These are your ads on Methbot…
The Hustle
Wed, Dec 21
Textbook 10 foot wall, 11 foot ladder situation
Ed Snowden, eat your heart out. The computer security firm White Ops released a detailed investigative report on the largest digital ad fraud operation to date.
Ominously dubbed the Methbot Operation (after the word “meth” that appears in the code), a group of Russian hackers appears to be making $3m to $5m a day by showing real video ads to fake people on fake websites for “real” clicks. Stay with us…
Here’s how it went down
See, to pull this off the meth heads needed to meticulously reverse engineer the ad-quality verification process to pass the fake views and clicks off as legit.
Step one was creating over 6,000 domains with 250k unique URLS that looked, at least on the surface, the same as major publishers like ESPN or Vogue. This, in turn, tricked ad-serving algorithms into sending them the most profitable video ads.
After that, it was a matter of building up a data center of 570k bots connected to hundreds of thousands of IP addresses to “watch” the ads, move the mouse a little, and click on the ad.
Heck, these bots even had social media login info.
So, what’s the damage?
White Ops estimates that the Methbot campaign watched upwards of 300m video ads per day, making an average of $13.04 per “view.” That adds up to about $4m each day of American advertising dollars going directly into the hackers’ cargo shorts.
According to a 2016 study White Ops released with the Association of National Advertisers, this type of digital ad fraud cost $7b in 2016.
Clearly, it’s a big problem as more and more advertisers turn to the web, but who knows, maybe there’s a small village in Russia that’s really into Coors Light, Mailchimp, or whoever else is advertising a lot these days.
Can’t knock their hustle
Walgreens and Rite Aid dump stores on a dark horse
Specifically, a dark horse by the name of Fred. In an effort to push their $9.4b merger through the Federal Trade Commission (FTC), Rite Aid is unloading 865 of its stores on Fred’s Inc., a struggling regional chain based out of Coldwater, Mississippi that’s gone “all in” with $950m cash for the locations.
Unfortunately, it’s not looking like a great bet.
Not playing the long game here, Fred
The chain had only $5.7m to its name prior to the deal which, just doing some mental math here… is a lot less than $950m. So they’ve pledged virtually all of their assets as collateral and secured a $1.65b loan.
You know that time in the Texas Hold ‘Em tournament after one too many beers when there are two clear frontrunners and one dude with like four chips left? That’s Fred. And he’s slapping down the mortgage on his house with pocket 2’s saying, “double or nothing.”
So where’d they get the backing? From Bank of America Merrill Lynch, the same company advising Walgreens on the transaction, of course. They’re that guy in the corner saying “do it, I dare you.”
But, poker metaphors aside…
Fred’s more than likely in for one heck of a reality check once the merger goes through.
Unloading assets in the final hour is a pretty shady practice for a couple of companies trying reeaally hard not to look like a monopoly. And Fred’s seems to have no problem being their pawn in exchange for a short-term boost.
Thanks a lot, Fred
Uber is bleeding a ton of cash
About $2.8b in 2016 to be an “exact estimation”. That’s according to a new story from everyone’s favorite paywall, The Information, claiming Uber lost a whopping $800m in Q3, adding insult to the $1.27b they already drained in the first half of the year.
But save your tears because $2.8b is a drop in the removable ashtray for a company who was most recently valued at $68b.
Is this type of reckless spending ever going to stop?
Definitely maybe. See, like most other “startups” out there, Uber is totally ok with losing money for the sake of growth. That’s exactly why they raised $8.71b in the first place.
And, while it’s never a sure thing, this type of bet is one that usually pays off when companies are dominating a specific market.
Take Amazon, for example, who refused to turn a profit for their first decade, instead deciding to invest as much money as possible into R&D rather than stuffing their pockets with cash.
Or in Uber’s case…
Leaked documents show Uber paid drivers $2.72b in the first half of 2015 so, more likely than not, they’re spending all their money now to gain market share and wait for self-driving cars to hit the road.
Kind of like how Netflix limped along mailing people DVDs until the internet got fast enough to stream.
Uber’s big bet is that once all the regulations and technology catch up, their biggest costs will drop and the competition will be so small that they’ll have a virtual monopoly.
So now, when your friends say Uber’s a sinking ship that’s losing tons of money, you can tell them it’s all part of the long game and to be patient. Then slowly nod with a weird smirk to make it seem like you know something they don’t.
Because now you do
Save the suits
There’s a rescue operation going on in Japan, but it’s not saving puppies, it’s saving businessmen. The Institute of Social Human Capital in Tokyo is a business school focused on rehabilitating former “salarymen” (white collar workers) after years of being part of the corporate machine.
It’s a lot like cult “de-programming”
Aka, teaching them how to think for themselves again. Many of the institute’s attendees have spent so much of their lives at companies that value mindless loyalty over individualism that they must be taught to rely on their own instincts again.
Japanese business culture, in particular, is deeply rooted in hierarchies based on seniority, rather than performance. Traditionally, employees are hired for life, with the expectation that your salary will increase linearly with years served. Not much incentive to challenge the status quo.
Best mid-life crisis ever
The good news: The damage is reversible. Sure, it takes some time to retrain (about five months for a full recovery), but people like 45-year-old Hiroyuki Ito are taking the opportunity to pursue completely new careers that give them a renewed sense of adventure.
Thankfully, it seems that this hamster wheel way of thinking is going out of vogue. Say what you will about today’s young professionals, but they do know when to take risks on things that matter to them. And, they’re creating a counter-culture movement that transcends the generation gap.
It’s not a phase!
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