news.”

WHAT TO DO

“There is only one solution to the problem. Take away surveillance and online advertising will become a minor annoyance like all other advertising forms instead of an intolerable, disreputable scourge.”

“Online advertisers would then not be able to stalk us everywhere we went on the web; fake news would be less likely to draw ‘programmatically’ delivered advertising money; quality publishers would have a better chance at survival; the economic incentive for click bait would diminish, and many other undesirable aspects of web advertising would be greatly minimized.”

“So, Ms. Advertiser, why don’t you insist on a simple transparent buying process in which your agency buys directly from online publishers?”

CLOSING THOUGHTS

Prior to ad tech, “the ad industry spent several decades developing common standards for measurement, standard definitions for transparency, and standard practices for third-party verification.” With ad tech, that’s been tossed aside. In the early days of online advertising, the lure was greater accountability for ad spending. It’s ironic that print media has been eviscerated by transferring ad dollars to a system which has less accountability. But at least you get cool graphs of your fictitious traffic and CTRs.

Hoffman writes, “technology is not synonymous with progress. Our ability to manage technology wisely determines if technology is progress or not… The idea that all types of technology constitute ‘progress’ is dangerously shallow. The idea that opposing malevolent uses of technology impedes ‘progress’ is irresponsibly stupid… “We are dealing with a very clear risk-reward situation here. The rewards of ad tech, if any, have been quite low. The risks have become enormous.”

GDPR went into effect in Europe on May 25, 2018. It remains to be seen how effectively that will curtail surveillance marketing. However, as I write this in Summer of 2018, I notice that the Fall 2018 ad:tech conference in New York has been “postponed.”  Maybe that’s an indication that the wheels are starting come off this go-cart.

Hoffman, Bob. BadMen: How Advertising Went From a Minor Annoyance to a Major Menace. San Francisco: Type A Group LLC, 2017. Buy from Amazon.com

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Published by andreweverett360