For almost as long as the Internet has remembered stuff for us, Google has been the kingpin of the ad mob. Its capo di tutti capi. It’s odd to write this. Google has honor. In the same way that Don Zaluchi had honor in the Godfather. Sure, I sell drugs. But… “I don't want it near schools! I don't want it sold to children!” There’s a line demarcating the bad from the truly awful that even villains won’t cross. As bad as the ad world is, it’s not truly awful. This isn’t a story about ads. This is a story about the new Don in the ad mob and ad’s further descent into dishonor.
No one starts life as a mobster. Google didn’t. They were that nerdy kid that backlinked webpages to make a better search. Something happens that gives you a taste. For Google, it was buying AdSense. It was easier to sell ads about searches than to get people to pay to search. That made them part of the syndicate and they can’t opt out. A little bad stuff leads to more bad stuff. And more.
Google commits fraud. Lots of it. Google has been busted for fraud so many times they can slice garlic nice and thin with a razor for that sauce the Goodfellas are making.
Ad fraud was $84B industry in 2023. For ref, that’s 3x more than the $26B spent on spent on all connected television (CTV) ads. We have a war on the $400B annual illegal drug trade so the police could bother 2Pac. But we don’t have a war on the $84B illegal ad trade. Because we’re all in on it.
Ad fraud exists because everyone in advertising is in the ad mob. From the CMO of P&G who spends billions on ads he knows are sketchy to the entry-level person who just started at a HoldCo who pushes paper, we know the numbers don’t make sense. We know. But we find ways to dissemble, obfuscate, explain it away. Or, worse, find some scintilla of data that makes the impossible plausible. Trillions of impressions. Billions of engagements. Profoundly positive ROI on any dollar spent on any thing.
It’s easy for me to pretend I’m not part of the problem. Watch. I live in a world filled with ads. And, I think I know how they work. But I have no clue. Yes, I know that advertising is built on a shaky foundation of informative bits the Internet’s forensic scouring services glean about me. And, that it uses that — sure, what the hell, “data” — to choose which ad it will jam above the results when I search Google or how Meta decides to remind me to buy luggage after I’ve come home. Every fourth grader who reads Bob Hoffman knows that. That’s just the part of the ad world that’s exposed to light. The part I see. Most of it, the vast majority of the way ads work, is buried so deep in the murkiest shadows that even the people I know who know how ads work tell me, “I have no idea how ads work.” So, I’m absolved. But I’m not. I’m complicit.
Not to go all Ricky Gervais at the Golden Globes, but I’m in the ad biz and I’m complicit. I take the da-cream and da-clear to play in da-bigs. Forgive me Bob Hoffman, I have knowingly allowed bad traffic into my network and cherry-picked the best stats to sell my offerings.
There are some lines even Google never crossed. Google wouldn’t pay us to watch ads. Google wouldn’t link our device identifiers. Some choose to believe it’s because Google has a scintilla of decency. I prefer to think Google doesn’t do worse stuff for same reason Don Corleone didn’t go into the drug trade. He made enough money running numbers, selling protection, and controlling prostitution. And he knew, “Even the police departments that've helped us in the past with gambling and other things are gonna refuse to help us when it comes to narcotics.”
— END OF APPLE OVEN I —
There’s a new Don in the ad mob. It does things that’s making Google blush. The first time I read about it was when Lee Elliott wrote about it a couple of years ago. I’d never heard the name spoke. I guess it was like Voldemort. My brain chose to pronounce it “Apple Oven.” Apple Oven. It conjures up images of baked apples dripping with brown sugar and cinnamon. Which reminded me of my niece — who loved making them when she was a kid. An oddly happy image to go with this slimy story.
To be fair, I didn’t pay much attention to those early posts. Mostly because Lee’s incredible insights into the ad tech world are well beyond my understanding. Stuff like, “If you don't have your own valuable inventory, the ‘value’ of your data drops significantly.” POW! He understands what he sees when the kimono is open. I just point and chuckle.
I ignored lots of posts about Apple Oven for a long time. Then I read this…
“something, something, something, Google is getting worried something.” Normally, I gloss over statements like this. Too often they’re from a stock analyst like Henry Blodget trying to insinuate himself into the conversation by making outrageous claims that Amazon was going to be worth a fortune. But this cautionary note was from Catherine Perloff — the best reporter in the ad-media biz. So, I read the somethings.
“The mobile app ad company's rise has been facilitated by flouting privacy norms.” Google is so worried about a new player on its turf that it’s flouting its own privacy norms. And doling out cash for cloud credits.
No one starts life as a mobster. Google didn’t. Apple Oven didn’t. When it went public in 2021, AppLovin (its real name) billed itself like Roblox. A portfolio of game apps. AppLovin raised $2B to invest in new gaming content. Like Netflix, they said, original content would give Apple Oven more signals to improve recommendations.
Games are hard. I know. I built a game with/for a friend that has shown about 43¢ worth of ads. You know what’s less hard? Putting ads on other people’s games. In February, Apple Oven sold their pgames. For $800M. I only point this out because investors valued Apple Oven’s games at $26B when the company went public. That’s an awfully big write-down.
Google got into the ad business when it bought AdSense. Apple Oven learned how to measure how well ads work in games when they bought Adjust in 2021. Four years later, they were hooked on advertising. The stock was up 700% last year. In the first quarter of this year, ad revenue was up 71% and earnings (ok, adjusted earnings) were up 83%. It’s almost too good to be true.
Too good to be true. The words were in my head when I had lunch this week with my other ad genius friend, “Dave.” I asked him what he thinks of Apple Oven. “One thing I've learned about digital ads is that if it seems too good to be true, it is too good to be true. Apple Oven’s rapid rise likely has something a bit sketchy behind the scenes powering it.”
He sketched a picture on the napkin. I wish I had kept it. Companies in China and Vietnam makes lots of games. Then they generate a ton of fake clicks on ads services put in their games. It costs them next to nothing he explained. Apple and Google know there’s a problem but can’t keep up. Even if they block most games some get into the App Store or Google Play. They can generate hundreds of millions of clicks in the days before Apple or Google can shut them down. By then, there are even more games.
“Mobile gaming inventory is dumpster fire of fraud, accidental clicks and incentivized traffic (watch this 6 second ad to get an extra life in Candy Crush). All the direct response advertisers I know have horror stories of getting burned by mobile gaming traffic.”
Advertisers know this. But, hey, we’re complicit — remember? We know game app ads are truly awful. We know. We just need a scintilla of data that makes the impossible plausible.
That’s where Apple Oven comes in. They run numbers and a protection racket. They can tell advertisers that ads work in game apps. They get bad goods from the Far East and get the West to pay for it.
I was beginning to get it. Now, I needed Lee. I asked Lee for an incredible insight. I got 2500+ words, charts, and a lot of funny takeaways. Far too much for me to drop into this. Lee if you’re reading this, publish it somewhere.
I’ll cut to his chase scenes as best I can interpret them. Data (from Singular) shows Apple Oven is great at placing ads in games. Less great outside games. You could look at the glass half full and say they’re just getting started. Lee short circuits that. Even on Android devices “the paradise for janky attribution gaming and weird grainy ad serving platforms,” Apple Oven is outside the top five ad networks. So, it hasn’t moved upmarket from games.
“When you hear that Apple Oven is courting e-com products, think about the potential falloff in their effectiveness of their ads over that gulf, going from digital freemium dopamine software to a physical product that costs money.”
It took me five reads to get that.
Apple Oven can show advertisers good numbers when fake audiences are forced to watch ads on fake game apps. It’s going to be a lot harder to get realer audiences to watch real ads in real apps.
As they move upmarket, Apple Over is going to have compete with Google and Meta. “How do you think a company that falls into the chasm between an ad where a half-naked cartoon lady vomits on a cat and the cat turns into an unlicensed cartoon Donald Trump and an ad for legitimate ride sharing service Uber is going to trying to cross the chasm that involves someone being generally compelled by your ad and remembering your product for months or years?”
— END OF APPLE OVEN II —
At the end Part I, Google told us not to ask about their business. Well, tough. The DOJ is all up in their business now. Part II is the long, drawn-out prequel/sequel. I don’t care who says it’s better than I. I insist that it’s not. Grab your popcorn because here comes Apple Oven III — the underrated sequel to cash in on the franchise value.
Look, it’s not like the Dons of this era were nice. They censored true information, they amplified bad information, they allowed misinformation, they lied about their performance metrics — repeatedly.
Here is an egregious example from just a few hours ago. Posted by the CEO of Heat Initiative, Sarah Gardner. The not-for-profit aims to stop platforms from abusing kids.
Two moms created avatar Instagram accounts — registered as 13-year-olds — to see what the platform shows kids. No followers. No history. Just the algorithm, doing what it does. Within three hours: their feed was racist content, sexualized content, and promoted drugs and alcohol. Platforms hit kids with a raw, unfiltered stream of influence the moment they sign up. Feeds for adults are shaped by years of history and behavior.
No, the Dons of Facebook and Google and TikTok aren’t good guys. And even they had lines they wouldn’t cross. The next generation of Don’s have even more questionable ethics.
Like an aging Michael Corleone in Godfather III, Google is beginning to realize crime is pointless and its time to go legit.
Google is quietly shutting down the services it let third parties use to bring traffic to its network. They knew they traffic was low quality. They knew. But traffic is traffic. So, as long it wasn’t truly awful, they allowed it.
That leaves the lower end of the ad market to new Dons. Ones who don’t have the honor Google did. Ones who will sell drugs to anyone. Even near schools. Even to kids. Whatever line was in place that separated ad players from being bad to being truly evil is blurring.
It’s time for everyone in the ad world to take a moment to catch the last seconds of Ricky’s monologue. If hearing, “If ISIS started a streaming service, you’d call your agent,” doesn’t put you back on the straight and narrow, may I suggest, “I won’t do more evil than Google used to do.”
