Another Reason to Be Wary of Digital Marketing
“Imagine if a car dealership slapped a Lexus sticker on an economy Toyota." The Wall Street Journal says Forbes has been scamming advertisers. Forbes blames its ad-tech company.
Good Morning!
Here are today’s highlights:
Return fraud is a big problem for third-party sellers on Amazon.
There’s another country where you might consider outsourcing work, and yes, they do speak English there.
For a while, landscapers could charge pretty much what they wanted.
How an entrepreneur delivers emergency relief around the world: “I am doing it without red tape and 100 meetings,” says José Andrés.
MARKETING
Forbes has been running a digital marketing scam, according to the Wall Street Journal: “Forbes for years ran an alternate version of its website where it packed ads that were intended to run on Forbes.com, another sign that brands don’t always get what they pay for in the opaque digital-advertising market. The alternate site, which Forbes shut down Tuesday following inquiries from The Wall Street Journal, featured stories from Forbes.com that were stretched into formats that can fit many more ads, like slideshows and articles written in a list format, known as listicles.’ One 700-word article was turned into a 34-slide slideshow, exposing the person who read it on a computer to about 150 ads instead of around seven for someone who read the original piece.”
“Ad-buyers said the ads on the alternate site weren’t worth what they paid because they reached a different audience and appeared on overcrowded pages. When brands bought some of the ads, it was with the understanding that they would appear on Forbes.com, according to Adalytics, an ad-research firm that shared its findings with the Journal.”
“Forbes blamed Media.net, an ad-tech company that manages Forbes’s ad-bidding software, for the misrepresentation, and said it only affected a small share of overall ad impressions. Forbes also disputed the notion that it operated an alternate site, which it described as a ‘subdomain.’ Because the subdomain ‘represents a very small part of Forbes’ user base and an insignificant part of our overall business, we’ve decided to shut it down,’ a spokeswoman said Tuesday.”
“Rocky Moss, chief executive of ad-research firm DeepSee, said it was shocking for a publisher to mix the ad inventory of multiple sites, so brands don’t know which one they are buying. Moss said one of his clients was affected. ‘Some advertisers bought premium ad placements, but received clickbait placements,’ he said. ‘Imagine if a car dealership slapped a Lexus sticker on an economy Toyota and sold it to you as a Lexus.’” READ MORE
ECOMMERCE
Merchants selling on Amazon are being overwhelmed by fraudulent returns: “Nicole Barton, one of the millions of merchants who sell products on Amazon.com, had to rebuild her business after a peculiar sort of theft became overwhelming. Her online store, where she sold clothing and apparel, was overrun with fraudulent returns. Amazon shoppers regularly switched Coach wallets for no-name dupes and Nike football cleats for flip-flops. She tried to get Amazon’s help, but filing complaints became a hit-or-miss process. She eventually changed her inventory and now sells consumable products like pet supplies, which has significantly reduced theft. ‘A lot of people don’t realize they are affecting small businesses when they do that,’ Barton said of return fraud.”
“Return theft represents one sore point in what has become an often contentious relationship between Amazon and its independent sellers. The Federal Trade Commission’s continuing lawsuit against the retail giant deals in part with how the company treats its sellers. Amazon is also facing new competition for its merchants from other e-commerce firms.”
“The National Retail Federation says return fraud has become a ‘major issue for our industry.’ About 13.7 percent of returns in 2023 were fraudulent, accounting for $101 billion in overall losses for retailers, the federation said. As more consumers have adopted online shopping, return theft has become prevalent and Amazon hasn’t done enough to stop it, sellers said.”
“For merchants, return theft is an example of what they see as broad indifference from Amazon. The FTC lawsuit says Amazon takes one of every $2 that an independent business makes from its website. It also argues that Amazon forces its sellers to use its logistics and advertising services to achieve success on the platform.” READ MORE
HUMAN RESOURCES
With wages and staff shortages still growing, U.S. companies are turning to the U.K. to fill jobs: “American businesses are sending all types of work across the Atlantic, drawn by depressed U.K. salaries, tax incentives, and a weak currency. This isn’t the traditional outsourcing model of the 2000s, which saw the mass relocation of American manufacturing jobs to China, or call centers to India and other parts of the developing world. Instead, the U.K.’s cost advantage has collided with the rise in remote work to allow high-skilled jobs—software developers, consultants, lawyers, film producers—to be done by people in Britain.”
“The average salary for a back end software developer in the U.S. is near $130,000, though closer to $175,000 in cities such as San Francisco and New York, according to data from global recruitment agency Robert Half. In the U.K., a developer’s average salary is about $66,000.”
“The cost of living explains only part of the gap. Software developers in Cleveland—one of the poorest major U.S. cities—can outearn peers in London by about $40,000, according to Robert Half’s data. Roles in finance, accounting and marketing have similar trans-Atlantic pay gulfs.”
“Danny Lopez, chief executive of cybersecurity software firm Glasswall, said nearly all of his software engineers are based in the U.K. even though 90 percent of the company’s revenue comes from the U.S. Having a cheaper U.K. cost base makes his business more competitive in the U.S. market, he said. ‘It is exponentially more expensive to hire in the U.S.,” said Lopez.” READ MORE
There’s something weird about our employment numbers, and it might be explained by increased immigration: “U.S. employment figures contain a mystery that has left many economists scratching their heads: How is the country generating so many jobs even while the unemployment rate has drifted up? The emerging consensus: a surge in immigration. It not only explains inconsistencies in the jobs data but suggests the economy can keep adding plenty of jobs without overheating. That in turn would let the Federal Reserve still consider interest-rate cuts.” READ MORE
PRICING
Landscapers are kind of missing the days when everyone was stuck at home: “Zach Brashear, founder of Cutters Landscaping in Austin, says the change in his business has been dramatic. A year-and-a-half ago, he says his company was fielding 35 to 40 leads for new work every week. ‘People were approving estimates left and right,’ he says. With more projects than contractors, homeowners were out of luck if they wanted to haggle about his pricing. ‘We’d be like, Hey look, I’m very sorry but this is our price, and this is what we’re going to stay at.’”
“While the business still gets about 20 to 30 inquiries from potential clients every week, ‘it’s harder to get them to say yes right now,’ says Brashear. So, if a homeowner wants to negotiate, he usually hears them out.”
“As long as the customer is within a reasonable ballpark, ‘we will give the discount to do the job, and take a slightly lower profit margin right now … to keep our guys going.’ Brashear has also become more flexible about the terms of payment, such as what percentage of the total he requires upfront.”
“Allison Messner, CEO of landscaping design service Yardzen, similarly observes that homeowners have become much more deliberative. ‘During the pandemic and the trailing 12 months, we saw a lot of clients meet with just one contractor, and then hire that contractor,’ she says. ‘Now we’re seeing homeowners take a lot longer to make their choice.’”
“Yardzen — which links homeowners with local contractors — has recorded an 85 percent increase in clients connecting with more than one contractor for an initial meeting since early last year. During the same period, the company has logged a 122 percent increase in clients receiving multiple bids.” READ MORE
FINANCE
The IRS has blocked a billion dollars in ERC claims: “Overall, the IRS has gotten back more than $225 million from more than 500 taxpayers through an ERC Voluntary Disclosure Program that allowed business owners that mistakenly took the credit to repay 80 percent of the credit value they received. It is still working on another 800 submissions that were filed before the March 22 deadline. It has also gotten withdrawal requests processed for 1,800 entities that no longer believe they are eligible for the ERC, adding up to $251 million. And the IRS itself has determined that 12,000 entities filed more than 222,000 improper claims that resulted in about $572 million in assessments.”
“Ultimately, the IRS issued a moratorium on processing new claims filed after Sept. 14, 2023, as it continues working on its compliance and audit efforts. While it has said it would revisit ending the moratorium, it has so far maintained it. That’s ahead of an April 15, 2024, deadline under which businesses can file ERC claims for the 2020 tax year.”
“But the IRS has continued to urge businesses to carefully review the complex ERC guidelines before submitting a claim, and to be doubly sure about using a reputable company to help file the claims themselves — as the agency has repeatedly singled out so-called ‘promoters’ that encourage ineligible business owners to file a claim and then take a cut.” READ MORE
PROFILE
Here’s how José Andrés pioneered a new way to deliver emergency relief: “World Central Kitchen’s rise as one of the world’s most agile and far-flung emergency feeding operations has been fueled by two powerful forces: chefs who know how to organize kitchens quickly in the most extreme circumstances, and the undeniable charisma of the chef José Andrés, a wealthy, well-connected restaurateur driven to feed people in disaster zones even when it seems impossible.”
“The idea for the organization came to Mr. Andrés in 2010, when he cooked with Haitians who were living in a camp after an earthquake. They taught him how to prepare beans as local cooks would, and he realized that making dishes specific to a region was essential to comforting people in a disaster.”
“From there, he helped build schools and train cooks in Haiti and other countries. His model — using a network of local chefs to serve thousands of meals based on local recipes — came together when he traveled to Houston to help after Hurricane Harvey in 2017. Later that year, wearing an Orvis fly-fishing vest like a battle jacket with rolls of cash in one pocket and cigars in the other, he flew into Puerto Rico after Hurricane Maria.”
“All of the group’s efforts centered on making hot food that was familiar to the people who were displaced. Some fresh fruit and a bowl of sancocho, a Puerto Rican stew that Mr. Andrés and his crew made in oversize paella pans, were a lot more comforting than a government-issued M.R.E. or a box of processed American snacks. ‘I am doing it without red tape and 100 meetings,’ he said at the time.” READ MORE
LISTENER FEEDBACK
Jesse Gernigin took issue with Shawn Busse’s recent warning in a Dashboard podcast that content marketing can lose its effectiveness if everyone is doing it. He says you just have to do it right: “Here’s how it works: One, pitch local publications/newsletters/digital publishers in your customer area. There are SO many small publications, circulars, free papers, glossies, that are hungry for content they don't have to pay for. Putting valuable content in the form of an article in their paper increases their value and basically gets you a half page to full page ad without the cost and without competing for attention surrounded by other ads.”
“Two, publish multiple articles on how to solve small issues/problems in your field every month. This lets you build trust by solving smaller problems they had. Great example from my coin/watch days was knowing the value of silver and gold. SO MANY older folks were scammed by gold-buying schemes. I pulled back the curtain on the value, how to figure out what they had, etc. so that when it came time to sell, who was the first person they turned to? The guy that taught them what it was worth in the first place.”
“Three, organically build authority and inbound leads with their trust for you already in place. Not every lead is ready to buy-but every lead that shows up is a 'fit' for when the time is right. I help the client capture those leads and, over 6-9 months, build an email list that keeps them in the black no matter the season. Clients pay me to do this, but anyone can just take and do the system.” READ MORE
THE 21 HATS PODCAST
I Took My Eye Off the Numbers: This week, in episode 190, Jay Goltz tells Shawn Busse and Jaci Russo that, while he’s always been good with numbers, he’s never really enjoyed tracking his finances. It’s not what drove him to start a business, and over time, he stopped paying close attention. But now, after seeing his inventory levels and some big expenses get out of control, he’s diving back into the numbers and pretty much serving as his own chief financial officer, something he says he should have been doing all along.
Plus: Shawn explains how one book and a specialized accounting firm and a monthly routine have gotten him comfortable with his numbers. And Jaci says it took years for her to learn to ignore the accountants who always gave her the same advice: Cut expenses. Instead, she tells us, “We've spent the past probably eight years really right-sizing what we charge. And now I feel like I can breathe.”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren
I was shocked by the story about how Forbes engaged in a digital marketing scam. They misled their iadvertisers about who the audience was for their ads. And although I'm a devoted reader of the Wall St. Journal, I missed that story. So, thank you, 21Hats, for calling it to my attention.