Last December, authorities arrested Edgar Welch, a 28-year old man from Salisbury, North Carolina, who had entered Comet Ping Pong, a Washington, D.C. pizza parlor, armed with a shot gun. Mr. Welch reportedly came to Comet Ping Pong on a self-described mission to free child sex slaves that he believed might be imprisoned there at the bidding of Hillary Clinton and her campaign Chief of Staff, John Podesta. After Welch shot his gun into the ceiling, terrified employees fled the building. Then, after encountering swarms of local police, and having found no evidence of the vast conspiracy he had been led by social media to believe existed, he gave himself up peacefully to authorities.

As outlandish as the story may seem, Mr. Welch was not the only one duped by the story. For weeks, dozens of anonymous posters had fanned the flames and pursued the imaginary conspiracy theory on Reddit.com, a hugely popular social news aggregation site.

This fake conspiracy was likely fueled in part by armies of “bots,” which are fake social media accounts often purchased and organized centrally, and mobilized to push a particular opinion or agenda and sway public opinion. It is surprisingly easily to purchase bots online. For example, Russian websites, such as BuyAces, sell empty social media accounts to anyone willing to pay with digital currency. Once purchased, programmers can enable these accounts to disseminate information or respond to news stories en masse. It is widely reported that Special Prosecutor, Robert Mueller, is investigating whether the Russian government used such tactics to influence the last election.

What does this have to do with advertising, you might ask? Everything.

Bot campaigns are an extreme form of influencer marketing. Bot armies can enable marketing messages to travel far and wide, while appearing to come from “ordinary people” without attribution or direct traceability to their actual source, thus evading the law enforcement gazes of the Federal Trade Commission and State Attorneys General. They take advantage of search engine algorithms, which are optimized prioritize information based on popularity. A bot campaign can fuel sales by sparking interest and making certain buying options more visible in a crowded online marketplace. Influencing by “bot” can manipulate trust in the digital economy, from online reviews, to rankings of popularity on shopping sites.

The IAB Takes a Small Step

Digital marketers are trying to get their arms around the magnitude of the bot problem. With vast inventories of digital impressions being bought and sold programmatically through exchanges, marketers are increasingly concerned with transparency and brand protection.

If I buy inventory through an exchange, how do I know whether my ads actually appeared and were displayed properly on the publishers’ sites? There are shadowy “brokers” (unauthorized resellers) participating in exchanges and purporting to resell what appear to be legitimate inventories at prices that are very attractive. These may turn out in the worst case either to be wholly faked or in the best case, to be poor quality – in the nature of pop-ups appearing at the bottom of a page that are invisible to consumers. Nevertheless, the trafficker is able to generate a report showing on the surface that the ads appeared on a reputable site such as CNN.com.

Late last year, a sophisticated fraud scheme known as “Methbot” was uncovered by the cybersecurity firm, WhiteOps. The criminals created fake publisher sites, resembling for example the New York Times, and then sold the inventory on legitimate exchanges, duping advertisers to the tune of $3 million per day until the scheme was uncovered and shut down.

Over the last year the Interactive Advertising Bureau (IAB), the leading trade association for digital advertising, has developed a technical response to the “Methbot” problem. It proposes to publish an inventory of Authorized Digital Sellers called “ads.txt.” An advertiser would be encouraged to by space from an Authorized Digital Seller. If the advertiser wishes to use a different seller, it can work to have that seller added to ads.txt. If this system is widely adopted, the IAB hopes that illegitimate resellers and publishers will eventually wither away.

Of course, the potential success of the IAB’s proposal depends on widespread uptake. There are a few disincentives to that happening, unfortunately:

  1. Unlisted resellers will still be operating in the exchanges and will still entice buyers with low rates.
  2. Since advertisers and publishers buy and sell through many different channels, not just exchanges, it is feared that ads.txt may provide a free look at competitively sensitive pricing information that may enable savvy buyers and sellers to work around the exchanges to negotiate different deals.
  3. ads.txt would not necessarily be used in Europe or elsewhere.

Digital Ad Market Duopoly

Issues of trust in the digital marketplace are only driving more traffic through the two titans of digital advertising, Google and Facebook. Overall digital spend is expected to approach $83 billion this year in revenue, greater than “traditional” media. Facebook and Google are projecting advertising gains of 32% and 14.8%, respectively. According to AdWeek, Google controls 40.7% of the U.S. digital ad market, followed by Facebook with 19.7%. “Google’s control primarily comes from search, and eMarketer expects that it will claim $28.5 billion of spend this year, which is 77.8 percent of the total $36.69 billion market. By next year, Google’s search revenues are expected to bring in $32.40 billion of the $40.49 billion industry.” The numbers are even more striking with respect to mobile advertising, where Google and Facebook together have a 57% share of all mobile ad spend.

With other platforms falling increasingly behind, the industry increasingly resembles a duopoly. Advertisers want to go where the traffic is. In the long run, this may inhibit innovation and hinder choice.