It's time to short the advertising industry. This industry is being held up by shady inventory and fake users, and we need to acknowledge this before we can make a change.
One of my favorite movies is The Big Short, a great concept that explains exactly what happened in 2008 and led to the greatest financial collapse in decades. The movie is about how three different firms got wind that the housing market was being held up on faulty loans. They decided to short the housing market, thus making millions of dollars for themselves and their clients. Basically, the banks got greedy and kept lowering the bar for people to buy houses. This allowed mortgage brokers to sign more loans by attracting people who were not financially fit to own a home. They kept scraping the bottom of the barrel until the whole thing collapsed.
One of my favorite scenes is when Steve Carell’s character is talking to a couple of mortgage brokers down in Florida, doing their research to short the housing market. He was talking to the brokers about how many loans they sign each week -- it turned out to be an obscene amount. The brokers were going after N.I.N.J.A prospects: No Income, No Job and No Assets, as those were the easiest targets. Carell’s character pulls his crew to the side and says, “I don’t understand. Why are they confessing?” His colleague had to tell him they weren’t confessing, they were bragging.
I see something similar happening in the advertising industry. The advertising agencies are the banks. TV networks, Google and Facebook are the young, cocky mortgage brokers. And the business owners are the American people who will end up holding the bag. I’ve been concerned for a few months, but it really hit me after reading WPP CEO Sir Martin Sorrell’s words about a 4 percent decrease in revenue growth in July for WPP and his own concerns about fake news. This thought came up again when AdWeek reported on a census fiasco with Facebook.