After years of “pretending” it doesn’t exist, Facebook finally broke their silence yesterday in a press release announcing immediate action against advertisers that circumvent their review team in a practice commonly referred to as cloaking.
They also mentioned they would be teaming up with industry leaders (i.e. Google) to help combat the problem.
What Is Advertiser Cloaking?
Simply put, when an advertiser wants to advertise something on Facebook [or Google] that they don’t allow, such as a diet rebill, they’ll show the review team one page and end-users the “money” or “real” landing page.
Facebook was so kind to put together an infographic to help explain:
For many years, one could Google Facebook cloaker, and there was free software available to help malicious advertisers carry this out.
A simple Google search for “best cloaker” also reveals a number of different companies offering “cloaking software” to help avoid Google, Facebook, and other review teams in order to run malicious advertisements.
Most of these applications are sold as premium software as they analyze many different variables (in real time) to help determine if a click is coming from a reviewer or a real visitor. There is big money in cloaking!
The Dark Side Of Advertising
Back in 2008, I was fresh out of college running my Internet advertising business. Since 1998, I had been operating popular websites where I would sign ad contracts to networks who would sell my inventory to big companies.
As the economic climate in the United States began to deteriorate, I noticed a lot of the advertisements on my websites being replaced with “diet pills” and other direct-response products:
I was particularly interested as the “landing pages” for these products were “home made” WordPress blogs, nothing fancy.
How were these advertisers able to pay the same CPMs as fortune 500 companies?
Being the Entrepreneur that I am, I decided to get involved in this industry and see what all the fuss was about.
Long story short, I realized the ads I were seeing worked like this:
- Diet advertiser creates an offer (includes re-bill subscription, $88 every two weeks)
- Affiliate Network signs Insertion Order with advertiser (advertiser agrees to pay network $50 per trial started)
- Affiliate Network recruits “affiliate marketers” to place ads across the Internet on behalf of advertiser and are paid a commission per sale, trial, or lead generated. (network pays affiliate $35 per trial started)
The thinking behind this model is that if anything goes “wrong” with the promotion, the advertiser and/or network are protected as they can simply place the blame on the affiliate (i.e. they didn’t know they were using false testimonials, cloaking, etc.).
Therefore the ads I were seeing on my websites were being placed by affiliate marketers getting paid per action.
How much money is being made?
In August of 2009 I decided to attend a conference in New York City called Affiliate Summit where I was told much of the advertisers for these type of products attended.
Person after person, company after company, I heard stories of millions of dollars being made. From 15-year-old teenagers to rags to riches overnight, the success from these advertisements was mind boggling.
As simple $100 investment into buying ads, could be returned 10, 20 times with the right landing page and “hot offer.”
Doesn’t Facebook and Google know?
I’m going to go out on a limb to say both Facebook and Google know EXACTLY what has been going on for the last decade plus. They’ve simply turned their heads while enjoying the revenue.
At the Affiliate Summit conference in 2009, a high-ranking Facebook employee was there speaking to a room jam packed of advertisers, networks, and affiliates. I personally went up and asked him about the diet ads with his reply being, “Zuck fucking hates that shit.”
But he completely contradicted himself by promoting Facebook’s “newly” launched self-serve advertising platform to a room full of “that shit.” Facebook went as far as hiring ad reps that would share high converting landing pages / offer combinations to boost their revenue to affiliates on AOL Instant Messenger (pre-IPO obviously).
Facebook’s Cloaking Enforcement
Facebook has hired International law firm Perkins Cole to go out and “get” the malicious advertisers, networks, and affiliates.
Apparently they have quietly been watching and collecting evidence for many years against companies (all while still filing record-breaking revenues).
Rumors swirling around the industry that cease and desist letters have already went out to hundreds of responsible parties with many more to come.
With Google now involved, I’m sure we’ll soon be hearing from them.
Personally, I think it’s all one big “shake down” but time will certainly tell.
Ryan Gray is the founder and CEO of NameHero, one of the fastest growing independent web hosts in the United States. Ryan has been working online since 1998 and has over two-decades experience in Internet Entrepreneurship.