In 1994, on an experimental corner of the still-novel internet, the first website banner ad debuted. A rectangular box with an invitation to click, it ran on the home page of new online magazine HotWired. It lingered there for four months, and in that time, 44 per cent of people who saw it took up that invitation, clicking through to see an ad campaign by telecoms company AT&T which was, as chance would have it, about the unbridled promise of this new thing called the internet. Armed with data on this “click through rate” – another innovation – the magazine managed to convince an initial group of five other businesses that advertising in cyber space was a good use of their money.
Three decades later and digital advertising is not only a $259 billion industry, it is the dominant business model of the digital economy. Almost all of Meta’s revenue comes from ad sales, and while Google may offer everything from cloud computing to email to AI, ads still make up about three quarters of that company’s revenue. Even online retailed Amazon made about 10 per cent of its revenue last year from selling ad space to its vendors.
HotWired knew their six advertising customers; modern ad tech sells ad space to millions of entities through complex exchanges designed to match payers to our personal profiles. For tech companies to succeed in this industry, all incentives lead to making buying ad space as quick, easy and “low friction” as possible. And part of that friction that has been reduced to the bare minimum is verifying that advertisers are who they say they are.
The lax controls that enable this money to keep flowing through the system have also allowed scams and fraud to become endemic, particularly, a new report suggests, on social media platforms, eroding the trust consumers can place in the content advertisers have paid handsomely to reach them.
An astonishing one in 10 social media ads, according to the research commissioned by Revolut, are scams. This means they are fraudulent and deceptive content designed to take our money, personal data or both. Ireland’s 2.8 million regular social media users were last year exposed to scam ads six billion times; that is over 40 attempts to defraud us each a week. These were things like bogus retailers, investment scams, illegal pharmaceutical sales and disingenuous quizzes and giveaways. They were also fake AI videos of Irish celebrities fake-shilling everything from face cream to bitcoin.
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Losses from these scams hit wide and hard. Irish victims of social media scam ads were found to have lost more on average than any other nationality in Europe, at £1,292 (€1,490) per successful attempt. Public figures like Miriam O’Callaghan have spent years battling the use of their name and image in fake ads that get people to share their credit card details in exchange for cosmetics samples, only to have large sums taken from their accounts
David McWilliams has warned of scams involving his stolen image that saw a pensioner lose €15,000 to a fake investment opportunity.
Two groups do benefit from these ads, however. One is the scammers, who often have links to criminal gangs. The other is social media firms. Companies like Meta and TikTok, both headquartered in Ireland, made £3.8 billion – or €4.36 billion – from selling ad space to these criminals last year just in Europe, of which about €32 million came from showing scams on Irish screens, according to this new research.
Online advertising in general has made a few companies extraordinarily wealthy, but the deal has worsened over time for advertisers. As tech platforms have pawned an ever-increasing proportion of the surface area of our screens, the value of that space has fallen. Our brains and eyes have become used to screening out this assault, leaving advertisers feeling extremely lucky to get click through rates of 5 per cent.
And for consumers, navigating Google search results to find what you are actually looking for has become an uphill slalom that would challenge even the most skilled Olympian. Paid content we didn’t ask to see clogs our social media feeds, news websites, video platforms and apps, as advertising real estate consumes more and more of the web. Now scam ads are adding to the clutter.
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Meta boasts of new AI tools that scan and stop fraudulent ads before they reach people. But leaked documents reviewed by Reuters last year showed that company policy was to only turn down taking money for ads that these systems were 95 per cent positive were scams; any less certain than that and the company charged more money to run them.
It was inevitable that the growth at any cost mindset would lead us to this; a bloated industry eating itself as it attempts to squeeze every last penny out of advertisers struggling to steal a piece of our embattled attention. How long before advertisers realise that maybe they are ones being scammed?