NEW YORK: A mixture of "malfeasance and faulty measurement" is restricting the effectiveness of online advertising, according to a new study published in the Journal of Advertising Research.
Benjamin Edelman, an associate professor at Harvard Business School, outlined several digital challenges that brands must seek to overcome in a paper entitled: Pitfalls and Fraud in Online Advertising Metrics – What Makes Advertisers Vulnerable to Cheaters and How They Can Protect Themselves.
One early form of "cheating" was known as "banner farming", where websites would open separate sub-windows which were invisible to users and hosted ads that were never seen.
"When fraudsters manipulate advertising systems, their efforts often may appear highly effective but, in fact, invite advertisers to invest in placements that are ineffective," Edelman said.
Detecting this behaviour was complicated by the low average clickthrough rates recorded by display ads as a whole – typically coming in at around 0.1%.
Pay-per-click techniques appear to be a step forward in this area, but some third-party services hired by advertising networks to syndicate ads then use tools like botnets and adware to falsify clicks.
Relying on conversion rates – namely, the number of actual purchases made – might be one way to reward effective sites. It threatens, however, to undermine platforms where influence is real, but not immediate.
"Cheaters" could also "game" such approaches by identifying buyers predisposed to making purchases from a certain site or vendor, and then claiming to have referred them.
In terms of measurement, a current weakness involves the difficulty of discounting those users clicking on ads solely for convenience, as they would have chosen a particular site anyway in organic search listings.
"The better known an advertiser, the greater the chance that buyers would buy at its site even without advertising," Edelman suggested.
"Moreover, technological advances cause these problems to grow beyond search advertising to affect other advertising formats also."
And the incentives for discovery, he continued, are "mixed" for some key players within the digital ecosystem.
"Advertising brokers and networks have mixed incentives," Edelman wrote. "They sometimes genuinely seek to improve advertisers' efforts, but often their interests are at odds with what's best for advertisers."
Furthermore, he insisted, "Standard methods of accountability and dispute resolution have proven ineffective; advertisers have struggled to hold perpetrators and intermediaries accountable for apparent breaches."
Data sourced from Journal of Advertising Research