One of the more entertaining stories of the day has to do with the crackdown by Instagram to purge millions of fake users, in the process exposing "celebrities" who were such only thanks to the excessive purchasing of followers, but worse, once again revealing that on the margin, the biggest growth for social media services such as Instagram, Facebook, Twitter and so on, continues to be from fake accounts originating at shady clickfarm spin offs, whose only job is to collect modest fees in exchange for "following" or "liking" with non-existent accounts that will never engage with the user, or with advertisers.
Here is what the NYT said:
This week, we got a look at just how many junk accounts there really are on Instagram, the four-year-old photo and video sharing service owned by Facebook. In what has been called the “Instagram Rapture,” the company is deleting all the accounts it had previously designated as “spammy” from the follower counts of its users. And for some high-profile accounts, a lot of users have been vaporized.
No account has lost more users than Instagram’s own main account. More than 29 percent of Instagram’s followers, or 18.9 million users, disappeared from Wednesday to Thursday, according to a graphic of the top 100 Instagram accounts compiled by Zach Allia, a software developer.
Celebrities also saw millions of followers vanish. The singer Justin Bieber lost 3.5 million fans, or 15 percent of his total, according to Mr. Allia’s calculations. Kim Kardashian lost 1.3 million followers, or 5.5 percent of her fan base on the service.
It's not just the service used by people to share artistic images of their dinner: every other comparable outlet, where popularity or punditry is determined by followers, shares or likes is subject to the same rigging. A rigging so pervasive across the entire social media industry, that advertisers will have no choice but to notice, as every day they blissfully keep their heads in the sand costs them million in lost revenue.
Here is the math: according to Adweek, bot fraud, digital advertising's albatross, will suck $6.3 billion from the industry next year, according to a much anticipated report highlighting the threat from the Association of National Advertisers and WhiteOps.
Needless to say, this is important to very important for the likes of Facebook, Twitter and others, whose revenue and cashflow is entirely driven by projections of future ad spend by their clients, ad spend which will implode when after several years of being ripped off by robotic, inert eyeballs, the ad-spend budgeters decide they have had enough of being ripped off by bot farms, and put social media spending on hiatus until the social media outlets fix this issue once and for all, a fix which in practical terms is impossible.
From AdWeek:
Bot fraud is among the digital ad demons the industry has been trying to excise. The report outlines some of the risks associated with programmatic ad channels, but there are technology-minded players who feel such automated advertising networks could eventually solve the fraud issue.
Industry group Interactive Advertising Bureau recently set up a special task force called the Trustworthy Accountability Group to combat fraud. "Research like this is critical in building a program that will excise this type of criminal activity out of the supply chain," Linda Woolley, TAG's CEO said in a statement today. "Fraudulent traffic, as well as malware and IP piracy, are obstacles to the growth of the digital economy, and TAG is committed to eliminating them."
Here is the stunning scope of the problem, per analysts at SunTrust Robinson Humphreys:
Up to 50% of publisher traffic (!) is bot activity, just fake clicks from automated computing programs.
Bots account for 11 percent of display ad views and 23 percent of video ads.
Between 3 percent and 31 percent of programmatically bought ad
impressions were found to be from bots, with an average of 17 percent.
More than half of traffic from third parties claiming to lift publishers' traffic numbers comes from bots.
Digital advertising will take in $43.8 billion next year, and $6.3 billion will be based on the fraudulent activity.
Even the top publishers setting up private advertising exchanges to cater to elite brands are unsafe. Ten percent of ad impressions from such premium programmatic campaigns are from bots.
Bots are corrupting retargeted ads because of more sophisticated user Web histories than actual users, attracting cookie-based ads. Nineteen percent of retargeted ads, the ads that are directed at an intended audience based on previous Web activity, are from bots.
The ball is in your court, dear advertisers.
Housing Bubble 2 Goes Nuts: San Francisco Home Sales Plunge 20%, Prices Soar 27%
by Wolf Richter •
San Francisco is known for its mindboggling booms and breathtaking busts as the hot money from all over the world ebbs and flows amidst startup frenzies and IPO manias.
And now the hot money is flowing. It has created a delirious craziness in the housing market, surrounded by an environment where app makers without revenues but with big dreams and the word “disrupt” in their description are worth billions and draw so much cash from investors that they struggle harder to burn through it all than to disrupt anything.
So I read with fatalist amusement in SF Curbed that the most expensive home on the market in early November is still on the market. At the time, SF Curbed described it this way:
Raw food chef Roxanne Klein and her entrepreneur/guitar-CEO husband, Michael Klein, have put their neoclassical-revival mega-manse on the market for $39 million. The couple have only owned the seven-bedroom, 16,000-square-foot home, located at 2701 Broadway, for two and a half years, having picked it up from real-estate mogul Ron Zeff for $27 million back in 2012…. The ask is a full $12 million above the last sale price, though the present owners haven’t so much as changed the paint in the au pair suite.
Why fatalist amusement? The asking price is 44% higher than when the home was sold two-and-a-half years ago.
So Fed Chair Yellen, in her press conference after the FOMC meeting today, said she’s surprised that housing hasn’t recovered more than it has. But for those who were on the receiving end of the Fed’s free money, the housing market recovered just fine.
There’s only one problem: there aren’t enough of these folks, and they don’t like to live in median homes. But with each price increase, more and more people who want to buy a median home to live in are left behind. And homes sales tumble.
In the nine-county San Francisco Bay Area, sales in November of new and resale houses and condos dropped 10% from November last year, according to CoreLogic DataQuick. It was the worst November since crisis-year 2008. DataQuick blames the debacle on the “limited number of homes for sale, cautious buyers, a challenging mortgage market, and a quirk of the calendar….”
But with a median price of $601,000 in November, up 9.3% year-over-year, there aren’t that many people left who can afford to buy a home. And investors, fattened by Yellen’s monetary policy? They’re starting to lose interest. These “absentee buyers” purchased 18.6% of the homes, down from 20.4% in November last year, the lowest level since September 2010.
Sales volume was down in all nine counties year-over-year, topped by my crazy and beloved San Francisco where sales plunged 20%.
But … the median price soared, gulp, 27% from November a year ago – um, that’s not a typo – reaching a new all-time record of $1,072,500.
That’ll buy a 2-bedroom no-view apartment in a so-so area.
The peak of the prior housing bubble in San Francisco occurred in November 2007, based on the same DataQuick series, with a median price of $814,750. After it imploded so spectacularly, everyone acknowledged that it had been an out-of-whack bubble phenomenon. Everyone had anecdotes of craziness. Sanity would henceforth reign in San Francisco, they said. Now, exactly seven years later, the San Francisco median home costs 32% more than it did during that crazy bubble peak.
Only this time, it’s neither a bubble nor a peak. It’s just an insufficiently recovering housing market, according to Yellen. And so she’s surprised that, after six years of free money for certain folks, it hasn’t “recovered” even more.
In the six-county Southland, the nuances are different. November home sales dropped 19% from October and 9.5% from November a year ago, to the lowest level for any November in seven years. The sales debacle hit lower priced homes particularly hard. While sales of homes over $500,000 edged down 3.3% year over year, sales of homes under $500,000 dropped 17%. And sales of homes below $200,000 plummeted 35%.
“Fewer investor purchases and other market factors,” is howDataQuick explained the phenomenon.
The median sale price of $412,000 hasn’t budged much since August and was up only 7% from a year ago – “only” because it was the sixth month in a row of single-digit year-over-year increases, after 22 months of double-digit gains. Hence the sense of stagnation in a world where prices must always soar.
The problem is that “traditional buyers haven’t filled the void left by the investors who’ve pulled out.” At $410,000 for a median home, “affordability and mortgage availability remain as hurdles, as do concerns about job security and the direction of the housing market.” The bad breath of reality.
In the miracle city of San Francisco, the plunging sales volume and skyrocketing prices coincide with an enormous building boom. Midrise buildings are sprouting like mushrooms, and a few towers are popping up too. Some of these units have started to come on the market, with many more scheduled for 2015 and 2016. But housing bubbles that culminate in building booms implode with particular splendor and a lot of nefarious side effects.
