KGB, Gestapo, Stasi Could Only Dream Of Information Adtech Companies Have – Bob Hoffman To The EU

Advertising veteran Bob Hoffman has given an incendiary speech to the European Parliament about adtech firms and the data they hold on individuals.

“The KGB, the Gestapo, and the Stasi could only dream of having the depth of information about citizens that Google, Facebook, and other adtech companies have,” said Hoffman.

“According to a report by the Irish Council for Civil Liberties, people in Europe have their online behaviour and location broadcast to thousands of companies and organizations around the world 197 billion times a day. Google alone sends this data to 4,698 organizations around the world, including Russia and China. There is no control over this data once it is sent.”

Hoffman’s gripe with adtech companies is nothing new. The former Hoffman/Lewis and Mojo USA CEO has spoken regularly about his wariness of data collection and its actual effectiveness in advertising campaigns.

“The worst governments in history have been the ones that abused the privacy of its citizens by following them everywhere, listening to their private conversations, and compiling secret files on them,” he added.

“Tracking is also a national security threat. The Congress of the United States has asked U.S. intelligence agencies to study how information gleaned from online data collection may be used by hostile foreign governments to spy on individuals and on the activities of the security apparatus.”

Hoffman also questioned whether real-time bidding was actually legal under the EU’s GDPR rules.

“RTB is the engine that drives the bulk of online advertising activity and it may itself be illegal under the terms of GDPR,” he said.

“As I mentioned earlier, RTB tracks and broadcasts peoples’ online behaviour and location tens of billions of times a day in Europe without the informed consent of the individuals involved. I’m no legal scholar but it’s hard for me to understand how this can be reconciled with the intent of GDPR.”

Ad fraud, according to Hoffman, represents another legal quagmire that the adtech industry has found itself mired in.

“The total amount of money spent by online advertisers worldwide is reported to be about US$400 billion (almost AU$600 billion). Ad fraud is probably costing marketers tens of billions annually,” he explained.

“While there are dozens of types of ad fraud, much ad fraud falls into one of three buckets— fraudulent audiences, fraudulent websites, or fraudulent clicks.

“The way fraudsters take advantage of the vulnerability of the system is often by creating fake websites, fake audiences, and fake clicks. Criminals use software strings, called bots, to produce fake audiences and fake clicks. According to web security company Barracuda Networks, there is more traffic on the web from malignant bots than there is from human beings.”

However, rather than simply representing lost revenue and lacklustre campaign effectiveness for advertisers, ad fraud has a darker side.

“The World Federation of Advertisers has asserted that by 2025 ad fraud could become the second largest source of criminal income in the world, after drug trafficking,” Hoffman said.

“According to a report by the Incorporated Society of British Advertisers 80% of the websites participating in the programmatic ecosystem are quote, ‘not premium.’ Not premium is a nice British way of saying crap. And where does the programmatic ecosystem compile the data that it uses to feed these ‘not premium’ websites? From tracking.

“You might ask yourself, so if marketers are foolish enough to allow themselves to be cheated like this, why should we care? I think the answer is frightening. No one knows where all this stolen money is going. It is possible that it may be funding the activities of organized crime around the world. It is possible that it may also be falling into the hands of governments hostile to our democratic principles who are using it to undermine [the] governments that this Parliament represents.

“Think about it. If you were a bad guy and you could easily steal billions of dollars with very little chance of being caught and virtually no consequences even if you were caught, why wouldn’t you?”

Advertising funds the free internet but, in Hoffman’s mind, the problems that programmatic ads can bring are unnecessary.

“As I said at the beginning, advertising is necessary for the continued operation of the free web. But tracking is not.

“The problem is not advertising. The problem is tracking.”

At the moment, the US government is in court with Google, seeking to split up its various advertising businesses. This could change the face of online advertising forever.

“Everybody has known that Google was not running a transparent and fair auction platform business for a number of years and this lawsuit puts in shocking detail the level of nefariousness that was going on,” one ad exec told Ad Age on condition of anonymity.

Perhaps the music is about to stop for programmatic advertising.