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Combining StitchFix and Instagram, FlipFit ushers in the next phase of social retail

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Nooruldeen Agha, has been thinking about what’s next for fashion retail for years.

The serial entrepreneur behind the Dubai-based online fashion retailer, Elabelz and marketing studio Elephant Nation had always wanted to redesign the shopping experience for how customers actually shopped in stores and online.

“If it was 1994 and we knew what technology is today and we want to reinvent this [shopping] experience… one thought was how we bought our whole life and how we go to the mall,” says Agha.

Shopping is, for most people, a social activity. Friends go to the mall or department store together to try on clothes and ask each other for advice. Most online and offline shopping experiences are completely divorced from that, Agha said.

“Fashion shopping has always been a social experience,” said Agha, co-founder and co-CEO of Flip, in a statement. “The decision for today’s shoppers to buy happens once they receive validation from friends and family, but e-commerce has made shopping very isolating. We are connecting the social behaviors of shopping, which were previously only possible offline, with a virtual experience.”

So he wanted to take the social aspects of Instagram and the subscription box and retail elements of StitchFix to create the new Los Angeles-based startup, Flip Fit. 

But to do it, Agha needed a push. His businesses in Dubai were successful, he says, and there was no need for him to pursue another new venture — especially one in America.

Then he met Jonathan Ellman at the Summit conference in Los Angeles.

“We met at a party.  At midnight,” Ellman says. “At 10 o clock the next morning we were sitting on a balcony talking to each other and  came to an understanding that Noor with his dynamics and understanding the industry… that he could not stay in Dubai.”

Ellman has a history as an investor and an operator. He was the founder of the scout program at GreatPoint Ventures and spent years at HoneyBook. And he knew immediately that Agha’s idea had legs.

For the next year, the two laid the foundation for the business. Noor had all of the connections already. Elabelz was pulling in $23 million in revenue off of the sale of 150,000 boxes of clothes — so the logistics and fulfillment and brand partnerships would be a breeze. The company has 200 brands that have already signed on as of today’s launch including: AG, JBrand, Hudson, Retrobrand, Boyish, MadeWorn, Junkfood, Mavi and Edwin.

FlipFit works by creating a social network based on friends and followers. The company isn’t borrowing from Facebook or Instagram, but instead is trying to build out its network from scratch. Users of the app are encouraged to take vote on selfies their friends take in different outfits. Each vote garners in-app cash that can be redeemed whenever someone purchases an item ($10 for each new voting user and $1 per vote).

As users vote on the styles they like, they can also add clothes to a virtual wardrobe. When they’re ready they can select a few styles from that closet to be shipped out to them to try on. If the user doesn’t like the clothes, then they just return it.

The mechanics aren’t that different from a number of other online retailers, but the difference is in the company’s decision to create an entirely new social graph.

Initially, Agha and Ellman are tapping influencers to hook in their target customers. Over the next 90 days roughly 500 influencers across social media will be encouraging their audiences to vote on different outfits using the FlipFit app. The influencers are getting $150 in store credit twice-a-month or getting paid sponsorships (depending on the size of their following). The outfits with the most votes are the ones that the influencers will keep… training their audiences on the mechanics of how to shop as they market the product.

Agha says that the user experience is most akin to TikTok or Snap,rather than Instagram. There’s a publicly available feed for those who want to use it or the feed can be made private and shared among friends. And the app is only available for children 13 and up.

On the business side, the company is keeping 33% of the cash from any item sold. It’s cut is higher, because FlipFit handles all of the back end logistics of shipping and returns, according to the co-founders. Every box the company ships includes the standard pre-printed return label.

“Returns are our default. While the rest of the industry is fighting this phenomena, we are leaning into it,” said Jonathan Ellman, co-founder and co-CEO of Flip. “Almost half of all fashion shoppers bracket their online purchases, buying several pieces to try on at home with the intention of returning what doesn’t fit or what doesn’t match what they saw online. We believe returns should be as easy as the purchase and by making the shopping process more efficient and effective, we’re keeping clothes out of landfills and in your closet.”

The company is, to date, backed by a $3.75 million seed round led by TLV Partners with participation from Lool Ventures.

“Flip is the evolution of social media and e-commerce — birthing the baby of Istagram and Amazon and creating the first physical product marketplace where your likes and actions impact the products you receive,” says Rona Segev, a general partner at TLV.

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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