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“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” This statement is often attributed to retail mogul John Wanamaker. In his provocative new book, Subprime Attention Crisis: Advertising and the Time Bomb at the Heart of the Internet, Tim Hwang argues that online, Wanamaker’s statement is far too optimistic. This slim volume is packed with infuriating details about how the immense, opaque, and inescapable machinery of online advertising exists primarily to move massive amounts of money to intermediaries, many of them fraudulent or fraud-indifferent. The benefits to consumers and publishers have been minor and incidental; the harm to democracy has been severe.

Hwang argues that the current internet is built on a fundamentally flawed model of ad-supported content. He explains that there are no real checks on online advertising fraud; there are too many intermediaries for advertisers (or publishers) to police in any coherent way. Ad failure online is pervasive. A publisher may claim it displayed ads online but consumers nevertheless may not have seen it due to poor placement (such as at the bottom of the page). Hwang notes, “[i]n 2014, Google released a report suggesting that 56.1 percent of all ads displayed on the internet are never seen by a human.” (P. 81.) Even when real humans are involved, they may not be the actual audience for ads; Hwang cites research that up to 50 percent of all click-throughs on mobile devices may be the result of accidental “fat finger” clicks. (P. 79.) He also notes fraud estimates of up to $1 out of every $3 spent on digital advertising, including ads served to devices that were “not real phones at all, or … were phones running automated scripts, unseen by any actual members of the public.” (P. 85.) (This isn’t just phones; it seems to be a pervasive problem with all digital advertising, including digital TV ads.) Even with exculpatory contracts, some of these problems have spilled over into litigation.1 But litigation will never catch up with today’s problems, even if (implausibly) it provided a full remedy for past harms.

The existing system involves too many intermediaries to provide any certainty that real people, much less the right people, are seeing the ads supposedly targeted to them, even before the ever-increasing presence of ad-blockers is taken into account. Rather than publishers being ad-supported, mostly it’s intermediaries sucking out as much as 70 percent of the revenues from an ad. Hwang’s critique of targeted advertising—it’s way more expensive than nontargeted ads and often quite inaccurate and permeated with fraud—is persuasive for anyone looking for how they should allocate their ad budgets.

But in the broader sense, I worry that Hwang is shouting into the void. Along with Wanamaker’s quote, I kept thinking of two other phrases as I read the book:

  1. “If something cannot go on forever, it will stop.”2
  2. “This time is different.”3

Hwang’s model of the “subprime attention crisis” makes a clear analogy to the subprime mortgage bubble, which collapsed and did huge amounts of harm—financial and otherwise—to millions of people (though largely not to the firms deemed too big to fail, who had profited from the bubble, and the principals of those firms). Hwang foresees a potential collapse of the online advertising market, taking with it the people who are actually doing journalism and otherwise creating expression other people would like to see.

But a bubble can last a lot longer than it should when there don’t seem to be other, better alternatives, which may be the case here. Given the constant renaming and tweaking of digital business models, the infinite promise of revised algorithms, and the rise of new platforms—Tiktok and its influencers, for example, don’t appear in the book—it is always possible for advertisers to hope that this time is different. Fundamentally, advertisers have budgets and want to use them, and while the occasional giant like Procter & Gamble can give up on big online advertising venues because of its enormous brick and mortar footprint (and its other advertising options), most advertisers can’t and won’t. Individual publications, from the New York Times to a Dutch public broadcaster are experimenting with promising advertising-funded models that cut out more intermediaries. And yet cutting out intermediaries generally means not scaling up, putting inherent limits on those alternatives, especially for new market entrants. If those initiatives expand, they will then become intermediaries for other publications, with some of the same risks and pressures (though perhaps a better ethical compass or at least an incentive to divert more money into publishers’ pockets).

So should we give up on preventing ad fraud and the marketplace distortions it causes? Not at all. But we also shouldn’t expect that a market correction will take care of the problem. Online ad money moves in ways so fast and complicated that Dina Srinivasan has suggested regulating ad exchanges the way we regulate financial exchanges for transparency and fairness. But if, as Hwang persuasively argues, lots of the money involved is just stolen by people who don’t provide the promised services, we should be thinking not just about transparency/antidiscrimination rules but anti-money laundering, know-your-customer, and anti-fraud regulations. Mark Lemley has pointed out that a lot of “fair access” rules are also “access for fraudsters/bad guys” rules, making platform regulation extremely hard to get right. Given that fraudsters and bad guys aren’t having much trouble accessing the current online advertising regime, however, Hwang’s book strengthens the case for looking much more aggressively under the hood of online advertising systems, using both advertisers’ purchasing power to require better-audited results and regulators’ power to set enforceable rules.

I would be remiss not to note the risks of regulatory intervention. Texas’s Attorney General is right now pursuing Twitter for, ostensibly, understating the number of “bot” accounts in order to make Twitter more commercially appealing. But it is obvious that he is doing so to punish a perceived political enemy and to reward a newly announced Republican billionaire supporter, Elon Musk. Nonetheless, fraud is fraud, and the risks of biased enforcement have to be balanced against the current freedom of private parties to steal from people who produce valuable things, including the news, with apparent impunity. We can’t start making the necessary decisions without understanding the scope of the problem. Hwang’s book helps with that.

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  1. See DZ Reserve v. Meta Platforms, Inc., 2022 WL 912890 (N.D. Cal. Mar. 29, 2022) (certifying a class of U.S. ad buyers who allegedly overpaid for Facebook ads based on misleading statements of ads’ “Potential Reach”).
  2. Herbert Stein, A Symposium on the 40th Anniversary of the Joint Economic Committee, Hearings Before the Joint Economic Committee, Congress of the United States, Ninety-Ninth Congress, First Session; Panel Discussion: The Macroeconomics of Growth, Full Employment, and Price Stability, at 262 (Jan. 16, 1986).
  3. Carmen M. Reinhart & Kenneth S. Rogoff, This Time Is Different: A Panoramic View of Eight Centuries of Financial Crises, NBER Working Paper Series at 13882 (Mar. 2008).
Cite as: Rebecca Tushnet, Advertising Fraud: Is There No Alternative?, JOTWELL (September 23, 2022) (reviewing Tim Hwang, Subprime Attention Crisis: Advertising and the Time Bomb at the Heart of the Internet (2020)), https://cyber.jotwell.com/advertising-fraud-is-there-no-alternative/.