Hey, Online Ad Fraud. Exaggerated for Sure

September 8, 2015

With digital information now the Land of Mad Ave, I enjoy thinking about advertising fraud. Hey, online fraud, you are overstated. I read “Widely cited Ad Blocking Study Finding $21.8 Billion Loss Is Incorrect.” Advertising is a pristine discipline. There is no stage magicianship. There is no 17.65 commission. There is no “Let’s do horses on a beach” thinking.

Nevertheless, the write up makes this point to unbelievers:

the study ignored the law of supply and demand. To get to the $21.8 billion dollar figure, it assumed that the blocked ads, if added to the overall pool of ad inventory, would command the same rates as those in a market without them. But in a real world situation, if ad blocking went away, the market would flood with an increased supply of ad inventory, dropping rates for all ads and leading to a much smaller loss figure than $21.8 billion. A word about ad blocking: the term may be a bit of a misnomer. The technology doesn’t “block” existing ads but rather prevents them from ever being served. Advertisers pay for ads when they show up on a web page (called an impression) after being served. So when an ad is “blocked,” the advertiser doesn’t waste any money, but rather doesn’t spend it. This cash remains available to spend on a smaller pool of inventory. Same cash (demand), less inventory (supply), should result in higher prices for ad inventory that remains after blocking. Those extra dollars from higher prices end up in the hands of publishers, the ones supposedly “losing” the $21.8 billion dollars.

I understand. I know that devices which prevent easy fast forwarding through commercial are an anomaly. I know that when ads blare when I open a Web page as I puzzle over the weird “allow or disallow” option are rare birdies. I know that when I think information is distorted by a commercial relationship that I just don’t have the right attitude.

Advertising, skewed search results, and infomercials are not an issue. Relax. Buy ads.

Stephen E Arnold, September 8, 2015

Written by Stephen E. Arnold · Filed Under Marketing, News

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Stephen E. Arnold monitors search, content processing, text mining and related topics from his high-tech nerve center in rural Kentucky. He tries to winnow the goose feathers from the giblets. He works with colleagues worldwide to make this Web log useful to those who want to go "beyond search". Contact him at sa [at] arnoldit.com. His Web site with additional information about search is arnoldit.com.