Business in Vancouver

Hacking highlights risks for digital advertisers

Online advertising effective, but fraud is industry’s Achilles heel, BC sector veterans say

PUBLISHED : Wednesday, 18 January, 2017, 11:45am
UPDATED : Wednesday, 18 January, 2017, 11:46am

By Glen Korstrom

Digital advertising’s effectiveness at targeting messages to consumers is likely to drive continued expansion in the sector despite online marketing’s vulnerability to manipulation and fraud, say industry insiders.

Deception is a risk because many forms of digital advertising rely on software code, or algorithms, that can be manipulated by hackers or misinterpreted by large media companies.

In November, Facebook admitted that it overcounted how many people were exposed to marketers’ posts because the social media giant was not accounting for repeat visitors. In December, Twitter began issuing refunds to some advertisers after the microblogging site admitted that it had inflated some advertising metrics.

The biggest digital advertising setback in December, however, was reportedly the biggest advertising fraud ever committed, in which Russian hackers allegedly set up thousands of web domains to impersonate high-traffic sites, attracted advertising placements that were determined by online auctions and then had bots “view” video advertising on these sites to artificially inflate and distort the length of time potential customers were exposed to the ads.

That scam allegedly provided the hackers with up to US$5 million per day in stolen advertising revenue, according to Forbes and the New York Times.

While advertisers are urged to be wary to get authentic results from their digital advertising spending, industry veterans say online advertising continues to be the most effective means to target specific consumers.

“Advertising is supposed to give me information I need, not try to sell me tampons when I’m a guy,” engageQ president Tod Maffin told Business in Vancouver.

Maffin is so excited about the retargeting technology niche within digital advertising that he announced on December 28 that his firm had bought an equity stake in Vancouver’s Retargeting Technologies Inc. for an undisclosed amount.

Retargeting Technologies has an application that hides software codes in links, such as an e-vite to a panel discussion. When you click on one of these links, a cookie is placed in your browser to ensure that you see specific ads from a specific marketer for a certain amount of time in the future.

This is an improvement over previous technology that required consumers to go to a specific corporate web page before a cookie would be placed in their browsers, ensuring that they would be bombarded with that company’s marketing material for a set period of time.

Past engageQ marketing, for example, ensured that people who went to MEC’s website to check out tents would then see ads for tents when they went to other websites because of a cookie placed in their browsers.

Snaptech Marketing co-founder Flavio Marquez agreed with Maffin that retargeting technology is the future, although he cautioned that any advertising that relies on algorithms can be hacked.

Through its AdWords network, Google parent Alphabet Inc. dominates the niche of online advertising where advertisers choose who sees their ads by targeting demographics or specific interests, such as food or fashion, he explained.

The niche is often referred to as “programmatic” advertising.

Alphabet’s dominance stems from Google’s owning a massive amount of data about web users – data that it has gleaned from users logged into Gmail accounts, Google Drive or other Google products.

A consumer who checks out a lot of food-oriented websites and then visits a news website that is connected to Google’s AdWords network, for example, will likely start to find food-oriented advertising on that news website.

Aside from AdWords, the other main form of programmatic advertising is known in the industry as demand-side platform (DSP) advertising, which includes players such as MediaMath, Turn and Invite Media.

“There are tons of DSPs out there,” Marquez said of the companies that auction ad space to fill holes in news websites. “DSPs are also relatively new compared with Google so their targeting capabilities are nowhere as good as Google.”

That is why he thinks it was likely the DSP side of programmatic advertising that the Russian hackers used to allegedly steal millions of dollars’ worth of revenue from advertisers and legitimate publishing houses.

The range of options for digital advertising is much wider than it was 10 years ago.

In addition to recent innovations, the sector includes the longtime option of pay-per-click advertising, social media marketing as well as advertisements that run before YouTube videos.

That range makes crafting a digital strategy an art form. To see BIV’s 2017 list of the largest media and digital agencies in Vancouver, click here.

“There is no rule of thumb where I would say you have to do this or that,” Marquez said.

“Every company is different and has different digital advertising needs.”

Hacking highlights risks for digital advertisers