SBP 147: Ad Fraud - The Real Cost. With Dr. Augustine Fou.
Episode SummaryDigital advertising promised perfect accountability—laser-sharp targeting, flawless attribution, and measurable results down to the last click. But what if the data has been lying to us all along?Dr. Augustine Fou, former Chief Digital Officer and independent ad fraud researcher, reveals why the "1% fraud rate" you've been hearing for a decade is dangerously wrong. In this eye-opening conversation, he exposes the systemic incentives that allow ad fraud to thrive, costing advertisers billions while enriching middlemen, platforms, and fraudsters.You'll discover how a major hotel chain found their "incredible" ROAS completely evaporated when they turned off campaigns for one week. Why "audience expansion networks" are actually "fraudience networks" filled with bots. And how placement reports from your DSP are systematically fabricated because fraudulent sites lie about their domains in bid requests.Dr. Fou doesn't just diagnose the problem—he provides concrete, actionable solutions. Learn the one campaign setting that eliminates 90% of fraud instantly, why paying higher CPMs actually saves you money, and how to measure what actually matters: Human CPM (HCPM), not just impressions.This isn't about pointing fingers. It's about upgrading your analytics so you can finally see what's really happening with your ad spend—and take back control.Key TakeawaysThe 1% Lie: Legacy verification vendors have reported ~1% invalid traffic for 10 years straight—not because fraud is low, but because that's all they can detectThe Attribution Illusion: View-through conversions and ROAS reports massively over-attribute sales that would have happened anywayEveryone Benefits But You: Ad exchanges, agencies under budget pressure, verification vendors, and even marketers protecting their jobs all profit from the status quoFraudience Networks: Turning off audience expansion on Facebook, Google, TikTok, and other platforms immediately eliminates 90% of fraudThe CPM Trap: Lower CPMs aren't "cost efficiency"—you're just buying 10x more impressions where only 10% reach humans, making your effective Human CPM 10x higherPlacement Report Fiction: Sites lie about their domain in bid requests, so your blocklists don't work and your reports show clean inventory that doesn't existThe Turn-Off Test: Run holdout experiments—turn off campaigns in one state or for one week and measure if sales velocity actually changesTimestamps00:00 - Introduction: The Promise vs. Reality of Digital Advertising02:58 - Dr. Fou's Journey: From MIT Chemistry to Ad Fraud Research05:54 - Why Everyone Dismissed the Warnings (Including Marc)09:12 - There's No "Typical" Fraud Rate: From 1% to 100% Depending on What You Buy11:58 - The Attribution Problem: Why Your ROAS Reports Are Fiction14:56 - The Incentive Structure: Why Everyone Profits From Fraud Except Advertisers17:58 - When Does This Become a Shareholder Problem?26:59 - Red vs. Blue: Why You Must Measure Both Bots AND Humans29:27 - The CPM Misconception: Price vs. Cost Efficiency32:54 - Fraudience Networks: Turn Them Off and Save 90% Immediately36:04 - How Bots Game Retargeting and Audience Segments40:04 - Best Practices: Inclusion Lists, Direct Buying, and Turning Off Audience Networks42:15 - The Placement Report Scam: Why Your Blocklists Don't Work47:00 - The Footfall Fraud: How Ad Tech Gamed In-Store Attribution52:01 - Moving Away From Black Box Algorithms56:04 - Reframing the Conversation: From "Fraud" to "Better Analytics"Guest BioDr. Augustine Fou is a former Chief Digital Officer, independent ad fraud researcher, and creator of FouAnalytics—an analytics platform that measures both bot traffic (red) and human traffic (blue) to give advertisers unprecedented...
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