Industry News

Early this year, Facebook updated their branded content rules that limit the way a Facebook page owner can post content in exchange for money. This paid-promotion strategy was pivotal to the growth of companies like Render Media, Little Things and Diply. As a result of the change, Render Media and Little Things completely shut down, sending ripples through the industry. Now 3^rd party advertisers like agencies, brands and publishers are scrambling for new avenues to promote products and content. We believe the reaction to this change is completely overblown with artificial media hype. Here’s why.

1. If you put all your eggs in one basket, you will lose.

Many publishers, most notoriously Render Media and Little things, built massive businesses promoting their content by paying Facebook page influencers. The strategy was successful because the cost of acquisition was sometimes as low as a penny, cheaper than Facebook’s floor. When the change occurred, Little Things, a business with over 50 employees, lost 75% of it’s traffic overnight. The lesson here is that many media companies put all their eggs in one basket: Facebook influencer traffic. Their strategy worked until it didn’t, and now many are reassessing where to go next. Don’t let the doom and gloom hype of big name demises freak you out.

2. Facebook isn’t the only sheriff in town.

This new update reminds us of the one Facebook did in August of 2016, when they changed their algorithm to bury promoted viral content for more organic, newsworthy content. Many publishers – whom we happen to deal with on a daily basis – were quick to abandon Facebook and find new avenues of content promotion. Content discovery platforms like Taboola and Outbrain benefitted tremendously after the change, providing new opportunities for 3^rd party advertisers to promote content and products.

3. It’s the internet, don’t lose faith and never doubt it.

The internet is so dynamic and fluid that when one opportunity closes, another will arise. As long as there are eyeballs, there will be opportunity. Entrepreneurs are innovative and marketers will find (or create) new ways to market products and content. As many advertisers, brands, agencies and publishers “scramble” for new avenues to promote to garner visits and sales, opportunities will emerge.

4. Facbeook influencer traffic is still a valid avenue!

It may have gotten lost in all the hype, but I can’t scream this loudly enough: you can still pay Facebook page owners for sharing content. The new Branded Content guidelines don’t completely prohibit paying a Facebook page owner for sharing content; rather, the Facebook influencer must use the Branded Content Tool to tag 3^rd party advertisers on both Instagram and Facebook. According to Gary Lipovetsky, CEO of Provdr.com, another publisher that build a huge business on cheap Facebook influencer traffic, 3^rd party advertisers can easily satisfy Facebooks requirements by a paragraph length description or caption to each post. Lipovetsky also thinks it will bode well for publishers long-term, helping increase organic reach.

Ad tech company Adform recently released a deep analysis after uncovering a new fraud scheme dubbed “HyphBot.” HyphBot has scammed advertisers and pubs every single day since its launch. Thousands of fake domains and millions of fake URLs were created by fraudsters through a file known as sortedUnixWords.txt. Adform researchers believe the bot has been actively running since August, if not earlier.

The suspicious domain name patterns were noticed by Adform after raking through illegitimate site traffic detected by ads.txt. Notably, two specific patterns showed up so frequently, prompting Adform to monitor HyphBot activity. The first pattern is a domain name followed by several non related words, i.e. forbes.com/red-throated_mid-atlantic. The second HyphBot pattern with a domain followed by random numbers and letters i.e. forbes.com/4qr56. By developing highly advanced filters through their platform, Adform can quantify the amount of requests from these unusual URL patterns and determine which premium publishers are being affected. They are continuing to investigate where and who this Bot was created by and how to shut it down. Adform has kept the details of their findings secret until now. This is so the fraudsters aren’t able to hack into Adform’s filters designed to detect and reverse what Hyphbot is doing.

Many industry leaders – including ourselves – agree that making the digital advertising industry more transparent is necessary for the future of digital advertising. Adform took a step in the right direction by informing everyone of their findings so quickly. Adform hopes that by gathering this information and exposing this scam, a sense of urgency will buzz throughout the industry.

People should be actively seeking the next steps to combat fraud as an industry. We recently discussed domain spoofing and the power moves JPMorgan made to combat ad fraud. Ads.txt was rolled out just a week prior, and many were taking a deeper look at what ads.txt could do to protect companies from scams.

Adform is a supporter of ads.txt. By releasing this data on HyphBot, they hope more people will educate themselves on ads.txt and understand its capabilities. If major players such as eBay and Walmart follow Google’s lead and adopt ads.txt, many more companies will follow suit. It has to start somewhere. We hope that leaders do what they do best – step up and set the tone in an effort to make the digital advertising world stronger and more transparent.

With digital advertising passing tv advertising sales for the first time ever in 2016, it really makes you think just how many ads digital viewers are consuming, and where exactly they are being placed on the web. A single ad can make it onto hundreds of thousands of websites, which typically leads to advertising platforms placing them on sites that companies would prefer the ads not appear on.

Perfect example: JPMorgan Chase and the infamous ad placement on the “Hillary 4 Prison” website. Seeing a Chase ad on a website like this naturally allows viewers to draw conclusions. This may read as Chase being a supporter of the website, something Chase was clearly not. Chase drastically decreased the number of sites that their ads would be placed on moving forward; from 400,000 down to a shocking 7,000. By carefully selecting the sites they want to advertise on, Chase figured they could reach their target audience in a much more tactful and efficient way. This proved to be true when they saw that ad viewability increased by 5%. The overall goal was to reduce fraud, which they did by an impressive 49%.

The actions Chase has taken in the last 8 months have stirred up much conversation in the ad tech and advertising industries. As one of the biggest players in the game, they are speaking up about legitimacy and transparency in the often dark and fraudulent digital advertising industry. Many other companies are planning to take actions of their own, reducing the overall amount of inventory being purchased. For many sites that rely on advertising revenues to operate, companies purchasing less inventory could be a huge cash flow / revenue problem. Despite actions taken by Chase, it’s still an uphill battle.

Chase still faces issues with domain spoofing, where poser sites act as if they are high-quality sites. Domain spoofing can also be called inventory spoofing, where fraudsters illicitly list inventory belonging to a top-tier publisher, syphoning ad dollars from publishers. Although the IAB’s ads.txt initiative could potentially solve these issues, it remains yet to be seen. The Authorized Digital Sellers List was just rolled out last week, and Chase isn’t interested in using ads.txt until its major ad publishers begin to use it as well. Here’s looking at you, eBay, WalMart, Yahoo…

As always, stay tuned.

Today the Interactive Advertising Bureau is finally launching their anti-domain spoofing initiative, ads.txt. The Authorized Digital Sellers list, known as ads.txt, is an inventory verification system that assure advertisers they are purchasing real inventory from the claimed publisher. This initiative has been launched in response to domain-spoofing, where fraudsters list inventory belonging to top-tier publishers, stealing advertising dollars from those publishers.

Ad-spoofing has become a huge problem in the digital media ecosystem for both advertisers and publishers. For advertisers, they end up purchasing fake inventory, and for publishers, they miss out on advertiser dollars because fraudsters syphoned money from ad budgets that should have been spent on inventory on their own site. Ad-spoofing is big in video ads because of the limited inventory for video and the higher CPMs. The extent of ad spoofing damage was reported by the Wall Street Journal last December, which is likely the single event that triggered the brainstorm that created ads.txt.

The blueprint for ads.txt was made public end of May. The way it works is almost like a verification technology, enabling content owners to declare who is and is not authorized to sell their inventory (sounds a lot like block-chain technology, doesn’t it?). As the IAB explains it:

‘This new tool, known as ads.txt, is a pre-formatted index of authorized sellers that publishers can post to their domains. Programmatic buyers can then use these publisher ads.txt files to screen for fake or misrepresented inventory.’

(Source: IAB Tech Lab Press Release)

Sounds cool, right? The Authorized Digital Sellers list has received both criticism and support since the blueprint came out. However, Google has thrown its weight behind ads.txt, by recently stating it will only allocate advertiser dollars to publishers that have implemented ads.txt. Supply side partners such as AppNexus, IndexExchange and Teads are also on board, and claim to have initiated verification technologies prior to ads.txt. As of now, 13% of the world’s top-tier publishers are signed on with the Authorized Digital Sellers list, but that number will likely go up if they want to receive ad dollars.

The net effect of ads.txt, remains to be seen. Proponents claim publisher revenues should go up because fraudsters will no longer be able to syphon ad budget money from them. Opponents say it’s not enough, and that the fraudsters will find a way around it. We will be watching it closely and advise publishers to employ ads.txt, because, why not?

Stay tuned.

There is a big push for transparency in the digital advertising market. Media firms (mainly publishers and advertising intermediaries) are demanding more and more disclosure. We agree in the market need for it. So we’ve been piggy backing on that since May, by disclosing payment data.

Ever 3 months we release a digital media payments report. In it we release general payment trends we are noticing and payment performance data on 127 firms. The goal is to shine a light on credit and payment data. Why? So fast growing media companies can avoid the pitfall of trading with a firm that pays late or inconsistently. That one unknown can have very adverse affects on a business. For example, a 9 day shortfall requires 15% more cash on hand, roughly.

So, you want to sign up with a new demand partner (i.e advertising exchange). Ok. What are their terms? Do they pay on time? If not how often are they late? Do they offset their payments if there is a dispute? If so, by how much? How often are the offsets? Why are there offsets?

These are the questions we answer in our free payment report. All we ask for is your e-mail. We think that is a fair trade for our data.

The data is as objective as possible. However when you look at data over time, you see trends. We draw analyses and commentary in our piece with Digiday.

Here’s what we’re reporting on:

• As a part of our entire portfolio, late payments have steadily declined into Q4, 2018. Late payments as a % of our portfolio peaked in November, 2017.
• Of the late payments, they got much worse in December, 2018: average wait days jumped to 9, versus 6.5 for all of 2018. And the amount of late payments more than 15 days late doubled.
• Video platforms are some of the “most consistently late” and latest to pay (in days).
• Mobile platforms are at the extremes: like video, their pay performance is “late”, but they also pay the earliest and on time (ex-Apple, who pays 26 days early on average).
• Acquired companies tends to have a decrease in pay performance. That means after they are acquired, their payments tend to become late and or inconsistently paid (as to timing).

For a full report, including payment performance details by company, download here:

Recent stories about the financial health of digital advertising companies have swept the industry. Recall the Defy Media bankruptcy and the blow-up of Videology. Defy Media lost their line of credit, and Videology was foreclosed on by their lenders. GroupM, as massive agency, just laid off 3,500 people.

In the general economy, the Federal Reserve has been increasing interest rates. This will to a credit tightening, which basically means money is harder to come by. What does this mean for the industry? Well, the Fed’s moves, coupled with the seemingly widespread poor investments / management in ad-tech, will make money harder to come by for digital media companies.

The signs of credit tightening are evident. Take the Defy Media bankruptcy, mainly a result of their bank pulling their line (i.e tightening credit). And Videology, which was foreclosed on by their lender, for $80 million. OAREX has seen this at a much smaller scale in the SME segment of the market (businesses doing $50k-2M/mo. in ad revenue).

We’ve recently funded deals that were once financed by banks or pseudo banks. These funders are major FDIC insured institutions, or funded by FDIC insured institutions. They take direct credit in their customers (something we do not do). Due to recent events and an overall credit tightening, they were not willing to continue in the deals and fund their customers. They pulled their lines of credit from healthy, growing digital media companies, or they capped their credit limit and stifled their growth.

OAREX does not care about your credit health, or if you operate at a loss. Since we buy your invoices, we only care about your customers credit. Therefore as credit tightens, we can continue to fund digital media companies — especially after your once trusted partner pulls the rug out from under you.

And if you’re monetizing with partners across the ecosystem, it’s important to check their credit and payment history data. We have a tool to help you do that.