what directors need to know about digital advertising fraud - digital advertising board

Is it worth advertising on Facebook, Google and other platforms?
Earlier this year, P & G announced a $0. 2 billion cut in its digital advertising budget after it pressured social media companies to be more transparent when selling ads.
According to an article by Reuters, Marc Pritchard, chief brand officer of P & G, said: "Transparency illuminates reality and we have learned valuable experience in driving profound change . ".
The company spends heavily on digital advertising.
Procter & Gamble cost about 1.
Last year, the company ranked third in its advertising budget for digital advertising.
Most listed companies spend hundreds of millions of dollars on digital advertising, which is often not an area of concern for the board.
But a key role for directors is to supervise how shareholders use capital.
Generally, we believe that the long-term capital allocation of investments and the annual operating budget expenditures are a key part of the board's oversight.
Recently, big technology platforms have made headlines, with lawmakers, antitrust experts and the American public increasingly calling for regulatory and antitrust enforcement.
More and more chorus has expressed concern about the harm of consumers, competitors, news publishers and citizens, but less attention has been paid to corporate advertisers.
According to Brian Weiser, an analyst at mindtal Research, digital advertising dominates Google and Facebook's $88 billion digital advertising market, accounting for 90% of the growth in digital advertising in 2017.
Advertising fraud has surged as the two technology giants have swallowed up advertising revenue.
Digital advertising fraud amounts to $7.
It was $4 billion in 2017 and is expected to increase to $10.
9 billion according to a recent letter from Senator Warner to the Federal Trade Commission, by 2021.
Facebook and Google lack strong competition in their respective areas, so the rampant advertising fraud caused by their platforms has little to no consequences.
The board is responsible for ensuring that the company's budget maximizes shareholder value.
But how do board members ensure that the huge amount of money advertised through Facebook and Google is able to get shareholder returns from these platforms for "self-reporting?
Facebook and Google have fled the United States. S.
However, Google and Facebook are largely unaffected by US antitrust enforcement. S.
Anti-monopoly law enforcement
Modern courts often require antitrust plaintiffs to prove that prices have risen or production has fallen.
Antitrust Case law judges anti-competitive behavior and acquisitions from the perspective of "consumer welfare standards" and believes that price is the main measure of consumer welfare.
Such standards block Facebook and Google because these platforms look "free"-consumers pay for their data instead of paying for it.
However, Facebook and Google are not free for advertisers.
Instead of just paying more attention to consumers
In the bilateral market for social media and Internet search, antitrust law enforcement officials also need to focus on the competitive harm of billions of dollars worth of advertising.
Rampant digital advertising fraud indicates excessive business
Paying for ads through Facebook and Google is the extent of digital advertising fraud. The $7.
The 4 billion advertising fraud figures quoted in Senator Warner's letter, although not limited to fraud by tech giants, are equivalent to a huge overpayment by advertisers.
The letter was exposed at Buzzfeed for more than one
Million dollar fraud plan using Android app.
"The disclosure of this program shows how serious fraud is embedded in the digital advertising ecosystem, the huge amount of money that brands have stolen, and the overall situation that the industry has failed to prevent fraud, read this article.
Although Senator Warner wrote that there was no evidence that Google had a direct understanding of the plan, he stressed that Google's advertising network and the advertising exchange were all involved.
Google controls the vertical stack of the online ecosystem, mainly because it acquired DoubleClick and AdMob.
"At the very least, many of Google's products seem to have been deliberately blind while taking profits from this fraudulent activity," the letter said . ".
As far as Facebook is concerned, it has acknowledged a series of measurement errors in recent years.
According to Weiser, Facebook's audience tools promise advertisers that they can reach 41 million between the ages of 18 and 24. year-
In the United States, the elderly are 10 million more than the people who actually live in the United States.
On 2016, Facebook was sued by internet marketing agency Crowd Siren for exaggerating video view indicators. after checking Facebook's internal files through discovery, Crowd Siren recently added fraud claims and demanded punitive damages.
Its revised complaint said Facebook had known a year's mistake without telling advertisers, and that Facebook overestimated the time it spent watching videos, up to 900%, the number reported by facebook is not 60% to 80%.
Facebook denied the allegations.
Facebook and Google are rarely affected by rampant fraud, in part because of their lack of competition restrictions.
Competition forces companies to do better, but Google and Facebook's ability to track user behavior on the Internet creates barriers to entry for competition.
Antitrust Enforcement and data protection rules both limit the ability of Facebook and Google to track users of other people's online property, such as general data protection regulations in Europe, which can trigger competition.
Transparency and independent verification are necessary blind trust in Facebook, and Google is neither cautious nor in line with the board's corporate risk management business practices that require independent verification.
The board needs to ensure that the company's advertising budget brings the right results to shareholders.
In TV advertising, advertisers are not only dependent on the audience measurement of the network;
Nielsen also provides independent measures, which are then measured by the Media Rating Board (MRC).
But advertising revenue continues to shift from television to digital advertising, and mobile advertising spending is expected to surpass TV advertising this year.
In 2017, YouTube of Facebook and Google agreed to accept an audit of MRC, but the audit is still in progress.
MRC audits are a step in the right direction, but not enough.
Marin Software surveyed more than 2018 B2C advertising professionals, and the digital advertising status 500 report found that 44% of advertisers "believe that Google and Facebook are becoming more dominant, it will have an impact on their business, surpassing all other trends or challenges in 2018.
"As long as advertisers are interested in Facebook and Google's own behavior
The data reported, their ability to detect fraud and ensure that the advertising budget is properly used will be limited.
Board members should request transparency and third
Consumer verification of advertising data.
To eliminate fraud and waste in advertising budgets, digital advertising usually costs hundreds of millions of dollars.
The board may consider asking management to question the use of third-party independent verification by Facebook and Google, proving that they provide real access and transparency to closed systems.
In this digital age, the board needs a new independent verification system to ensure that their companies get real value digital spending for their shareholders.