Pitfalls and Fraud in Online Advertising Metrics

Benjamin Edelman

Harvard Business School

INTRODUCTION

A century after retail pioneer John Wanamaker wondered which half of his advertising spending was wasted, advertisers have reason to think that a solution is within reach. Modern online advertising placements purport to track which users see which offers, who clicks, and who buys—a road map for vastly improved targeting, greater efficiency and, one imagines, reduced cost.

Despite these high hopes, the short-run reality is challenging. This paper, in fact, identifies four key challenges:

  • Some perpetrators intentionally drain advertisers’ budgets. When fraudsters manipulate advertising systems, their efforts often may appear highly effective but, in fact, invite advertisers to invest in placements that are ineffective.
  • Measurement systems may be less reliable than they seem. When purchases are unpredictable, even precise measurements may not identify true cause and effect. In some cases, optimization may exacerbate faulty measurement.
  • Advertising brokers and networks have mixed incentives. They sometimes genuinely seek to improve advertisers’ efforts, but often their interests are at odds with what’s best
    for advertisers.
  • Standard methods of accountability and dispute resolution have proven ineffective; advertisers have struggled to hold perpetrators and intermediaries accountable for apparent breaches.