Reality sucks: the link between ad fraud and sky-high start-up valuations

Humans cannot hyperscale, says Dr Augustine Fou

The Internet and its giants were born in an era of moving fast and breaking things and, in 2019, it can feel that we have broken a lot of things in our pursuit of hyper-growth and connectivity at scale.

Ad fraud, brand safety, data breaches and even the potential of the internet to hack democracy, it’s easy to forget that it also paves a way for anything positive, such as fuelling SME business growth and connecting marginalised communities.

Dr Augustine Fou, an independent cybersecurity and ad fraud researcher, has recently penned an article on this subject, urging the digital and marketing world to remember that humans do not hyperscale, and yet we expect our tech platforms and the numbers behind them to do the same.

Dr Fou spoke to The Drum about this topic and how marketers can change their mindset to focus on humans, versus just scale. Fou says there is a direct link between the start-up and VC world chasing hypergrowth and the rise of ad fraud.

“In the physical (offline) world, there are finite humans and finite space (for example space to put billboards, number of magazines you can print). In the digital world (online) there are no such physical limitations," he explains.

"So it is extremely easy to use software to manufacture fake ads, caused by fake traffic, on fake websites. This is easy to hyperscale because it is all software and bits and bytes. An advertiser that wants to reach larger audiences now has virtually limitless audiences to buy."

Dr Fou continues: "Without the fraud, the online audiences would be much smaller, the number of impressions would be much smaller, etc. because the finite number of humans spend a finite amount of time online or using mobile apps. The numbers don't add up and the growth rates are not fast enough to justify the sky-high valuations of ad tech companies. Therefore, fraud is virtually required to produce those nice looking hockey stick growth projections."

While there are tools to help detect ad fraud and measures to counter it, he says a fundamental change in the expectations marketers have around scale needs to first happen. Rather than being wooed by large, and potentially partly bot, traffic, marketers need to think smaller.

“For marketers, the issue is that they expect large numbers now. But when we solve fraud, the quantities of impressions, and the amount of traffic, will be one-hundredth of what it is today. Also, marketers now expect high click-through rates and large numbers of clicks, thinking that that means ‘engagement’. But those are not humans interested in your ad; those are bots clicking on ads to drive up metrics like click-through rates so marketers allocate more budget to fraudulent sites,” he says.

Another issue that Dr Fou calls out is what has been labelled surveillance capitalism, which looks at how ad tech businesses have collected data that people can’t have control over or correct. This is the main issue that fake traffic driven by hypergrowth targets has created for consumers, he adds.

“For consumers, their privacy has been violated due to ‘surveillance marketing’ where their data is collected without their knowledge or consent and bought and sold for profit by ad tech companies. Consumers have no recourse, cannot opt-out, and cannot correct bad data,” he argues. This is somewhat being addressed by industry crackdowns on bad actors, as well as the increased direct action taken by governments to protect the privacy of its citizens.

Ultimately, he says, this pursuit of hypergrowth makes digital advertising “complete crap” but brands can work to make theirs better.

Dr Fou suggests that marketers go back to basics and measure against business outcomes, which will help banish lofty expectations on the scale that drives the fraud demand.

“Marketers should go back to basic marketing. This will be hard too since they are addicted to large numbers of impressions and large numbers of clicks. Reality will suck in comparison. They should be focused on business outcomes instead of vanity metrics like quantity of impressions, the number of clicks, click through rates, etc. All of those mean nothing if there were not business outcomes.”

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