That's a mind bogglingly big number, if true. I don't really find myself feeling sorry for advertisers, though.
If true fraud levels were exposed it could shift the digital economy in a massive way.
Say you have an unpopular dishwasher and it breaks. It's great to go to Youtube and find someone showing you how to fix the problem even for a relatively niche dishwasher. But if the ad money dries up for that content producer, that video won't be there the next time you look for it.
Or you will be forced to pay $1.00 to watch it.
Not everyone who makes YouTube videos is doing it for ad money, especially the sort of content you're referring to. A lot of people just do it to document things for themselves and use YT as a "convenient place to put videos"; the fact that everyone else can see is incidental.
But the only reason that YouTube is there as a platform that allows people to upload videos for free is that they expect to make money either off of that video through ads, or through other videos through ads.
Just like roads need to be created regardless of their profitability, I think it's important for society that we have means to share and view image and video content regardless of profitability.
Patreon works great when you enjoy someone content on a continual basis. These 1 off trouble shooting type of content producers need to find their own way.
If the advertisers thought they were paying $500 for 10000 clicks resulting in $1000 worth of visible revenue, the fact that they really only got 5000 "real" clicks resulting in the same $1000 worth of visible revenue doesn't really change the equation much.
Over the long run companies spending money on advertising are going to hone in on how much they can spend compared to how much revenue they get can trace back to that advertising spend.
The pay-per-click model and the current cost-per-click pricing is just an implementation detail of the current state of web advertising. Advertising still works when those stats aren't available, like in Podcasts.
They should have been able to dedicate half the money for the same revenue, or the same money for double the rev, in your scenario.
Put another way, the estimate is that they pay out $500 for $2k in revenue, then someone came in and dumped a bunch of bots in the way and ate away half their revenue. It's not like those empty clicks are people who just weren't compelled to buy what they were selling. They are bots intentionally disrupting commerce.
In some niches, there's an unending new supply of get-rich-quick newbies that will pay for underperforming ads.
There's really no incentive for Google's AdSense team to focus on fraud in these spaces. Because the suckers just keep coming. Google profits from it, so there's little incentive to fix the glitch.
It’s simple... ad value or die as a business. Is that easy? No, but why should it be?
You're getting paid with advertising dollars for posting on hacker news?
Surprise: you (and all the other posters on hacker news) are the content producers I love. We've never been paid for this nonsense, and I doubt we ever will be. Won't stop us posting though. I'm really not that worried if buzzfeed and medium go under.
Now, I‘m not sure YouTube itself will survive in its current form if ad money dries up.
Brands looking to build awareness are buying access to this fraudulent traffic.
Advertising agencies, ad tech companies, and publishers more times than not are incentivized to look the other way and not investigate what is going on too closely as long as it is profitable.
Digital display advertising has long been considered a channel of questionable effectiveness. But the current state of programmatic advertising has made things much worse and will ultimately lead to Advertisers pulling billions of dollars out of this space unless there are significant improvements in getting more transparency into their advertising investments.
That is believable to me. Larger than fraud in a lot of markets, but not particularly large, and everyone knows the market is full of bots, bad stats, and scams.
Edit: Oh did you mean advertising reports for sessions?
I may have forgotten to acknowledge that I never really cared I didn't get all the clicks -- I was doing a CPA campaign, so I just baked in the non-visits.
Depending on targeting and platform, there was almost always a 20-70% discrepancy between the clicks I paid for (reported by the ad platform), and the visits that landed on my site (reported by GA, server logs, piwik, and analytics.js).
Also interesting - AdWords was always within 5%.
I'm sure it differs case by case, but I would naively expect the latter is more common if you have competitors.
There's never a right answer to "am I charging the best price", it's always a guess.
The problem always is that it very difficult for an observer to tell the difference between an educated guess and just a, like, regular guess. So I don't fault anyone for interpreting it like that.
When I was shopping for lawyers, not that it was a consideration in my evaluations but I found that lawyers I recognized from subway or daytime TV ads were considerably more expensive than random selections from the phonebook. Their ads project images where you've been victimized, and you need a legal gladiator, willing to fight the evil empire to get all that settlement money that rightfully belongs to you. I found that the service was better with the random selects-- free consultations, quicker responses to inquiries, more services rendered, better aftercare, etc.
Dentistry is the same. I've noticed a lot of billboards for dental services around my area. Most of them evoke Fisher-Price colors and softness, playing up to peoples' fears in how the experience doesn't have to be scary or painful. But when I did the legwork for quotes on significant dental work, I found that those that offices which advertised were much more expensive than random Yelp selections. The quotes varied by thousands of dollars for the same work.
Auto repair does things slightly differently. I live in a small town and don't have much choice in this space, but for lack of time I recently took a vehicle to a shop that bought ad placements simply because aside from that their reputation in town was better. Their quote was fair and accurate given the job and they did the work without playing any games or breaking anything else. But then they tried to upsell me on additional services (fluid changes, etc.) at absolutely obscene prices. Since auto ownership is a cargo cult where nobody knows even the basics of what goes into making them work, I'm sure this tactic works on plenty of other rubes.
Similar story-- I had a car break down on the side of the road on a long road trip. AAA towed it to the nearest repair shop, which happened to be a dealership (dealerships generally spend mad money on ads, and already have reputations for being overpriced). I know the failed part cost less than $300 and would take less than an hour to put in. They must have seen the out-of-state plates and the after-hours dropoff and banked on my presumed desperation and ignorance because their quote was $6000. I said no, had it towed to another garage and got it done for $450.
The presumption is that consumers don't (or in some cases, literally can't) shop around, are generally unintelligent and are easily swayed by appeals to emotion, so you play to these factors and charge as much as you can get away with-- not some paltry "(cost of goods + cost of labor + cost of advertising) + 10% markup" silliness.
My rule of thumb is that anything you see advertised is a sign of a hustle. If you don't know how the hustle works, you'll get got. This applies doubly so for anything marketed to the poor or minorities.