A Publisher’s Manual for Clawbacks and Derivations
Businesses that are supported by ads depend on the money they make from the ads that appear on their apps and websites. Therefore, it should come as no surprise that debates regarding deductions and clawbacks are among the publishing industry’s most contentious. A thread with a disgruntled publisher claiming fraud and threatening to sue Google, another major SSP, or a Google partner who “stole” their earnings appears to pop up every few weeks; however, is this something that legitimate publishers should be concerned about?
What drives deductions?
SSPs, like Google, correct incorrectly reported revenue when they believe it. There are occasions when revenue is underreported and slight upward adjustments occur. However, it is more frequently initially overreported, resulting in deductions from the corrections. This occurs when the SSP discovers that impressions or clicks that were reported were not genuine. A good illustration of this would be if bot traffic had been credited to the publisher.
Deductions typically occur either at the end of the month or on the day the payment is issued. As a result, publishers receive less revenue than they might have anticipated.
When clawbacks replace deductions.
When the amount that must be deducted exceeds what is still owed to the publisher, deductions become even more problematic. This happens most frequently with Google due to their short payment terms, but it can happen with any SSP.
If they suspect fraudulent activity, they can deduct up to 90 days’ worth of revenue under Google’s terms. If they have reason to believe that an account is facilitating fraud against their advertisers, they do exactly this: They close the account and take up to 90 days’ worth of earnings out of it. Because Google pays approximately 22 days after the end of the month, that deduction will frequently be greater than the publisher’s outstanding amount, which is where clawbacks come into play.
The publisher’s account will be terminated, no further payments will be made, and there will be a negative balance on the account if the publisher works directly with Google. Google would have to pursue this offline if they want to recover that balance.
A single monthly payment covers all of the publishers a partner works with when a publisher collaborates with them. Google now has a very efficient means of ensuring that they will never be responsible for the payment risk. A clawback is a term used to describe this covering of revenue loss from the broader balance.
So, who bears the risk of payment?
Who is left vulnerable if Google can suspend payments for up to 90 days while protecting their own interests? The response is contingent on the publisher and partner’s agreed-upon payment terms. The publisher bears all risk if the payment was made in accordance with Net 90 terms. If the payment terms are any quicker than Net 90, the partner runs the risk of losing money if publisher activity results in a clawback.
Exactly when are deductions made?
If Google and other major SSPs were able to take deductions throughout the month, none of these issues would arise. Overpayments would not occur, publishers would know precisely what they are earning, and clawbacks would not exist if reporting were updated on a monthly basis. Why then does that not occur?
It does, at least in part. Throughout the month, minor corrections are frequently implemented. Even before it is reported, some invalid activity is filtered out, but not all of it can be caught quickly enough to do this. When additional data are analyzed, invalid activity may sometimes become detectable. When this occurs, it may appear that the activity has been going on for some time, prompting the 90-day deductions.
In these scenarios, what happens to the money?
Google does not charge the advertiser for any invalid activity that they discover during the current billing cycle. Despite what the reporting may indicate, this indicates that there is no actual revenue generated.
The funds that were clawed back are given back to the advertiser if the advertiser has already been billed. Google keeps up with that it never keeps deducted reserves.
What evidence are publishers provided?
When deductions and clawbacks occur, the absence of evidence of invalid activity provided by the SSP is one of the most common grounds for complaint. For instance, Google’s fraud teams see secrecy as an absolute necessity for protecting advertisers. Even other Googlers can’t figure out exactly why certain deductions are made. Also, Google doesn’t give you a way to challenge these decisions. The decision they make is final.
When dealing with deductions, this can be very frustrating, especially when the publisher is innocent and genuinely wants to prevent fraudulent activity in the future. When we decide to collaborate with Google or any other SSP, we all acknowledge that while it is unquestionably an unfair method of enforcement.
Is this allowed?
Words like “theft” and “fraud” are frequently used in reports about publishers facing clawbacks. As a result, you might be left wondering how Google and their partners can behave in this manner. In digital advertising, deductions and clawbacks are commonplace and are covered by our collective contracts. For instance, when a publisher begins making money through Google Ad Exchange, they will sign agreements with Google and their partner. Both will talk about the publisher’s responsibilities and how corrections are handled if and when they happen.
This is known by most publishers facing deductions. However, it does not alleviate the reality of losing up to three months’ worth of income. Therefore, it shouldn’t come as a surprise that these publishers will frequently make a lot of noise online in an effort to get a different result, especially if they believe that doing so will make Google or their partner pay up (Spoiler alert: This is ineffective.
Has this ever happened to you?
When a disgruntled publisher goes public, it can seem like a common occurrence because of the amount of noise created. However, this is not the case. The majority of the time, the publishers will be aware that they have been taking risks, though they may not have been aware of how significant those risks were.
The majority of our 90-day clawbacks appear to be connected to one of the following:
-Human trafficking: buying traffic from bots, low-quality sources, etc.
-Traffic that was rewarded or encouraged
-Behaviors that are deceptive
-Ad arbitrage with content of low or no value.
The majority of publishers clearly do not need to be concerned about these issues. If you are unsure, the best advice is to discuss your concerns with your Google partner openly and honestly. Google partners are heavily rewarded for minimizing risks like these for publishers. SSPs like Google also expect their partners to actively work to avoid problems like these, so they share the risk of deductions.
Even though SSPs can be frustratingly opaque when it comes to these kinds of issues, they usually make the right decisions. Keep in mind that the majority of those who voiced the loudest complaints were well aware of the risks they were putting themselves and their partner in as well if you are reading reports of deductions and “fraud.”