Google Growing on Fumes: Something Is Rotten in the State of Online Advertising

“Google Bubble” getting ready to deflate?

By Sarunas Barauskas, co-founder at Kalkis Research:

A couple of months ago, I was going through Google’s newly released 10-K filing. The night before, we had had an argument with Philippe, the other co-founder of our start-up, about how ad dollars were fueling a new kind of economy. We realized we had no clue of who was making money, by what means, or how much. I just wanted to understand.

What mesmerized me were the sheer amounts of cash Google (ehm, Alphabet) was raking in: $75 billion dollars in revenue for 2015. For 2016, they’re set to generate as much as the GDPs of Lithuania, Latvia and Estonia put together. That’s six million people.

Another thing that was weird: how vague Google was about how they actually made all this money.

Their main metric, the cost per click (CPC), was a nonsensical aggregation of a wide array of user actions, from a click on an ad that could be worth as much as a few hundred dollars, to a video ad that wasn’t dismissed quick enough, an for which the advertising company would be charged a fraction of a penny.

Their SEC filings were full of statements about how Google was revolutionary and unique. They would go to extreme lengths to describe various non-essential parts of their business. But there was very little of actually useful information about the way online advertising worked. After all, it’s only the source of 90% of their revenue.

In our media database, Google has been mentioned in one-hundred-thousand articles over the last two years – that’s one out of every fifteen articles. If you tried to read everything Google, you just wouldn’t have enough waking hours to keep up with the information flow. No wonder people stopped trying to figure out what the company is really about. During every earnings call, analysts usually focus on CPC and user acquisition costs, and a few other nice-sounding, reassuring metrics that were created by the company itself.

Google’s earnings growth is also surprisingly smooth. The last time they’d had a major earnings mishap was back in early 2012. At the time, the company had scared the market by announcing that their CPC – the amount of money generated per “click” – had declined for the first time since 2009. Larry Page had explained that this was due to a “decline in ad quality.” I thought to myself, what the heck is an ad’s quality?

This was the first of an uninterrupted series of declining CPCs since then. The market cared for a few months, and then forgot about it, focusing instead on rising revenues and profits. Nonetheless, the fundamental shifts continued, behind the scenes.

I drew an n-gram of key word combinations used in articles about online advertising since 2007, to get the big picture of how the ecosystem evolved.


Most of the online ad space is bought on ad exchanges. Google’s own AdWords is an exchange, born out of the acquisition of DoubleClick back in 2009. Ad exchanges centralize all the ad space that’s available of blogs, websites, online video streams, and offer it to the highest bidder.

Most of ad space is also bought in real time. This trend started around 2009. When you visit a website that displays ads, it notifies potential bidders through the ad exchange about your visit, with some info about yourself (your web browser, physical location, browsing history, cookies). Each bidder then decides what to bid knowing your profile, and probable interests.

Real-time bidding is automated, a typical transaction is done in around one tenth of a second. To manage this process, demand-side platforms started to gain prominence around 2010. They are interfaces between human buyers and computerized ad exchanges.

Programmatic buying is an even more conceptual increment in the process of buying ad space, where algorithms bid for ad space as it comes up, according to a “macro” description of what they should buy, done by human traders. It started gaining traction towards the end of 2012, around the time Google’s CPC started declining.

The online advertising ecosystem has become more and more automated and complex, with more and more intermediaries.

Advertising agencies set up their own trading desks to buy ad space on behalf of their clients. Twenty years ago, when Nike would run an ad campaign, its executives could actually hold a paper issue of Men’s Health, and see their ad on page 23. Today, they are presented with a more or less detailed report on where the company’s ads were displayed, at some point, to some Internet users. No paper trail.

The effect of automatization is that it became much cheaper to do due diligence on available ad space. An algorithm can decide if an ad is worth displaying on some obscure website for a thousandth of a penny. Placing ads on low quality websites for a few cents a pop became economical. CPC declined, because advertisers started buying ad space on the low-end corners of the Internet. Online advertising has expanded into subprime ad real estate.

This expansion fueled three new trends. Ad tech companies sprouted, as new infrastructure brought down barriers to entry. The number of ads being displayed everywhere exploded, and in reaction, people started using ad blockers; available high-quality, prime ad real estate started to shrink, putting even more pressure on subprime.

Faced with ever-growing demand from advertisers to place ever more ads in this environment, intermediaries lost the incentive to effectively check if ads were being displayed correctly, and ad fraud exploded.


Listed ad tech companies provide much more details about the inner workings of their businesses than Google. Rocket Fuel, Millennial Media, Tremor Video, The Rubicon Project all mention “fraud” as a risk factor around a dozen times each in their 10-K filings.

Google never talks about fraud, which I found very surprising, especially since they went through a rough patch in 2013, with This startup revealed that a lot of Youtube ads were displayed to bots and never seen by human eyes, while Google still billed the clients for all of the “views.” Google bought the startup shortly afterwards, and the story never gained traction.

I got in touch with a friend of a friend who works in an advertising agency. What did he think of all this? Was I going crazy? Did people talk about ad fraud, did his own clients ask for reports of who was seeing the ads?

As it turned out, the system has become so automated, that just about anyone can pretend to manage an ad campaign. Twenty-somethings with no clue of how the system actually works buy ad space on behalf of their clients, who are just all too happy to be part of the trend. Display advertising is a big hit, because there’s no way to check if it works, so there’s no accountability.

With pay-per-click, at least you know if people who come to your website buy something. The industry pushes display advertising because more and more people browse the internet on their smartphones, but most of purchases are made on desktop. And it works, display has outgrown pay per click in the US, for the first time ever.

We’re living in the last months of the online advertising bubble. Everything’s out in the open, if you only care to look. Ad fraud has been covered by Bloomberg, Reuters, Fortune. The rise of ad blockers has been widely condemned by the media, because it hurts their bottom line. But somehow it hasn’t impacted Google’s revenues, which is very weird. Who is actually seeing the ads?

The moment the red line on the chart above breaks to the upside, and the media starts covering ad fraud more extensively, people will become aware of what’s going on. Companies will redirect marketing budgets toward more productive purposes, and then it’s game over for the ad industry.

Don’t get me wrong, Google will still be around. They have a core business that’s clean and effective. But they have to shrink down. By Sarunas Barauskas, Kalkis Research

You just think you own the device you paid for? Read…  Google Tells Customers “Ownership” is now an Illusion

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  54 comments for “Google Growing on Fumes: Something Is Rotten in the State of Online Advertising

  1. polecat says:

    “DO NO EVIL” my ass……….

    • NotSoSure says:

      You are still not getting it. When someone says “DO NO EVIL” that statement is directed to you and everybody else. The one who makes the statement understands VERY WELL that Evil pays and they are just afraid that you’ll do it too and make their profit lower.


      It’s the same with religious organization and everyone else that likes to admonish people with “Don’t do X”. Most of the time, they are the biggest violator of that rule.

    • Jonathan says:

      Almost nobody realises how insidious Google can be. Just because their services are free in the monetary sense doesn’t mean you not paying in another way like your privacy.

      Take Android for example. A “free” open source mobile OS for everyone, except that it is next to worthless without closed source proprietary Google Apps to lock manufacturers up into playing to the race to the bottom Android handset game while also locking users up as part of their personal data collection goldmine. The only end winner with Android is Google.

  2. Surfs Up says:

    “We realized we had no clue of who was making money, by what means, or how much. I just wanted to understand.”

    So do I. Can you rank the top five competitors from 2015 in the cpc ad space by revenue? It would clarify what google’s real business actually is.

    I don’t view google as being in advertising. They no doubt recieve large amounts of revenue from their spy satellites, spy e-mail services, spy street data (people and license plates not blocked out) and generic spy data mining services.

    Google is also scanning the contents of a vast number of public libraries for that day not far off when University deans can reuduce their overhead by closing down their physical libraries. (over course google will hold the keys).

    With ad- block and internet proxies I can’t see cpc ads as being the source of that 75 billion.

    • Sarunas says:

      I thought about it, but couldn’t find any clue anywhere that would suggest they monetize their data. We looked at companies who disclose their online marketing spending in their SEC filings, and their costs rose in line with Google’s revenues ( and the like). Ads seem to really be Google’s (practically) sole source of revenue.
      The feeling I get is that they’re making so much money out of something so trivial, that they need to rebrand themselves as much more sophisticated and savvy. Remember how banks hired most of star students out of university back in 2006, to work on stochastic modeling and the like? Same stuff is happening now in tech.

      • Homer says:

        “I thought about it, but couldn’t find any clue anywhere that would suggest they monetize their data. ”

        Google meets at the White House several hundred times a year. Doesn’t sound like something a lowly ad company does.

        Google satellites are now following everyone (likely in ‘movie’ mode. Forget snapshots, we’re talking movies).

        When Wolf exits his palatial home and gets into his porsche a Google satellite is watching. When he’s out sunbathing, they know when he’s got a tan and if he’s overweight. They know where he goes, possibly what he knows.

        Google is evil.

        • Wolf Richter says:

          I only leave my palace in SF in the middle of the night, and through the back door. Even then, I wear a big hat and dark sunglasses. I put my Android cellphone in my driver-less Porsche (a prototype, but who cares) and send it off to Nancy Pelosi’s house, in front of which it will park all night. Meanwhile, I go about on foot to do my business.

    • Wolf Richter says:

      Let me throw in my own experience, since I use the Google’s ad exchange (CPC ads): they pay Wolf Street Corp (the “publisher”) very little and they charge the “advertiser” (such as Nike) a whole lot. They keep the difference.

      That’s how CPC makes money.

      Now look at the numbers: WS is a smallish site, compared to the New York Times, for example. Yet Google places about 2-3 million ads per month on WS.

      That said, I used other ad exchanges and even an ad agency. And often times, we didn’t get paid at all … so Google, I think, is the cleanest dirty shirt out there.

  3. Jungle Jim says:

    I am annoyed by two things. First the sheer number of ads, and secondly the poor quality of the ads. They are not much better than spaghetti code. As they load they can slow my set down to a crawl and on occasion have hung my set up. Advertisers complain about ad blockers, but they are the ones driving the adoption of blockers.

    • walter map says:

      “As they load they can slow my set down to a crawl and on occasion have hung my set up.”

      They’ve fixed that by slowing your set down a crawl and hanging it up after the ad has loaded. That way you’re more likely to see it.

      You might like to scan your system to see how much adware and spyware you’ve been accumulating.

    • West says:

      The worst part is paying for a subscription to a site, and it still comes with ads.

      Has anyone noticed that lately many web pages have a lag, that causes an ‘inadvertent ad-click”. So it looks like I’m watching an ad, when in reality I accidently clicked it, and have already made a mental note not to support companies that resort to such campaigns.

  4. SN says:

    Watching a big blue advertisement right in the middle of this article saying:

    Welcome new customers with an Ad on Google.
    Get Going Today

    • Wolf Richter says:

      The infamous “Google sarcasm.”

      On one of my articles are few years ago about Fukushima, one of the readers saw a sushi ad … and sent me the screenshot. Priceless!

      • alexaisback says:

        . The adds are effectively worthless. I have never understood it.
        I like to read so I rarely if ever listen to an add or watch the video….

        I turn the volume off and read the articles. If not in writing I do not watch it I click it off..
        . If I watch a utube it says click in 4 seconds, I click it every time never pay attention to the adds..
        If anything the adds make me angry if they slow the loading, so those with complex ads may not only get ignored they may get blowback. Frankly if it is slow in loading I do not bother I click it off, I dont have time to read everything anyway.
        . I understand Google makes money because business Must advertise, they must make the attempt, but does anyone ever pay attention to them, –

        Yes, the elderly when you put a hurt kitten or dog and tears.
        Not so much other than that.

        • Sayldog says:

          More like the Millennials when you put up a hipster in skinny jeans, because…you know…the elderly are confused by tech.

  5. walter map says:

    “Another thing that was weird: how vague Google was about how they actually made all this money . . . They would go to extreme lengths to describe various non-essential parts of their business. But there was very little of actually useful information about the way online advertising worked.”

    I would suggest that if you can’t tell how they’re making their money that perhaps they are not making as much as they would have you believe. It also could be significant to note that Alphabet has been buying back shares and does not pay a dividend, neither of which is particularly reassuring.

    “They have a core business that’s clean and effective. But they have to shrink down.”

    Perhaps, but how much? If it weren’t for the stock buybacks one might venture a short opportunity.

    I’m distrustful of the fact that some of these big tech companies, like Alphabet and including Facebook and Twitter, operate on business models based one way or another almost exclusively on marketing in a stagnant economy, producing neither a tangible product nor providing a conventional service, which means external metrics could be very limited, in addition to that certain lack of transparency.

    Thank you for bringing this to my attention.

    Alphabet is buying back it’s stock and does not pay a dividend.

  6. Chicken says:

    Wouldn’t surprise me if the sum of all their earnings exceeds global GDP….

    • mark says:

      Given companies like Alphabet and Facebook sit on billions in cash, what is to stop them using some of the cash pile to pay for clicks for ads they place for big brand advertisers. This then convinces the advertiser to spend more and all the while ad revenue appears to go up. All that really happened is they cycled their cash and subsidized a preferred brand name. Not saying this is the case, but whats to stop it. Might explain why these guys seem to increase revenue when the economy isnt growing.

      • Yancey Ward says:

        Nothing prevents it. Nothing.

      • NYcjeff says:

        Why would they pay? They have plenty of computers and programmers. They can run their own scripts to view and click the ads

  7. NLK says:

    Interesting read, especially since online advertising in and of itself doesn’t work. There was a study not too long ago that discovered online ads only work on people who have never seen them before.

    As for Adblock, media can shove it with their griping. Online ads are often riddled with malware that can do all sorts of nasty things. Adblock is essential if you want to keep your stuff safe.

  8. Phil says:

    I’ve been deep in the seo/sem space since the beginning and can tell you it’s a race to the bottom now. Click/view fraud is 100% real, only getting worse, and google hides this from advertisers. Adsense just rolled out new mobile ads to get around adblockers but it’s too late and ad blockers find ways to stomp them out anyways…bottom line is the money is now in native ads…this includes the outbrain type shady networks and the fb/LinkedIn/etc…at the same time if you know how to bottom feed on Adwords you can still do pretty well running arbitrage type business models..but it’s not as easy as it once was by any means.

    • Petunia says:

      I have an ad blocker and haven’t seen a political ad this entire election cycle. I wonder if the political campaigns have a clue that their money is not reaching the voters. I also wonder what the political ramifications of the ad fraud will be on the election. Between the ads not being seen and the queries potentially being modified, it must be having some sort of real impact on the races.

      • polecat says:

        Yeah ….I enjoy seeing the two legacy parties waste millions of $$ trying to capture an increasingly pissed-off public that won’t buy in to their schtick !!!

        …and yes…why waste time & frustration w/ obnoxious boggy ads….. block them out….

    • CrazyCooter says:

      I consulted a few times at companies that had “agency” as part of their deal, but never learned much about it … I am sort of a software plumber and avoided all the folks with action figures adorning their cubes … you posted ….

      bottom line is the money is now in native ads…this includes the outbrain type shady networks and the fb/LinkedIn/etc…at the same time if you know how to bottom feed on Adwords you can still do pretty well running arbitrage type business models..but it’s not as easy as it once was by any means.

      …. and I would really be curious to hear you expand, because I don’t know those lingo bits enough to follow all the way through the thoughts you are posting. Native ads? Outbrain? and arbing the systems (even if the example is simple to make a point)?



  9. phil m says:

    ” Companies will redirect marketing budgets toward more productive purposes, and then it’s game over for the ad industry.”

    Not sure what the author has in mind as far as more productive purposes. In the digital ad space, display tends to be ” the lazy marketers” approach, much akin to running print ads ( who looks at print ads, who knows).

    There are some legitimate points made here but I don’t see armageddon around the corner for the digital ad business. The NYTImes reported they lost $14 million this past quarter. It’s a complicated situation but I don’t see traditional media stepping in here as viable alternatives.

    • MC says:

      The global advertising pie has stayed remarkably stable for the past few years at about $250 billion. Of this Alphabet takes a $67 billion slice and Facebook another $17 billion slice. That’s about one third of the worldwide advertising market in the hands of just two companies.

      Now, the reasons why the worldwide market has stagnated in such spectacular fashion are many, but two stand out above the others.
      The first is that advertising just doesn’t cut as it used to. Firms have no incentive at increasing their ad budgets if they know nobody will pay attention.
      The second is that on average prices have been dropping like a stone, because sellers (ad agencies/intermediaries) have multiplied while buyers (firms with something to sell) have become more cautious in spending more money for a service/product that doesn’t work as it used to.

      In turn this has led to a drop in ad quality. To offset the lack of effectiveness, ad campaigns have taken a “carpet bombing” approach. Even Alphabet, which has long prided itself in aiming advertisement in efficient fashion through their sophisticated algorithms and pervasive data mining, has taken at simply plastering ads in the hope somebody will click like the USAF plastered the Ho Chi Minh Trail with bombs in the hope of stopping the PAVN.
      That’s why a 16-year old girl looking for makeup tips will see an ad for automotive water pumps and why a 50-year old man looking for laptop reviews will see an ad for wholesale plush toys.

  10. Intosh says:

    This article summarizes nicely Silicon Valley’s best kept secret. Online ads is so opaque and complex, it’s like the CDS, MBS, CDO and other black magic derivatives of the financial sector.

    However, I don’t think we are living in the last months of this. Ads money are shifting to mobile ads and mainly Facebook is reaping the benefits of that trend. So the smoke, lights and mirrors are still up, it just moved to another theatre.

  11. Kasadour says:

    So, not only do we have Internet ads that generate no sales (no conversion), we have Internet ads that are displaying to nobody! And companies are paying for that– apparently not for much longer. Haha. Amazing. I wonder how this will effect Facebook? Facebook could charge for its services I suppose, but then people would flock to one of the other 1000s of free social media platforms. Nobody is going to pay a service fee for Facebook.

    This will get interesting.

    • Jonathan says:

      There’s also the matter of users adblocking the shit out out of their Internet thanks to malicious ad networks that no provider seems to bear any responsibility to secure and ads doubling down on being as obnoxious and resource draining as possible. I saved well over 40% of my mobile data bandwidth on my iPhone just by adblocking.

    • CrazyCooter says:

      It has been mentioned in blogs lately that FaceBook ads on the desktop have all but gone away … and mobile is a bitch to get traction with ads …



  12. Petunia says:

    The most interesting thing google has done lately is to wall off all the different lines of business with the new alphabet corporate structure. They are getting ready for the day when they have competition in the search area. If it wasn’t for search they wouldn’t have any value. I guess they are using all the buybacks to extract whatever value is there, waiting for that day.

  13. NotSoSure says:

    Facebook is still going strong though. Would love to see that House of Cards tumbling down.

  14. chris hauser says:

    they have a very good search engine, and i like youtube.

    can’t say i look at ads.

  15. polecat says:

    In America…search engine searches you….

  16. Yancey Ward says:

    I have always just assumed I must be incredibly different from most human beings who read and work on-line- I literally pay zero attention to any ad on any site. I am probably mistaken, though- it is quite likely most people are like me, which means most ads are worthless. I suspect most print ads were also worthless for the most part, though they at least had the option of being full-page as you leafed through a periodical.

    • Nycjeff says:

      Your brain pays more than zero attention, even if you think you pay zero attention. There’s lots of research about this, even with traditional advertising.

    • Petunia says:

      I still subscribe to a woman’s fashion magazine and it is only for the ads. I like to see what is going on in the high end world of fashion. It’s entertainment for me. I have not transferred my subscription to digital because digital magazines are not as visually useful. You can’t always expand what you want to see on the magazine page and the average page doesn’t show enough detail. This may be one of the problems with online ads, but I don’t see that many, so I am not sure if this is one of the reasons they are ignored.

  17. Thomas Malthus says:

    Facebook is the WORST!

    We tried a campaign once — our entire budget was burned through — lots of clicks – NOT ONE SINGLE LEAD.

    If anyone wants to bust this wide open try this:

    – allocate a couple of hundred dollars to a few campaigns

    – set up campaigns that should generate no clicks e.g. target 15 year old Syrian girls living in any small town in the US with an add for mens fedora hats (dream up a few others ones like this so you have a few case studies)

    – then monitor the campaign and see if you generate clicks

    I guarantee you that your entire budget will be used up. Then publish this on the PR Wires

    • dogeatdog says:

      I knew Facebook ads were a scam when they snailmailed me a “$500 credit voucher” right before their IPO- not $10, $25, or even $50… $500 in free ads! They must have bought a mailing list of Google /Bing/Yahoo advertisers for the mass mailout.

      I threw the voucher in the trash.

  18. Lars says:

    It wouldn’t surprise me to find that Google, like hole-in-the-wall Italian restaurants who’d do 2 or 3 million dollars a year gross – in laundering money for the Mafia, is using the sham of online ads to launder money for the CIA or NSA or whoever it was that initially put up the bulk of their startup money.

  19. ML says:

    Having a professional interest in the subject, I like ads. Good or bad all the same to me. The interesting thing about bad ads – bad and good are subjective – is that someone thought it worth spending money, time and effort on thinking it up so presumably expected the ad to be worthwhile. Either that or the company is making so much money that a bad ad is simply a legitimate way to reduce profits.

    My biggest complaint however is when using an ipad or smartphone and scrolling to read an article I have to be especially careful where I rest my fingers or else I could touch an ad on the right hand side of the screen whereupon I am taken to some irrelevant content.

    As for advert tagging, which I describe as stalking, have a look at Adobe’s latest wheeze of software that tracks the viewing/buying habits of people using different devices so that ads can be better targeted. Invasion of privacy par excellence!

  20. MC says:

    I just wanted to thank Mr Barauskas for the excellent article.
    By the way, it sounds like a Lithuanian name. ;-)

  21. unit472 says:

    I sometimes wish I could go back in time when I had dial up and no ads because no one had figured out how to monetize the Internet. It kept computer criminals at bay too since there was no reason to infect someones computer unless you wanted to read their e-mails an I’ll gladly share mine with anyone who is interested.

    The internet ‘security’ companies don’t work either but they continuously annoy me with the pop ups and attempts to scan my computer. Some way has to be found to secure computers otherwise the internet, as a commercial platform will die. Who wants to have to pay for some company like Lifelock that can’t prevent someone from stealing your password to your bank or brokerage account but only promises to ( maybe) alert you after the fact!

    • Petunia says:

      There is no such thing as security on the internet. The security companies can only monitor or tag a site for being dangerous. The way they intend to make all of us secure on the internet is by selling us insurance. For a price they will insure our losses. That’s the best they can do.

  22. unit472 says:

    Oh I also hate those ‘reCaptcha’ I am not a robot that have become ubiquotous now to gain ‘permission’ to access a website or the ‘fuzzy’ words and numbers others use for the same purpose. Even government agencies require them now… God help the elderly or those whose vision is impaired!

  23. Brian Richards says:

    Because of the incessant ads, and ignorant, hateful language, I dropped Facebook a year ago. Likewise, Zerohedge. I quit Kitco, and several other websites months ago because of pop up videos (which could not be exited) or ads for certain stock brokerage companies, which likewise, didn’t respond to mouse clicks on the “X”. I make an effort to leave negative feedback for all the advertisers. This was an interesting article, although I can’t fathom all the new language. The internet is becoming its own worst enemy I’m afraid.

  24. truthalwayswinsout says:

    Google is single-handedly responsible for the decimation of small business in the US.

    Its page rank system has no relation to the real world and hence anyone who starts a business that has a real location with real workers is at a massive disadvantage unless you play the Google page rank game and spend $200K per year to rank high on Google so people find your business.

    They have already destroyed new business formation and soon the cascading effect will make us into a third world country.

  25. dogeatdog says:

    I agree something is fishy with google revenues since the rise of adblockers and smart phone web browsing.

    My google adsense “pay per click” bill has dropped 80% over 5 years,
    It seems internet ads were on an up cycle until 2012 and are now on a down cycle – Less publisher $ = fewer publishers = less eyeballs for ads = fewer clicks.

  26. ML says:

    It is not compulsory to have a website for a business and I know of plenty very successful businesses that don’t. Where many businesses go wrong is in thinking they need a website not because they do but that it is expected they should.

    This article and the comments are very interesting. Thank you for sharing your gripes. I shall incorporate the gist in the content I am writing for a new website. Which based on my track record so far I expect to go straight into the top 5-10 search results without any ads on it.

  27. NickCarraway says:

    I’m surprised anyone would try to advertise on FB given that they apparently do NOT allow third-party verification of their auditing practices. Apparently they have guys out in the middle of nowhere adding 600,000 likes BY THEMSELVES to various suckers — er, that is, advertisers, who paid handsomely for the privilege.

    A quick GS of “Facebook Fraud 2.0 Zero Hedge” will get you pointed in the right direction.

  28. NickCarraway says:

    Or, you can read a similar article about FB on Business Insider: THIS MAN’S $600,000 FACEBOOK DISASTER IS A WARNING FOR ALL SMALL BUSINESSES


    Recently, however, Brar has fallen out of love with Facebook. He discovered — as Business Insider reported recently — that his Facebook fanbase was becoming polluted with thousands of fake likes from bogus accounts. He can no longer tell the difference between his real fans and the fake ones. Many appear fake because the users have so few friends, are based in developing countries, or have generic profile pictures.

    At one point, he had a budget of more than $600,000 for Facebook ad campaigns, he tells us. Now he believes those ads were a waste of time.

    Brar’s take is a cautionary one because Facebook has 25 million small businesses using its platform for one marketing purpose or another. Many of them are not sophisticated advertisers — they are simply plugging a credit card number into the system and hoping for the best. This is what can happen if you don’t pay careful attention to contract language, or the live, real-time results your campaigns on Facebook are having.

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