How the rise and fall of Ozy illustrates what’s wrong with digital media

Jordan This is a story about digital media and about ad fraud. But it’s mostly a story about how little most of us understand either of those things. It’s a story about Ozy. Ozy is a digital publisher that claimed to have millions upon millions of page views on its site, millions of subscribers to its email list, millions of downloads of its podcasts and millions of views on YouTube. Now, had you ever heard of Ozy before this week? Me neither. And I spent a lot of time consuming digital media. What the collapse of Ozy over this past week has shown us is how much of a Mirage the digital media economy can be. Ozy created the image of a hugely successful publisher. It charged gigantic companies like Chevrolet and JP Morgan millions of dollars to do business with it. And it claimed to these mega brands that millions of real people were consuming their advertisements. And all of that was a house of cards, an almost unbelievable combination of fraud and gaul. And what happened to Ozy is reverberating through the entire digital media and advertising industries. So how did it happen? Did nobody at Ozy know what was going on? Did none of their advertisers, really? And at the end of the day, who are the real human victims of Ozy’s rise and fall?

I’m Jordan Heath-Rawlings, this is The Big Story. Craig Silverman is a reporter with ProPublica . He’s also covered the guts of digital media for many years at his previous stint with BuzzFeed . Hello, Craig.

Craig Hello.

Jordan Why don’t you start by telling me what is Ozy and why had I, someone who has to pay attention to all media on a daily basis, never heard of this company until last week?

Craig That’s kind of the core of the issue here, because on its face, Ozy seemed like a really successful digital media company. It’s raised tens of millions of dollars from high profile investors, including Axel Springer, which is a major German publisher that owns Insider.Com and now Politico . One of its investors was the billionaire Laurene Powell Jobs. And it had a website that looked really nice. It claimed to have tens of millions of newsletter subscribers. It claimed to have a very popular YouTube talk show hosted by its CEO and founder, Carlos Watson, who’s a former MSNBC anchor and one of the rare black men leading a media company in the US or Canada. And so all of the metrics and all the claims and everything seemed really, really good. But if you asked people in media about this company, they never saw its content, they never received its newsletters. And we thought, well, maybe we’re in a bubble and maybe other people really like it that are not us. But Ozy’s audience is basically kind of a mirage, it seems in a lot of ways. Which is why you maybe have never heard of it before.

Jordan Just for those of us who are listening who are not digital media nerds, what happened over the past week, and how did this all come out?

Craig Yeah, it’s been a very tumultuous week or so for Ozy. So the most recent controversy is a result of a column by Ben Smith, the New York Times media columnist who talked about Ozy’s most recent attempt to raise money. And basically what happened is Ozy’s COO impersonated a YouTube executive to a bunch of people at Goldman Sachs, the huge investment bank, to basically lie and have a YouTube executive claim that Ozy’s stuff on YouTube is really popular, and they’re a great partner. And he got caught. He got caught impersonating a YouTube executive lying about their relationship with YouTube, and the Goldman Sachs execs have caught him in this, and Google has actually referred it to law enforcement. So this kicked off a massive cycle of scandal, and of people really digging in deeper into Ozy saying, well, what else have they been lying about?

Jordan And briefly, what else does it appear they had been lying about?

Craig Let’s pull up a chair. One of the things at the core of it seems to be a lot of the claims they make about themselves and their popularity. So, for example, this YouTube show they have, which they were lying to the Goldman Sachs executives about. They claimed that it was being praised by certain media outlets like Deadline Hollywood and being praised by the Los Angeles Times . And it turns out, Ozy was in most cases, buying its own sponsored content. So paying for its own sort of self promotional material in the Los Angeles Times or other places and then quoting its own self promotional material to pretend like these independent news organizations had praised them. They claimed that the Carlos Watson show was Amazon Prime’s first talk show, which sounds like a big thing that Amazon is paying for them to produce the talk show. Well no, all they do is they upload their content to Amazon Prime, and Amazon Prime has asked them to stop calling themselves that.

And beyond that, a lot of former employees and current employees started talking to media, saying that the website gets almost no traffic, that the company acquired all of these email newsletter subscribers through shady means, and basically that there doesn’t seem to be a large audience behind Ozy. And they have done a really great job promoting themselves and promoting also an in person festival they hosted. But they have consistently been deceptive about how popular their stuff is and really the relationships they have. And it is incredible how long they seem to have gotten away with this.

Jordan And now comes the reason that we wanted to talk to you in particular. First, because you just know this stuff inside out, but second, because you are one of the few people in media who actually knew about Ozy before the past week. When did you first encounter them and what happened?

Craig Yeah, this is probably my biggest told-you-so moment in more than 20 years in journalism. So in 2017, I published an investigation that looked at a bunch of digital publishers, including Ozy, that had basically paid for web traffic to their websites. So most of the time, when you’re running a site, you’ve got people who find you, maybe they’re searching online, maybe they see a link on Facebook and they come to your site or they’re loyal and they type in your address each day to come check it out. In this case, these publishers and Ozy in particular, who paid for a lot of this. They basically bought traffic. So they bought loads and views of their websites. And in Ozy’s case, we caught them actually sending this traffic, which one independent web traffic evaluator had declared as fraudulent, meaning not human. The traffic that Ozy was paying for was being sent to the pages of sponsored content for partners they had, like JP Morgan, Amazon and Visa, really big blue chip companies that had paid Ozy to produce content, making their brand look good. So we basically caught them red handed paying for traffic that was declared as fraudulent. And using that traffic to kind of make it look like the sponsored content for some of their big partners was getting a lot of views. And Ozy did acknowledge that they paid for this traffic, and their excuse was, well, we thought it was real traffic when we bought it.

Jordan And what happened when you took that information to the sponsors who probably thought they were getting real traffic?

Craig Yeah. This is one of the most frustrating things about this story. And I think about our media ecosystem in general, which as just a bit of background, brands will spend billions and billions and billions of dollars on digital ads. But unlike when they would pay for an ad in a magazine or in a newspaper or on a TV show, they actually, in a lot of cases, have no idea where their ads end up showing up because of the magic of our digital advertising ecosystem. They’re trying to put their ad in front of the right person, and they don’t necessarily care if that person’s on this website or that website. In this case, you have people like JP Morgan spending money directly with Ozy producing this content. They’re really happy with it. And in this case, I told them, look, these weren’t real people coming to view this. This is invalid, fraudulent traffic. And they said that they took it very seriously and they were going to look into it.

But at the end of the day, they still continued working with Ozy, and they accepted Ozy’s explanation that this was just a test, this wasn’t really sponsored content part of their deal. An explanation that I find really implausible. But JP Morgan continued to spend money with them after seeing this extremely concerning behavior. And that, to me, is just an incredible thing. That if you’re going to continue to work with people who deal with you that way, then maybe you do deserve to get ripped off I guess.

Jordan I know Ozy is an extreme example of this because of what we’ve learned over the past week. But the reason I find this story fascinating is because it reveals so much about what most people just don’t know about how digital publishing works. And I guess my first question on that is how rare is it for companies like Ozy to buy this kind of traffic and use it to boost their numbers?

Craig Yeah, this is maybe one of the sort of dirty little secrets in digital media, which first of all, I think for the average person, it may be surprising to learn that you can buy traffic. You think about it more as, well, you build up an audience, people come to you, you promote yourself on Facebook and what have you. But there’s a entire giant global market for buying traffic, and it can range from really low quality stuff like what Ozy had paid for to other ways of buying traffic that are considered a little more accessible.

So, for example, if I published an article and I pay for it to become a sort of sponsored post and show up in people’s feeds on Facebook, people still have to click on that link. They still have to be interested in it enough to click. And that is a real human clicking and coming to my page, even though I have paid to kind of promote it to them. That’s considered a sort acceptable, normal form of traffic. But it is widespread that digital publishers will, for example, promote stuff on Facebook related to campaigns they’re running with advertisers to get more people to view it. They have minimum promises they make to advertisers. They need to make sure a certain number of people see it.

But the really dirty little secret are the publishers who are choosing to pay for audiences to come to their sites. And in the most extreme example of this, you have people who create bots. Instead of humans viewing content, they create bots that look like humans that pass some of the advertising filters to check for quality. Once you’ve got bots that are passing people’s filters, well, you can just generate as much fake traffic as you want, have them view as many pages as you want and earn as much money as you want. And so we have a range of behavior from the sort of more acceptable stuff all the way to 100% fraught, 100% rip off. And in between, you often have more quality publishers who at times are paying to get a little bit of extra traffic so long as it passes the filters. And this is something that does go on.

Jordan And this is the other thing that that kind of surprised me. And maybe it’s changing now. But how aware are advertisers of all the stuff that companies can get up to to inflate their numbers? Whether that’s for attracting them in the first place or for meeting their campaign promises or whatever, because it just it seems like there’s a total lack of knowledge on almost all sides of this industry.

Craig It is a really unique time in that you have so much money being spent where people aren’t actually paying attention to where it ends up. I mean, I’m trying to think of another scenario in another industry or another time in history where you have literally billions, tens of billions, hundreds of billions of dollars a year spent on digital advertising and a lot of the companies that spend it, in fact some of the biggest spenders, are not actually doing a daily look to say, so where did our ads appear? And how did that go? They look at the overall aggregate.

And so this is sort of where we’ve ended up and advertisers have come to accept this because they get these data reports saying, hey, your campaign reached the type of people you want, but they don’t scratch beyond the surface. And so I think a lot of advertisers have been spending blindly, have been getting ripped off because there is so much money to be stolen in digital advertising because of the lack of controls and how confusing this system is and how it works. And brands, I think it’s just been the last few years, have started to wake up and understand that if they are not checking where their ads are appearing, they could be funding hate speech. They could be funding extremist websites. They could be appearing on sites with extremely hyper partisan content that they don’t really want to be next to, instead of actually funding the type of media that they want their brand associated with.

And so I think brands are still to this day doing some blind spending, are kind of covering their ears and covering their eyes because they don’t necessarily want to know. Because what chief marketing officer wants to have to tell their CEO that 20% of our spend ended up on really objectionable websites, or it turned out to be stolen by fraud. The CMO of JP Morgan, when I told them how bad things look with Ozy, they don’t want to have to basically acknowledge that a partner they chose to spend a lot of money with seems to have been doing really dodgy stuff. Everybody wants to find a comfortable way to sweep it under the rug and keep everything moving.

Jordan And what about on the other end of the spectrum? What has this system done to, I’m going to say genuine, for lack of a better word, digital media startups that are trying to grow through content and organic audiences?

Craig Yeah. Look, this is the challenging thing. And earlier I mentioned that Carlos Watson is one of the few Black men leading a media company in Canada and the US. And this goes to that point, which is that there’s still a diversity problem in media, and so I think a lot of the People of Colour who are running digital media companies who saw money flowing to Carlos Watson and see this facade that was there, they’re probably going to end up facing more scrutiny because of him. And that’s a really horrible outcome for this.

And when it comes to people doing a good job in digital media, sometimes they’re just not getting rewarded for that. They’re not getting in the room with the big spenders for whatever reason, they’re not also getting the support of the advertising, because if an advertiser can’t tell the difference between a real audience, maybe it’s a smallish audience, but a committed one and aligned with their brand and what they’re interested in. If they can’t tell the difference between that and another company that is buying social media followers as Ozy was, that is buying traffic as Ozy was, that is lying about its popularity and its connections. If they can’t tell the difference, then the money is going to keep going away from the responsible ones and more towards the ones who are kind of out there lying and deceiving. And that’s a really big problem for trying to have quality information out there for people to choose from. If the funding is not going to the people doing the hard work and building real audiences and doing good quality work, then that work is just going to go away. And it’s a real big concern that I have.

Jordan What about enforcement of all this? You mentioned at the beginning that Google has asked police to investigate the fraud that allegedly occurred on the telephone call. But we spoke to Jesse Hirsh yesterday about Facebook, and one of the things that came up is often the people that do have the power to enforce this stuff or regulate this stuff simply don’t have the knowledge base to actually do it properly. Is that the same case in the world of digital ad fraud?

Craig It’s arguably maybe even worse with digital ad fraud because we’re talking about a highly technical, very confusing ecosystem that has grown up to facilitate the buying and selling of digital ads. So it’s true that the average regulator doesn’t necessarily understand a lot about that dynamic. But what’s even more true is that if you were to go and talk to people in the RCMP and the FBI, for the most part, they have absolutely no clue about any of this. And I know that it’s been an effort in the FBI among a small number of agents over the last four or five years to actually get educated about this area and see if they can look more into it. And recently, there is actually a few people who are either on trial or already in jail in the US for digital ad fraud. But that is the absolute exception. It is confusing, crosses jurisdictions, you have to get people extradited in many cases around digital ad fraud.

And so law enforcement, forget the regulators, law enforcement itself is really, for the most part, not investigating digital advertising fraud. So it is one of the biggest crimes in the world in terms of the amount of money being stolen every year. By some estimates, it’s second only to the global drug trade. Wow. And yet almost nobody gets caught. Nobody goes to jail. And if the chief marketing officer of a big brand spending a lot of money doesn’t fully understand the stuff and doesn’t really get it, the chances that a regulator, a politician, a law enforcement officer are going to get it are pretty slim. And that’s why it is so pervasive. And such a big problem is it’s a great way to make money with relatively low risk.

Jordan Do you think the past week and what’s happened to Ozy, can become that kind of ‘come to Jesus’ moment for a lot of advertisers for law enforcement, for whatever? It’s usually something incredibly high profile like this that shifts things right?

Craig It usually is. But in the case of Ozy, the thing they got caught doing, as you pointed out, is lying on an investor phone call. The thing that tripped the wire wasn’t them buying social media followers and buying traffic and that kind of thing. It is a much more easily prosecutable offense. And so I think that Ozy may become a cautionary tale of kind of inflated metrics, but at the end of the day, if people are prosecuted, it’s gonna be around regular old fraud, not digital advertising fraud. So I have to say that I’m actually quite skeptical that this represents a big turning point. I think marketers are continuing to sort of wake up to this a little bit, but I don’t think the average person, the average regulator, the average marketer, is gonna look at this and suddenly have a big awakening. I suspect we’re gonna see a lot more cases of digital ad fraud that go unprosecuted. And we’re going to see other deceptive kind of fake mirage digital media companies like Ozy because you can get away with a lot. And at the end of the day, that will bring people to the table to do it.

Jordan Last question, what happens now to Ozy? And I guess what happens now to the journalists who were working there? And we should take a minute and mention that those folks probably thought they were just doing their jobs and didn’t realize what was going on behind the scenes.

Craig That’s exactly right. There were roughly 70 employees at Ozy, apparently, a lot of whom were writers, designers. And I have to say, I mean, the stuff looked nice. And if you read the content on Ozy, it was well done. They were doing their jobs. But leadership at the company, they weren’t willing to actually build something real. They took shortcuts. And I think that’s a really unfortunate scenario for the people there trying to do the good work. And what we have is it’s like a never ending cycle here with Ozy, by their own choosing and largely by Carlos Watson’s choosing.

So initially, within about five days of the original Ben Smith column coming out, they announced they were shutting down operations. And then a few days later, Carlos Watson goes on The Today Show and CNBC and says, no, this is our Lazarus moment. We are rising out. We’re going to bring Ozy back. We’re going to do some of the things that we’re great at. And as of right now, he claims that he is restarting the company. However, the company is now being sued by one of its investors who came in after the Goldman Sachs investment fell apart and gave them $2 million. They’re claiming fraud. They didn’t know apparently about this whole thing that went down with Goldman Sachs and the fake YouTube executive. They had a crisis communications firm that was helping them set up those Today Show interviews and other things. That firm is apparently no longer working with Ozy.

So it remains to be seen what this rebirth will look like. And we already have one case filed against them from an investor. Is the FBI far behind that’s one of the things I think we’ll be watching for.

Jordan Craig, thank you so much for taking us inside this incredibly complex world a little bit.

Craig Thank you and thank you for the interest in it. And also to folks listening: one of the things that you can do is to actually spend your time in places and help give a real audience to places that you care about and do the kind of work you want to support. So it may sound disempowering and confusing, but if you simply choose to spend your attention and your time and maybe your subscription money at places that you want to support, you are helping create a better media ecosystem.

Jordan That means rate and review this podcast.

Craig Silverman of ProPublica , formerly of BuzzFeed .

That was The Big Story. If you want more from us, you can head to thebigstorypodcast.ca we can use real human traffic. It’s always good. You can also find us on Twitter at @TheBigStoryFPN. You can talk to us anytime via email at theBigStoryPodcast@rci.rogers.com [click here!] And as always, if you’re in a podcast player listening to this show, please subscribe, follow, rate, review, share. All of it.

Stefanie Phillips is the lead producer of The Big Story. Joseph Fish and Ryan Clarke are our associate producers. I’m Jordan Heath-Rawlings. Take care of yourself. Have a great long weekend and we’ll be back on Tuesday. Back to top of page