Comment by cardine | Hacker News Reader

Comment by cardine | Hacker News Reader

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> Can a simplistic malware fraud generate half a billion dollars of wealth?

Absolutely. Traffic Vance was a great example of this. They installed adware on users computers and advertisers could bid on what sites you wanted your popup ad to display on and their adware would display your popup and charge you the money.

There are shady individuals who bid $10+ for a single popup on a site like StateFarm.com with a fake "rate comparison" and the infected user would assume that the ad was associated with State Farm despite the tiny disclaimer at the bottom.

On a site like CNN a shady weight loss supplement company might have a popup with a fake news story that pushes a misleading negative option subscription that is setup in a way where the infected user assumes it is a CNN story.

The adware itself is designed to be as subtle as possible so that the user is unaware that anything suspicious is going on and views these ads as legitimate.

Traffic Vance has since been renamed several times due to this type of scrutiny, are well past their glory days, and don't push their adware anymore. Despite all of that they are still making millions[1] from all of the people who have downloaded their adware over the past 10 years that still haven't deleted the adware or gotten a new computer.

[1] https://www.propelmedia.com/propel-media-reports-6-1-million...

Man, haven't heard that name for years. Traffic Vance and others like them were all the rage when affiliates were big on "CPV" (cost per view) traffic where instead of paying on a CPM rate for pop-up and pop-under traffic, they would pay for each view. The CPMs were actually pretty high in many cases, but when you think about the computer savviness of the infected users, the shady tactics affiliates would use, and the potential payouts, the math definitely worked out for many of them.

But even in Traffic Vance's case, I'm not sure that they have generated $400 million over the life of the company. Even at $6M/quarter in EBITDA, it would take ~16 years to get there. I'm not sure what else this guy was into, but I doubt he made it solely with malware.

That said, nobody actually needs $400M, and there are plenty of people making $1M+/yr operating useless websites like viral news, quiz sites, etc. There is a ton of money in online advertising. Most goes to Google and Facebook, but there are still billions left over for the "little" guys. The rise of retargeting through Adsense has enabled even the most worthless of sites to show ads that generate reasonable RPM. If you can generate impressions, you can make quite a bit of money.

Is there any literature on this? I always figured Google and Facebook dominated the market so heavily everyone else was left with scraps (twitter, for example).

Actually, those guys make only a tiny slice of the value per click. Banner advertising is a low return game.

Now...if you control the landing page and conversion funnel, basically delivering paid customers (vs. clicks) to a paying merchant, your value per visit goes up by a factor of 10 - 50. $.25/click vs. $10 - $30 (varies by product).

Now imagine a company that launches dozens of offers with hundreds of variations and plows it's bankroll back into the best (most profitable) version (for years at a time).

Yeah, $400MM is possible.

You make a great point that advertising and ecommerce have no clear demarcation. Revenue for all online commerce is divided among layers of players performing specialized steps in the process, so any sizing of the online advertising market starts with an arbitrary distinction.

Google annual revenue is $75B, Facebook annual revenue is $18B. The total Internet advertising spending this year is about $250B [1], and total advertising combined is $600B [2]. Google and Facebook combined account for only about 30% of Internet advertising, and 15% of total advertising.

They get the lion's share of attention because they're the biggest players, but that doesn't mean they're the only ones, or even that they own a majority of the market. People in general are not well-equipped to process the idea of a long-tail, where disparate players collectively make up a majority of the market but aren't identifiable as a single organization. By the numbers, there's room for about 400 $400M companies in the space of the online advertising market not claimed by Google and Facebook, or alternatively, for 1.6M sole proprietors who each earn a six-figure income on ad revenue alone.

Twitter, BTW, makes a very respectable $2B+/year in revenue. Their problem is that their cost structure assumes that they're going to beat Facebook; they're supporting 4000 employees with fat salaries & option packages on that revenue (Facebook, with 8x the revenue, has only 4x the employees). If they fired half their employees they could easily be profitable. And the company in the article probably has no more than a few dozen employees, hence its massive profitability.

[1] http://www.pwc.com/gx/en/industries/entertainment-media/outl...

[2] https://www.emarketer.com/Article/Advertisers-Will-Spend-Nea...

The biggest ever industrialised clickfarm/clickbait ring I've heard of was making around 100m in revenue in 2009, but they had thousands of "affiliates"

> Even at $6M/quarter in EBITDA, it would take ~16 years to get there. I'm not sure what else this guy was into, but I doubt he made it solely with malware.

They have been around for 10+ years and are currently a shell of what they once were. They stopped promoting their adware years ago and that $6M/quarter is solely from all of the previously infected people who still haven't gotten a new computer. I would be very surprised if they didn't make considerably more than $400M over the life of the company.

Do you have any information on this weight loss fake ad on CNN. I think my parents got this one.

I'd check out this story[1] on Jesse Willms, who made hundreds of millions of dollars distributing these types of products using an assortment of deceptive tactics.

[1] http://www.theatlantic.com/magazine/archive/2014/01/the-dark...

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