Digital advertising has a dirty little secret: huge amounts of the money spent by companies for their geo-targeted ads ends up being squandered.
Companies like Twitter offer targeted advertising, claiming “country-level granular targeting (by region, metro, postal or zip code).” That all sounds great, but the reality is often sadly different. In its recent 10-Q filing, Twitter went so far as to concede that their geolocation data is in fact insufficient for reporting and audience targeting purposes and often did not accurately reflect the actual location of a Twitter user.
This acknowledgement reinforces what we already know: that the system that Twitter is using for its geo-targeting, IP addresses, is both inaccurate and definitely not sufficient for most use cases, such as higher-priced targeted ads or know-your-client (KYC) processes.
This is critically important for Twitter’s advertisers to understand since Twitter sells premium ads that promise delivery to a specific geographic location, right down to a user’s zip code. This may not be a problem for large national brands, but if you’re trying to reach a highly localized audience, such as for a retail store, inaccurate location data means you could be marketing your shoe shop in Queens to a user now located in Boston. According to Advertising Week 360, “for every $100,000 spent on geo-targeted ads, $29,000 delivered impressions missed the targeted area and $36,000 ‘was possibly wasted’ as a result of insufficient location signals.” Not great ROI on your ad spend.
Ad-Fraud Exploits the Weakness of IP-based Geolocation
Beyond inaccurate targeting, fraudsters can also exploit other weaknesses of IP-based geolocation. As Dr. Augustine Fou, a leading ad fraud investigator writes in a recent article, “we are up against hackers whose job it is to hack your defenses and cover their tracks, so they can keep making tons of money by stealing from your ad budgets.” In fact, every year since 2016, there have been massive ad fraud schemes exposed that used spoofed IP addresses to steal billions of dollars from advertising budgets.
The scale of fraud being carried out today through inaccurate geolocation data logic is staggering, with one gang earning up to $5 million dollars per day from such schemes. As Forbes reports, “a group of Russian criminals are making between $3 million and $5 million every day in a brazen attack on the advertising market… [they] obtained hundreds of thousands of IP addresses and associated them with major U.S. internet providers so it looked like they were based in American homes.”
IP-based Geolocation Not Accurate for Reporting
When discussing its monetizable daily active users (mDAU), Twitter reports that “geographic location data collected for purposes of reporting the geographic location of our mDAU is based on the IP address or phone number associated with the account when an account is initially registered on Twitter. The IP address or phone number may not always accurately reflect a person’s actual location at the time they engaged with our platform. For example, someone accessing Twitter from the location of the proxy server the person connects to rather than from the person’s actual location.”
Furthermore, Twitter sees mDAU as a primary measure of its overall success. But as Twitter itself notes, often an IP address only registers the initial location of an account upon sign up, and does not change to that user’s location later on. Or, it can easily be spoofed using a VPN or proxy.
Spammers and Trolls Hide Behind Fake IP Addresses
But not knowing a user’s true location has even more serious consequences when it comes to enabling dangerous disinformation campaigns. Spammers and organized troll farms bank on the fact that their location isn’t properly checked or can be easily spoofed in order to launch disinformation campaigns on social media platforms. In fact, spam accounts are specifically mentioned in Twitter’s 10-Q filing, stating, “the actual number of false or spam accounts could be higher than we have estimated.”
The fact that companies like Twitter (and Facebook is no different) are still using 20th century technology for something as important as determining the actual location of their users shows how much education still needs to be done in the market. It’s not only to ensure that advertisers are getting the services they are paying for, but to stop spammers and trolls from exploiting the platform for organized and dangerous disinformation campaigns.
21st Century Geolocation from GeoGuard
At GeoGuard, we offer a full suite of geolocation solutions that go beyond an IP address to accurately locate a user using multiple data points in order to determine their true location. As proven by our customers around the world, the technology works. Twitter’s recent acknowledgement of the limitations of an IP address for determining a users location should remind every organization, from financial institutions and payments companies to social media platforms, that accurate, authentic and unaltered location data is a necessity in the 21st century.