Click fraud is costing US advertiser 6.4billion dollars a year reports Bloomberg Business.
The promise of internet advertising was that it could provide much more targeted audiences with far better, precision results.
It turns out the truth is different, with Bloomberg citing Heineken US who did a detailed analysis of their advertising returns to find, as the company’s Brand Director Ron Amram says, “giving money to the mob.”
While that news is bad, although not altogether surprising, for the digital media industry there’s even an even worse revelation from Heineken.
Digital’s return on investment was around 2 to 1, a $2 increase in revenue for every $1 of ad spending, compared with at least 6 to 1 for TV. The most startling finding: Only 20 percent of the campaign’s “ad impressions”—ads that appear on a computer or smartphone screen—were even seen by actual people.
That major brands are television is three times more effective than digital puts online advertisers in a bad position, although social media gurus have long argued companies can’t measure return on investment from their efforts.
Ultimately though the Bloomberg story shows we need a new model, applying broadcast advertising conventions to online services isn’t working. We’re still waiting for a new David Sarnoff to come along.