When you talk to Google sales they want to know how much you make per customer, so theyre able to figure out exactly how much they could charge to take 80% of the margin. The cream on top is taken by Google in the form of fake bot clicks.

IF you have things right - which Google has incentive to see to it that you don't - this makes no difference. Because the real measure isn't how much you make per customer, (including those who come by other means) - it people who didn't click on the ad even though seeing it was a part of their decision to buy (they saw the ad on their phone and told their wife who bought it). If you are doing proper add effectiveness measurement you get this data (it is messy data).

Remember what matters is how the ad affects the bottom line. Everything else is just a proxy - you need to check to see if your proxies are good enough.

If you could pay for web ads in the same way you could pay for a billboard (flat rate per period of time) yeah that would help. if you pay per impression or view or click you have some other issues

I love when I see websites that do this. They are just rare enough, but I appreciate them for existing.

It depends on whether the ad engagement / views were real people or bots - if you're a competitor, then using bots to use up your competitor's ad budget is a strategy.

If you display ads on your website, then sure, it doesn't matter if a bot or real person viewed/clicked on your ad if you get paid regardless - to the point where there's a big industry of putting ads on sites then having bots engage with the site and its ads.

Billboards are a bit different because that's paid per week / month, but internet ads are paid per impression or click.

If it's on your website then they'd be taking up bandwidth you gotta pay for.

It makes optimizing your ads significantly harder. Imagine trying to understand traffic flow on a freeway when 99.9% of cars are just projected illusions. Not fun.

Effective advertising depends on iterative testing, which is very hard if the signal to noise ratio is way off.

Yes it matters because Google ad spend is just one way to market and it's harder to attribute sales if there is a lot of fraud making it more inefficient.

> they don't care if the ad is seen by dashcams and dogs

they also don't get charged retroactively for each dashcam and dog that looks at the billboard

You may be able to cancel out the numbers if the rate of fraud to real clicks is stable.

But it's incredibly unlikely that the amount of fraud is stable, any attention from a small player can generate enough volume to eclipse all of the background. Thus no, you can't just account for it on your calculation.

When a company puts up a billboard, it doesn't get taken down because a flock of birds passed by before anyone could look at it.

This is the key point. Ads and clicks etc are priced in a competitive market. If they don’t deliver the ROI because of bots, then people (including the allegedly hopelessly confused e-commerce retailers) would pay less for the same amount of traffic. It may be annoying (and the cost of dealing with that annoyance would further drive down the price paid for the traffic). But what matters is that an e-commerce site is profitable (enough) after the ad spend, period. If they are not, why do they spend what they spend on the ads?

Google is a competitive ad market?

There are certainly competition concerns about Google's advertising programs.

But within their advertising market, you compete for placement with other advertisers. If everyone is getting lots of fraud traffic, presumably they adjust their bids for it, if you're getting outbid consistently, it's reasonable to expect that the other advertisers are either getting a better ROI or they have a lower ROI target than you do.

About a million years ago, I was on a team that had a significant ad program, and it was primarily data driven, we'd come up with keywords to advertise on, measure the results and adjust our bids. With a little bit of manual work to filter out inappropriate keywords or to allow a lower ROI on "important" keywords. Of course, our revenue was largely also from advertising, so it was a bit circular.

At google I would expect no. However I don't understand why other "portals" are not running their own ads (some are of course - but I think more should). If you are a portal your value is the eyeballs you sell to advertisers, so why are you out soucing this critical part of your business value? This needs to be a core competency you keep in house.

yes, the co is likely spending big money on retargeting to bring back a potential customer to sell what the bot clicked on to generate retargeting. it's fraud and costing the company money.

Because the digital ads environment has promised more data. That is slowly falling apart, but it has been expected for a decade or so now.

Sounds like the bots might eventually restore privacy by accident by making the additional data all dross, leaving only sales correlative modeling.

Yes, that is more or less what is happening now, but also driven by AI. All marketing is moving back "up the funnel."

Of course. It means you're being scammed by your advertising partner (Google).

yes, it matters.

I was about to say something similar to this.

You aren’t paying for conversion rate, you are paying for a link being put on a website when a query is made. You can’t control whether a bot follows that link. You can’t control how sophisticated that bot is. You can’t expect an advertiser to filter out every type of illegitimate traffic (although it sounds like they probably have the capability to filter out more but don’t have any incentive to do so).

I have seen recommendations from across the Internet to not bother with Google ads and other similar paid ad services. It’s basically like paying for a cold lead, you’re attracting one of the least interested types of customers.

The recommendation I’ve always seen is that it’s better to build legitimate interest in your product by producing content. Or perhaps move to an advertising platform where there’s more of a guarantee of reaching human users.

But still, I’ve heard that trying to spend customer acquisition dollars on one-time purchases is a losing battle.

If Tesla was able to start a massive car company without buying ads you can go without AdWords, too.

>I have seen recommendations from across the Internet to not bother with Google ads and other similar paid ad services. It’s basically like paying for a cold lead, you’re attracting one of the least interested types of customers.

Google Ads used to be very effective. You are catching the punter as they are actually looking for a solution to their problem. However Google have inflated bids and increased the complexity to the point where very few people can make a decent return now.

>The recommendation I’ve always seen is that it’s better to build legitimate interest in your product by producing content.

That is becoming rapidly less true as AIs steal all the traffic.

>If Tesla was able to start a massive car company without buying ads you can go without AdWords, too.

We can't all be Teslas.

> Does it really matter if it's all fraud

Uh, yes.

If you get 47 sales on $10k in ad spend (pay per click) and $9900 of that $10k was fraudulent then you got 47 sales on $100 of ad spend. Imagine if you could stop those fraudulent clicks.

You can't just "ignore" fraudulent clicks as though those aren't baked into the original price. The only thing you should care about is your own sales vs your own ad spend.

Your calculations make as much sense as pouring out 90% of a can of beer, claiming you have just made vodka, and simultaneously trying to pay only for the 10% of beer that is left.

Why are fraudulent clicks my problem? Why should I pay for them?

In my extensive experience, you take irrefutable evidence back to the ad platforms and they provide 'make goods' after the fact for those fraudulent visitors.

The entire premise of the article is quite accurate and most companies are spending money on third-parties to do what this guy has done to recoup fraudulent spends; so, none of this is new to the industry. Everyone knows it's happening and it's all part of the gig; it benefits everyone except those spending so little is truly done to correct it.

They are not your problem. You paid $10k for 47 sales (that is the original example numbers) - is this a good value is the question you need to ask. If this is not good value then you don't advertise there at all, if it is you pay the price.

It is the ad network's problem because they are showing ads to all those bots which costs them. It is also the ad networks problem in that they are not effective - maybe for your $10k for 47 sales is good enough, but for most it isn't and so they lose customers who pay attention to value. It is also their problem in that by giving a false number of views they lose some face, but this is always a proxy that isn't of much value to anyone.

The more important thing that is your problem is verifying the ads are worth it. How do you know the ad resulted in 47 sales. A large number of adds should be buy this in the future not today, and thus clicks are the wrong measure.

> The only thing you should care about is your own sales vs your own ad spend.

You do understand that when I stop/reduce the fraudulent clicks that leaves extra ad budget available to be spent by clicks from real people who will actually buy things.

I have 0 incentive to not work to stop/reduce the fraudulent clicks. My ad spend stays the same but my sales go up.

And imagine how much more you’d have to pay for each of those clicks if everyone could stop those fraudulent clicks. In equilibrium it shouldn’t change the total ad spend.

That’s the point, without the fraudulent clicks you would just move on to some other strategy because the pricing would not be worth it.

Fake clicks give the illusion that ads are working and instead you have to optimize your funnel or whatever else.

But if you're the only one doing it because the competition haven't figured it out, then you win in until they do. You can outbid on each ad.

That’s true. But you probably can’t. At least any more than others. It’s a systemic issue in the ad network ecosystem which you don’t have much control over. If you can figure it out, odds are lots of others can too. People do assess the quality of traffic sources and do check the return on ad spend. It’s that system wide process that keeps the return on ad spend roughly constant.

The point here, for me, is that a microeconomic perspective on this whole question is more salient than a purely technical one.

A properly informed market is a more efficient market.

The online ad market is extremely inefficient because it has no idea how much ad spend is even reaching people.

You should have a good idea. How to know if an ad reaches people had been extensively studied for a lot longer than the internet even existed. Newspapers don't have clicks, but you still need to know if you ad works. Even on the internet, a large part of the value of ads are see the ad, buy latter without clicking on the ad. We can track this: do it.

The ad spend itself is not the issue.

I am fine with spending $10,000 on ads (or whatever amount).

The issue is that when I know $5,000 of it was spent on clicks that had 0% chance to convert. For every fraudulent click I can block/prevent that is one more click that can be made by a real person who may actually make a purchase.

The point is, if $10k brings in 47 sales and that’s not enough then you stop buying those ads. It doesn’t really matter why it’s not working. You take your marketing spend elsewhere.

You can’t stop fraudulent clicks just like you can’t stop your SuperBowl ad from playing while your viewers are in the bathroom. How much of ESPN’s viewership happens at bars where nobody is watching?

At some point it’s not reasonable to expect ad networks to be able to stop sophisticated bots or exclude them from your billed impressions.

They should definitely try to minimize it if they want to maintain the value of their impressions but I think there is a good argument that OP just isn’t the right customer for this type of advertisement.

If you’re trying to sell a t-shirt you don’t hire a salesperson to cold call people, maybe OP shouldn’t be using web ads in the first place. If fraud was cut down by half would their situation really be that much better?

> It doesn’t really matter why it’s not working.

It does, because it changes the strategy.

If you think the ads are working and have 10k potential customers then you start thinking about how to increase your conversion rate thinking you could get a chunk of those 10k, you might think distribution is solved.

But if it turns out only 2.5k are real humans then your conversion rate might not even be an issue and it’s just the marketing strategy that needs tweaking.

The whole point is that they are giving you fraudulent traffic which you use as real data to figure out the next steps. If you don’t know it’s fraudulent or how much of the clicks are fraudulent then you are taking decisions under the wrong assumptions.

> You can’t stop fraudulent clicks just like you can’t stop your SuperBowl ad from playing while your viewers are in the bathroom

That’s not even a good analogy, we are taking clicks, not impressions.

> You can’t stop fraudulent clicks just like you can’t stop your SuperBowl ad from playing while your viewers are in the bathroom

Yes, you literally can stop fraudulent clicks. I'm not sure where you get the idea that it's not possible?

This is nothing like the Super Bowl analogy.

> When a company puts up a billboard or an ad on the bus, they don't care if the ad is seen by dashcams and dogs.

Billboards sell for flat rates, online advertising is sold on the basis of impressions.

Billboard rates are based on impressions too. A billboard along a busy road is more expensive than one out in the sticks.

The pricing of a billboard is based on projected impressions but is decoupled from the billboard’s actual impressions. You pay the flat rate based on projected impressions. It doesn’t subsequently matter if an army of robots passes through and views the billboard 10,000 times, because the original projected audience should still see the billboard. You’re getting what you paid for. It’s also possible the projections are erroneous, fraudulent, or that the actual impressions just don’t follow the projected impressions for some other reason. This is the advantage of advertising online—if you pay for 10,000 views, the ad runs until you get them.

Contrast the billboard with an online ad: If you pay for 10,000 impressions, and 9,000 of those impressions end up being automated traffic, then you’ve effectively lost 90% of your advertising budget. Like you mentioned, ad buyers can and do account for this, so it’s not clear that it’s as big of a problem as this thread is making it out to be. The theory I see thrown around is that Meta and Alphabet are tacitly allowing this bot traffic to continue (or even that they are responsible for it themselves) because it allows them to sell another round of ads, but if this is what is going on it isn’t clear why firms would keep buying ads that aren’t converting.