January 30, 2022
 min read

Is ad tech the next internet bubble?

Reza Askari

Recently, a book published by former Google employee Tim Hwang has called into question the legitimacy and long-term validity of digital advertising. 

In Subprime Attention Crisis, Hwang argues that digital advertising doesn’t work. More than that, he claims the inherent illegitimacy of the industry is pushing us towards another bubble burst-- one not unlike the 2008 housing crash.

If Hwang is to be believed, then many of the world’s largest agencies have been running a long con for many, many years.

At Brandcamp, we have audited dozens of companies running ineffective or inefficient ads. In fact, we’ve won some of our most valued clients through this process.

In truth, Hwang’s claims open the door to an ongoing issue in our industry. Across the world, clients are being misled about their campaign effectiveness as they watch their ad dollars disappear without any real results. 

Yet, Hwang fails to prove the illegitimacy of the industry entirely. 

Below, we’ll outline some of the larger points of his findings alongside the strategies you can use to see real results in your paid advertising campaigns. 

Why your ad spend is being wasted by robots

Hwang’s argument centres around the idea that the increasing presence of AI and bots online is undermining the legitimacy of paid advertising. Company ad budgets can be easily manipulated by click farms and domain spoofs. This, Hwang claims, combined with companies such as Google and Facebook who make 90-99% of their revenue through advertising, is leading us towards an inevitable crash. 

Along with the introduction of adblockers, increased fraud and bot traffic are changing the online advertising industry. In his book, Hwang cites an Adobe estimate that adblockers have deprived online advertisers of $21.8 billion in annual revenue. This is equal to Facebook’s 2019 net revenue. 

In another citation, Hwang shows a 2017 study that found poor ad placements and online fraud amounted to, “as much as 56 percent of all display ad dollars were lost to fraudulent or unviewable inventory in 2016.” The bulk of the businesses suffering from this loss are small to medium-sized businesses that rely on their advertising budgets to bring in sales. 

Too often, we see ad agencies focus their efforts on impressions and reach, which doesn’t paint a clear picture of effective ROI.  Showing high impressions does not mean showing conversions. Showing high reach does not mean the people who saw the ads are going to become customers.

In addition, failing to implement procedures such as detailed campaign monitoring to block bot traffic is a huge miss on the agency side.

As well, understanding the impact of adblockers and how they impact your PPC campaigns is becoming increasingly important. 

If Hwang’s predictions come true, we could see an incredible collapse of some of the world’s biggest companies: Facebook, Google, and Amazon.

Can we still rely on paid media advertising?

The answer is yes. There are many forms of online advertising that are still effective. 

For example, intent-based ads like Google Search ads are effective because we already know a person is searching for something they want.

In contrast, display ads and Facebook ads are often trying to create or inspire intent. Or, source people that might want our product. These ad formats can be ineffective if done poorly.  

For example, if you target for link clicks, Facebook will put you in front of the people most likely to click a link (regardless of what the product is). 

If you target engagement, Facebook will find the people who click on everything, even if your product will never be one they purchase. 

If you target people who add your product to their cart, you may never find people that have purchased anything online, just window shoppers. The list goes on.

The solution? Work with a team that knows what they’re doing

The bottom line? You shouldn’t be working with an agency that can’t prove your results. If you’re unsure where your budget is being used, or what platforms your ads are being shown on, then you’re dealing with an inexperienced team. 

At Brandcamp, we provide detailed reporting systems alongside real-time budget updates to keep you informed every step of the way.

If you’re ready to have a clear, ongoing understanding of your digital ad spends, reach out to us

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