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Instant Gratification vs Lump Sum Rewards

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Instant Gratification vs Lump Sum Rewards


A bonus is a payment to an employee that is outside of their pay structure. An employee bonus is given as a reward for a specific behavior or achievement.

The purpose of a bonus is to:

  • Motivate employees
  • Attract and retain top performers
  • Align employees to desired outcomes
  • Make employees more committed to goals
  • Help employees link their performance to the success of the organization

What Is A Spot Bonus?

Spot bonuses are an ‘on the spot’ reward for employees that are given immediately as a reward for a particular behavior, achievement, or action. Spot bonuses are awarded to individuals and not to teams. They are usually reserved for employees and not the upper levels of management. An employee can receive any number of spot bonuses a year.

Advantages Of Spot Bonuses

Spot bonuses are more frequent than other bonuses. They give the rewarded employee a feeling of being rewarded more frequently. This is a pattern that is more likely to sustain employee morale and happiness over a period of time. Recurring chances to earn rewards also keeps employees motivated to always perform at their best.

While annual bonuses also reward the employee, there is a long gap between the achievements and the reward. The annual bonus loses the ability to create the ‘high’ and feeling of elation immediately after an achievement. This immediate reward after an achievement helps the employee tie their levels of performance with the success of the company easily.

When bonuses and rewards are team-based, there is no differentiation between the over performer in the team and one who does the bare minimum. However, individual bonuses recognize and reward the actual stellar performer and encourage all the employees to step up and perform. And since the bonuses occur frequently, there are more chances for others to also achieve a spot bonus.

When a spot bonus is a reward such as an experience that can be shared with others, the bonus has more of an impact.

A spot bonus is more than money that is spent to reward an employee, it is also an opportunity to connect with the employees. When the organization rewards an employee, it grabs the attention of all the employees and is a great opportunity to reinforce the organization’s goals.

Spot bonuses are smaller bite-sized rewards that reduce the cost burden of bonuses on the company. While giving an employee a raise or a larger annual bonus may be more expensive for organizations, spot bonuses are more cost-effective.

Disadvantages Of Spot Bonuses

The methods and reasons for giving our spot bonuses should be very transparent, consistent, and unambiguous for spot bonuses to be effective. If the reward is more dependent on the immediate manager’s discretion rather than set criteria across the company, spot bonuses can create dissatisfaction among employees.

Sometimes spot bonuses are awarded verbally but the disbursement of it is pushed away. This nullifies the immediacy of the reward and may lead to demotivation. Automation of rewards through technology solutions makes the award of spot bonuses quick and easy for the organization as well as the recipient.

Sometimes, too much of a good thing can have the opposite effect to what is desired. When companies use the same rewards repeatedly, it leads to satiation or boredom. Organizations should think out of the box or use a reward platform such as Plum to offer employees a varied and exciting choice of awards. The organization does not have to worry about selecting the award or disbursing it as it is handled by Plum.

The reward size or amount should be decided carefully and be tied to the specific behavior that is being rewarded. Employees will expect future bonuses based on past bonus values. If the subsequent bonuses do not live up to the expectations of the employee, they cause more demotivation than reward. Rewards systems such as that of Empuls help companies categorize and plan their reward structure better.

If one employee continually outperforms all the others, they may be rewarded spot bonuses very frequently. This may demotivate the others to compete. To avoid this situation, it may be better to reward this employee with a raise and create a more level playing field for spot bonuses.

Annual Bonuses

Annual bonuses have been around a long time. They are the lump sum bonuses that are given at year-end or at festival times annually. Some companies also pay bonuses half-yearly or quarterly. Annual bonuses can also be tied to a review process to determine the size of the bonus that each employee is to get.

Advantages Of Annual Bonuses

Most HR personnel and finance departments are very familiar with the concept of an annual bonus. They find it easier to compute an annual bonus rather than continually monitor employee performance. However, software tools and solutions such as Plum have made spot bonuses easy to manage.

An annual bonus payment gives the employee a lump sum to look forward to at the end of the year. This amount may be useful for them to take a vacation or celebrate a festival. Not all employees have the financial discipline to allow their spot bonuses to collect and form a larger sum. For such people, an annual bonus is advantageous.

Though an annual bonus does not have the instant gratification that the employee gets from a spot bonus, it does show appreciation for the achievements of the employee.

Knowing that a review of their overall performance will determine the bonus amount is a motivation to work through the year. It is the responsibility of the company to help employees understand what actions and achievements led to appreciation.

Disadvantages Of Annual Bonuses

Having to pay many employees a lump sum of money at the same time may be a financial strain for the company. Also, annual cash bonuses are often more expensive than smaller spot bonuses that are handed out year-round. Companies can give out other awards such as those available on the incentive and rewards platform Plum instead of a cash payment.

A larger bonus payment in cash may have tax implications for the employee. While a raise in salary will also increase the other benefits that are calculated based on salary, an annual bonus will not lead to other benefits. Smaller spot bonuses may not impact taxes.

While a spot bonus rewards a specific achievement, not all companies are able to clearly communicate how each individual performance has helped the company. Annual bonuses reward overall achievement rather than specific goals.

When there is no transparency in the process used to determine the amount given out to each employee, there may be problems created by the annual bonus. An employee who thinks that they deserve more will be disgruntled and unmotivated.

Companies that award annual bonuses may find that an employee who plans to leave will wait for the bonus payout before leaving. There may be a mass turnover of employees after a bonus payment.

Key takeaways

The choice between spot bonuses and an annual bonus payment depends on the company. Both have their own inherent pros and cons. Spot bonuses are less expensive than annual bonuses. Software solutions have made both types of bonuses easy to manage. Employee reward platforms like Plum give both companies and employees the freedom to choose rewards that are far more exciting and memorable than a simple cash payout.



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MARKETING

The Biggest Ad Fraud Cases and What We Can Learn From Them

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The Biggest Ad Fraud Cases and What We Can Learn From Them

Ad fraud is showing no signs of slowing down. In fact, the latest data indicates that it will cost businesses a colossal €120 billion by 2023. But even more worrying is that fraudsters’ tactics are becoming so sophisticated that even big-name companies such as Uber, Procter & Gamble, and Verizon have been victims of ad fraud in recent years. 

So what does this mean for the rest of the industry? The answer is simple: every ad company, no matter their size or budget is just as at risk as the big guns – if not more. 

In this article, I summarize some of the biggest and most shocking cases of ad fraud we’ve witnessed over recent years and notably, what vital lessons marketers and advertisers can learn from them to avoid wasting their own budgets. 

The biggest ad fraud cases in recent years 

From fake clicks and click flooding to bad bots and fake ad impressions, fraudsters have and will go to any lengths to siphon critical dollars from your ad budgets.

Let’s take a look at some of the most high-profile and harmful ad fraud cases of recent years that have impacted some of the most well-known brands around the world. 

Methbot: $5 million a day lost through fake video views 

In 2016, Aleksandr Zhukov, the self-proclaimed “King of Fraud”, and his group of fraudsters were discovered to have been making between $3 and $5 million a day by executing fake clicks on video advertisements. 

Oft-cited as the biggest digital ad fraud operation ever uncovered, “Methbot” was a sophisticated botnet scheme that involved defrauding brands by enabling countless bots to watch 300 million video ads per day on over 6000 spoofed websites. 

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Due to the relatively high cost-per-mille (CPM) for video ads, Aleksandr and his group were able to steal millions of dollars a day by targeting high-value marketplaces. Some of the victims of the Methbot fraud ring include The New York Times, The New York Post, Comcast, and Nestle.

In late 2021, Aleksandr Zhukov was sentenced to 10 years in prison and ordered to pay over $3.8 million in restitution. 

Uber: $100 million wasted in ad spend 

In another high-profile case, transportation giant Uber filed a lawsuit against five ad networks in 2019 – Fetch, BidMotion, Taptica, YouAppi, and AdAction Interactive – and won. 

Uber claimed that its ads were not converting, and ultimately discovered that roughly two-thirds of its ad budget ($100 million) wasn’t needed. This was on account of ad retargeting companies that were abusing the system by creating fraudulent traffic. 

The extent of the ad fraud was discovered when the company cut $100 million in ad spend and saw no change in the number of rider app installs. 

In 2020, Uber also won another lawsuit against Phunware Inc. when they discovered that the majority of Uber app installations that the company claimed to have delivered were produced by the act of click flooding. 

Criteo: Claims sues competitor for allegedly running a damaging counterfeit click fraud scheme 

In 2016, Criteo, a retargeting and display advertising network, claimed that competitor Steelhouse (now known as MNTM) ran a click fraud scheme against Criteo in a bid to damage the company’s reputation and to fraudulently take credit for user visits to retailers’ web pages. 

Criteo filed a lawsuit claiming that due to Steelhouse’s alleged actions — the use of bots and other automated methods to generate fake clicks on shoe retailer TOMS’ ads — Criteo ultimately lost TOMS as a client. Criteo has accused Steelhouse of carrying out this type of ad fraud in a bid to prove that Steelhouse provided a more effective service than its own. 

Twitter: Elon Musk claims that the platform hosts a high number of inauthentic accounts 

In one of the biggest and most tangled tech deals in recent history, the Elon Musk and Twitter saga doesn’t end with Twitter taking Musk to court for backing out of an agreement to buy the social media giant for $44 billion.

In yet another twist, Musk has also claimed that Twitter hid the real number of bots and fake accounts on its platform. He has also accused the company of fraud by alleging that these accounts make up around 10% of Twitter’s daily active users who see ads, essentially meaning that 65 million of Twitter’s 229 million daily active users are not seeing them at all. 

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6 Lessons marketers can learn from these high-profile ad fraud cases 

All of these cases demonstrate that ad fraud is a pervasive and ubiquitous practice that has incredibly damaging and long-lasting effects on even the most well-known brands around the world. 

The bottom line is this: Marketers and advertisers can no longer afford to ignore ad fraud if they’re serious about reaching their goals and objectives. Here are some of the most important lessons and takeaways from these high-profile cases. 

  1. No one is safe from ad fraud 

Everyone — from small businesses to large corporations like Uber — is affected by ad fraud. Plus, fraudsters have no qualms over location: no matter where in the world you operate, you are susceptible to the consequences of ad fraud. 

  1. Ad fraud is incredibly hard to detect using manual methods

Fraudsters use a huge variety of sneaky techniques and channels to scam and defraud advertisers, which means ad fraud is incredibly difficult to detect manually. This is especially true if organizations don’t have the right suggestions and individuals dedicated to tracking and monitoring the presence of ad fraud. 

Even worse, when organizations do have teams in place monitoring ad fraud, they are rarely experts, and cannot properly pore through the sheer amount of data that each campaign produces to accurately pinpoint it.

  1. Ad fraud wastes your budget, distorts your data, and prevents you from reaching your goals

Ad fraud drains your budget significantly, which is a huge burden for any company. However, there are also other ways it impacts your ability to deliver results. 

For example, fake clicks and click bots lead to skewed analytics, which means that when you assess advertising channels and campaigns based on the traffic and engagement they receive, you’re actually relying on flawed data to make future strategic decisions. 

Finally – and as a result of stolen budgets and a reliance on flawed data – your ability to reach your goals is highly compromised. 

  1. You’re likely being affected by ad fraud already, even if you don’t know it yet

As seen in many of these cases, massive amounts of damage were caused because the brands weren’t aware that they were being targeted by fraudsters. Plus, due to the lack of awareness surrounding ad fraud in general, it’s highly likely that you’re being affected by ad fraud already. 

  1. You have options to fight the effects of ad fraud  

Luckily, as demonstrated by these cases, there are some options available to counteract the impact and losses caused by ad fraud, such as requesting a refund or even making a case to sue. In such cases, ad fraud detection solutions are extremely useful to uncover ad fraud and gather evidence. 

  1. But the best option is to prevent ad fraud from the get-go

The best ad fraud protection is ad fraud prevention. The only surefire way to stop fraudsters from employing sophisticated fraud schemes and attacking your campaigns is by implementing equally sophisticated solutions. Anti-ad fraud software solutions that use machine learning and artificial intelligence help you keep fraud at bay, enabling you to focus on what matters: optimizing your campaigns and hitting your goals. 


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