$140 Billion Problem: How Ad Fraud Is Stealing Your Marketing Budget | Rich Kahn

What if 25% of your digital marketing budget is being wasted… right now?

In this episode of Small Business Pivots, Michael sits down with Richard Kahn — entrepreneur, Inc. 5000 leader, and co-founder of Anora.io — to expose one of the biggest hidden problems in business today:

Ad fraud

With over $700 billion spent on digital marketing annually, Rich reveals how $140 billion is lost to fraud — and why most business owners don’t even realize it’s happening. 

💡 In This Episode, You’ll Learn:

•  What ad fraud actually is (and where it’s hiding) 
•  Why 1 in every 4 marketing dollars is wasted
•  How bots fake clicks, traffic, and conversions 
•  The truth about buying followers and fake engagement 
•  How AI is making fraud harder to detect—and easier to commit 
•  Simple ways to immediately reduce fraud in your ad campaigns 
•  Why relationships still outperform digital-only strategies 
•  How to grow from $0 to $1M with real outreach (not just content) 

🚨 Key Takeaway

There’s no longer a question of if you have ad fraud…

👉 It’s how much.

🎯 Who This Episode Is For:

•  Small business owners running ads on Google, Facebook, or YouTube 
•  Entrepreneurs trying to improve ROI 
•  Marketers scaling digital campaigns 
•  Anyone spending money online and not seeing results 

🔗 Resources Mentioned:

• Anora.io
•  Traffic Quality Audit (free analysis mentioned in episode) 
•  Book: How to Win Friends and Influence People

Ad fraud is when fake users (bots or manipulated traffic) interact with digital ads, costing businesses money without generating real customers. On average, businesses lose up to 25% of their ad spend to fraud. 

Transcript

Why Ad Fraud Matters

SPEAKER_00 0:00

All right, welcome to another Small Business Pivots where we have special guests from around the world. And today, I think you might want to listen to this because we've had about 140 episodes now, and we've never, ever talked about this topic. So before we get beginning, uh, I want to share just that our guest today has had multi, multi-millionaire businesses. He's been an entrepreneur for about three decades and on and on been recognized as a top ink 5000 fastest growing company. So he's got some experience in the entrepreneur world, but our listeners know that no one can say their name or the business like the business owner. So I let you introduce yourself and tell us a little bit about yourself.

SPEAKER_01 0:42

Sure. I'm Rich Khan, CEO and co-founder of Anora.io. Um, what can I say? I've always been a developer my whole life. In fact, I wrote my first game when I was nine years old. I got published in Compute Gazette for those of us that are old enough to remember that when I was 12. Um, worked my way through uh college selling. So internet sales was like perfect for me.

SPEAKER_00 1:06

So here I am. Yeah, fantastic. Well, I'm glad there's people like you because including myself, like I've mentioned earlier, I hadn't even heard of this. And you said you've been fighting it since about 2005. I said, I thought you said. Yeah. So this has been ongoing, and so it kind of needs to bring to the surface. We have talked about internet security and we've talked about IT security and you know, all those malwares and all that stuff, but not on the digital marketing side. So is there any place you just want to start? Because it's uh we're all uneducated on this, so I'm sure there's some things that you really want our listeners to know first before we dive into the questions.

Digital Marketing Channels Explained

SPEAKER_01 1:45

Well, let's paint a bullseye on how big this topic really is. Um, I use this story once in a while and it's it's kind of interesting. Like I'm a Shark Tank fan. I'm I'm love entrepreneurs, love your ingenuity, love seeing different ideas that come and you know what people are passionate about. I just I'm into that. And when I watch, watch it every now and again, I'll hear someone say, you know, this is a, you know, this industry is a$3 billion industry, and I just want a little slice of the pie. This is a$4 billion industry. And so just to give you a paint of the picture, the digital marketing industry right now, uh, as of 2024, I don't have 2025 numbers yet because they haven't come out yet. But as of 2024, we spent over$700 billion in digital marketing. It was the first year that digital marketing exceeded traditional marketing. So now that's the digital marketing space. If we're in digital, we're spending money there, right? So by our conservative estimates, and a lot of different companies agree with us, some say more, some say less, but our conservative estimates, 140 billion is stolen by uh ad fraud. Wow. So when you when I hear these shark tank stories and are like it's a three billion, there's a hundred and forty billion dollar loss. Wow. And it's there's there's a way to solve it, and but you can't ignore it. Like there's no longer, I always tell people there's no longer a question of if you have fraud, it's a question of how much fraud do you have.

SPEAKER_00 3:14

Interesting. So for digital marketing, you're you're can you explain for the listeners because a lot of small business owners, they're still not quite engaged in in the capacity of digital marketing. So can we talk about what that includes first? Yeah. Overall.

unknown 3:30

Yeah.

SPEAKER_01 3:30

So digital marketing is anything where you spend money online. So it can be Google, Facebook, so all your search, all your social networks, programmatic, connected TV, affiliate marketing, email marketing. Um I think that covers most of the major channels. Uh, so those areas, like, you know, especially with new entrepreneurs, when they first get started, they want to be found on Google, right? So they want to have that earned traffic, as you call it, which is like SEO. So they always do SEO, which is important, but it's a long tail process, right? It takes months to develop an SEO plan that actually starts bringing in dollars. So, as most entrepreneurs, we're antsy and we want to get to the bottom line faster. We want to start growing faster. So we pay for pay for advertisement. So Google is probably one of the go-to places. Google, Facebook are one of the go-to places that people will start their digital marketing um journey. Um, and this fraud there, you know, but it's the first place people turn to. Um, as you get bigger, you start adding on different channels. Maybe do an affiliate marketing channel where you let people go out and spend their marketing dollars to drive in business to you, and then you pay them based on the business they bring in. Um, and then if you really start to get big, then you'll start start looking at the programmatic connected TV eras where uh there's lots of opportunity to get in front of people and a lot more fraud.

SPEAKER_00 4:56

So basically, anywhere that you're spending money on the digital side, not just like if you have a company page and you're posting or anything like that, or does that include any online presence?

Fake Followers And Real Growth

SPEAKER_01 5:09

Pretty much any online presence. I mean, we've tracked it down to an average when we do, we do traffic quality audits for our clients, right? Like before we engage in working together, we want to find out how big of a problem they have and does it financially make sense to work together. So what we do is a free traffic quality audit. And what we're looking to find out is how much fraud they have. And on average, we're catching 25% of their traffic as fraudulent. On average. Wow. I mean, one in every four dollars that they spend is being put in the center of a room and lit on fire, like just going nowhere. So our job is to find it, find out where they're getting their traffic, and then show them how using our software, we can solve that problem.

SPEAKER_00 5:48

So does that include like followers and stuff that come on your page and and they start following you? Because I know a lot of business owners have asked me, like, some of these names don't even look real. Stop paying for your followers.

SPEAKER_01 6:04

I love it. I mean, you know why? Because if if you generate, if you build a if you build a presence online, like you guys have, you got a podcast going and you put out good content, you know, you build it, then the people will come, right? That's the old saying. Like, you build a good product, you go put out good information. It takes time, but it'll eventually build out correctly. And again, entrepreneurs are antsy, they want things to happen quick. So they go to Fiverr and buy 10,000 followers on there, and they don't realize you're buying fraud. So stop buying your followers, earn them. If you earn them with the when it comes to followers, that's that's the right way to do it. You still you still get some fraud mix in there because it's just part of the ecosystem, but it won't be the lion's share of it.

SPEAKER_00 6:46

Well, let's talk about those followers real quick, because I know a lot of business owners are automatically sold, like, oh my gosh, I can't I get these little onesies and twosie followers, and I've got 10 this week, and and now I've got 25, but wow, I could sure use a few thousand. Is there anything out there that's legit when you're investing in someone getting you followers? Because I know I'm asked that all the time, and I'm like, I don't know. I don't I wouldn't think so, but I don't know.

SPEAKER_01 7:13

Yeah, it's it's you know, it's gonna be advertising, you know, it's gonna be digital advertising. You just can't go buy followers, like because that's that's where people get in trouble, right? Because they're they're going generally to Fiverr and they're, you know, for 10 bucks, they can buy a thousand followers and they're like, that's the way to grow, you know, and it's not the way to grow. Um, but you can do advertisements on other, you know, like podcasts. Like you can advertise if they're YouTube channels, you can actually advertise on YouTube to show your ad, your your create, your creative, your ad ad unit in front of like audiences. So if you're doing, you know, for small businesses and my my target small businesses, if you post your stuff on YouTube, I can actually advertise specifically on your channel. When people look at your channel, and I know it's the right audience looking at your channel because you got a good following, and now they're gonna see my advertisement. That's how you earn or advertise to drive in real followers. Um, it's the best way I've seen. I mean, I'm sure there's lots of shortcuts. I mean, I've been in the space for 30-something years, so I guess I'm old school at this point. You can tell by the company name. I don't have isolve fraud.com. That seems to be like the mantra most people have is like their their domain name spells out what they do because it's SEO credit. I come from an era when you know domain names were nonsensical, like Google, Yahoo, Bing. Like they they link back a little bit to the company, but it doesn't say we help you find information.com. Like it's it's yeah, so you can tell I'm old school by how I mean my companies.

How Ad Fraud Actually Works

SPEAKER_00 8:47

Wow. Interesting. So when you first got in this space, what what were you doing then versus what you're doing now? And in other words, how has it evolved over time? Oh my god. Um we could talk all day about that, right?

SPEAKER_01 9:01

So let's let's paint the picture. Um, from best research I could find, September 1st, 1991, the internet became publicly available. It's the first time everyone can connect to the internet, but it wasn't a point-and-click. There was no browser at the time. You had to be kind of a geek to unknow how to get around. You had it was all technical, it was all command line driven. Um, I didn't get started until 93. Um, I was busy doing a lot of other things, and I learned about the connection because it wasn't really popular at the time. It was very like, it was low-key kind of deal. And once I learned about it, I was hooked. I'm like, you don't have to dial into people's modems anymore, and you don't have to do the I'm I'm in. So I was so enthralled with the internet, and I'm not a writer, I started writing a newsletter. And what I did was I basically went around AOL newsgroups, for those of you that remember those, and said, Hey, I'm writing a newsletter talking about what's going on with this internet thing. If you're interested, you know, just reply back with your um email address. I'll add you to the newsletter and I'll send it out. And I think it was about six months it took me. I had over 20,000 opt-in subscribers. Like, wow. Back then that was crazy. Yeah. So, and I had a lot of communication with my audience, and it was it was really cool. So I was just, you know, I would just research, get my hands on magazines or whatever, get my hands on, and I would just write up articles. Um, like this is the newest thing. Oh wow, there's a great new resource over here. Like you should, this is how you get to it. Like describing how the internet was coming along. And, you know, I was just doing it for fun. And then what started the business was somebody turned around and says, Hey, I see you got over 20, you just announced you had over 20,000 subscribers in this newsletter. Could I advertise in there? Uh-huh. I can make money doing this. Why not? Heck yeah. So we went ahead and said, sure. And before long, I was making a couple thousand dollars a week. Again, this was very, very part-time side hustle, I guess you would call it today. Um, and it was just fun. It was just because I was enthralled with learning about the internet. And then I'd, you know, spent a couple hours writing an article, and then I had a special way of mailing it out to different people and just started growing it that way. And then then in 94, so this would have been October of 94, I believe, is when the first web browser came out. Um, my first web browser was Netscape.93 Alpha.

SPEAKER_00 11:31

I remember Netscape.

SPEAKER_01 11:33

So this was an alpha version. This is before, I mean, this was just, I'm like, oh my God, this is gonna make mass uh adoption because no longer do you have to be techie, you can just be the average person just clicking on things and getting you around. Um, and shortly after that came out, I was hooked on that because I'm like, this is how you're gonna get mass adoption. Uh somebody turned around and said, Hey, um, what about you running a mall? Because back then, when they first started, online shopping malls were like, they thought that was gonna be like the holy grail at the time. So I sent out I sent out a newsletter and said, Hey, the new thing is these web malls that are coming out. I'm not sure how to build one yet, but I'm gonna build one. And if you're interested, I'll build you a store, put the storefront in there, advertise you on the directory, and I'll do and I'll host it for like three months for like 150 bucks, something minute minuscule. And I sent out the letter, and I got almost$10,000 in checks. And I was like, So my wife's like, what are you gonna do? I'm like, I'm gonna learn. I'm gonna cash them first. I'm gonna cash the checks, and if they cash, I gotta figure this out. So I took a week off from work. I read 2,000 pages over the weekend, built the entire mall and all 50-something stores or whatever it was at the time in like three days. I mean, I just worked, I don't think I went to sleep. I I was just so excited about it. I was building it out. Um, some other newsletter wrote me up for having one of the first moving graphics on the internet because I had this idea of First Street Mall. And my envision was again, dating myself. If you guys ever watched Happy Days, in the opening credits, Al's Diner would have this neon sign rotating. And I'm like, if I could have the name of my company spinning, how cool would that be? And I figured out a way to do it and I posted it, and I got written up for like one of the first motion graphics they saw, and it was just it was fun. And and then all of a sudden it started to grow. And that's kind of where where really the start of my first multi-million dollar business started out.

SPEAKER_00 13:39

Wow. And I think this is really important for our younger generation to understand how technology has evolved. Even my sons, who are 24 years and younger, they didn't understand IP address. And you know, they didn't understand how all this evolved, and now they're like, oh wow, that makes now they can really use the internet the way it's supposed to be, and and not worry about as the fraud and stuff like most people that aren't aware of it. So I appreciate it.

SPEAKER_01 14:14

I'll give you one step better in going that little evolution real quick. Yeah. So before the internet came out, you used to have to dial into people's into a computer system that was running a modem. The line had to be available for you to connect, and then you would download what was called a bulletin board system. That was the early version of a website. And when the bulletin board came down, it was all basic text. But the text would come in just fast enough that you can read it as it was being downloaded from the server. That's how slow it was. And it wasn't rated in, it was it was called baud at the time, like 300 baud. You had a 300 baud modem, you were like, you're cranking, but it would just come fast enough that you can read it as it was populating the screen. Fast forward until probably '96. I had an ISP where I had 300 phone lines coming to my house, a T1 coming to the house. And we were the first company on the East Coast that I'm aware of that was able to download a meg in 10 minutes.

SPEAKER_00 15:07

Oh my goodness.

SPEAKER_01 15:08

One meg. And I had had a client that was like, I gotta be able to see this. Like I I want it for the speed. And we sat there and we timed it. It was like just under 10 minutes, and they're like, wow. Now it's like every little image you put up is is got to be downloaded in like milliseconds, otherwise you get pissed.

SPEAKER_00 15:27

Yeah, exactly. Yeah. So that that's very interesting for our younger listeners to uh to do some more research on that too. Because my son, he was like, What? The web pages don't, that's not what they're reading. I'm like, nope, it's all text in the background. I mean, it's you know, code and everything. And he didn't know all that. So uh this is very important to understand how people hack into websites and digital marketing with code. So can we kind of jump into that part now and explain how that all works?

SPEAKER_01 15:58

So there's so many different ways of logging into stuff. But let's use Google as the example because they're probably, if not the biggest, one of the biggest, you know, online marketing channels out there. So everybody knows Google.com, you know, that's where they get the traffic from. But what people don't know is that Google gets most of the traffic that it sells to its clients from other websites, like a weather.com, CNN, where you go to these sites and they'll have banners or they'll have text units, they'll have different things on there. And, you know, a lot of the sites that you that they'll get traffic from are legitimate, you know, they've been around for years, name brands, people know who they are. But then there's this whole underworld of sites that you've never seen before, right? And they're all about driving traffic, like they'll buy traffic from other locations to drive to these landing pages to hopefully click on an ad and make money from Google. And anytime you pay somebody to do something on the internet, cheaters find a way to cheat. So that's how they cheat. So now back in the day, we'll give you like a little bit of evolution of fraud. You know, let's say this was my website, right? I went and I clicked on an ad. I was like, ooh, I just made two bucks. Click again. Oh, I just made another two bucks. Well, if the click keeps coming from the same computer, same IP address back in the day, that was allowed. Now it's not, right? So they check it. So now how can you click on those ads without having to actually spend the money to drive the traffic or build up the you know the following to click on those ads? So bots came out, right? Because I can run bots from all over the world to do a simple task. Come to the site, scroll down to a link, click on the link. And then that became okay, now we can catch those. And then it became it evolved over time. So now you have AI that's making it look like so. Now if I'm recording the screen, because a lot of people use screen recording captures, if I record the screen, the mouse movement looks real, the the page scroll depth looks real, everything looks real and it's not. And at the end of the day, it's it's clicking on a link, and they're able to bounce off of, you know, this uh throw out a term there called residential proxy IPs. You know, so basically people are able to bounce off your cable modem using your cable modem's IP address so it looks like a legitimate IP address, and then perform some action. And because this is all software, you can run tens or hundreds of thousands of these bots simultaneously for next to nothing. It becomes so easy to commit the fraud.

IP Addresses And How Bots Hide

SPEAKER_00 18:36

Wow. Can you explain for the non-techies what an IP address is and how that actually works? I've had a discussion with business owners before, and I've shared with them, yes, everything is traceable now. Everything goes back, and they didn't understand what how the IP works and what it is.

SPEAKER_01 18:58

Okay, so an IP address is an internet protocol address. There are two versions, IPv4, which is basically, if you look at this number, it's they call it four octets separated by periods, and each octet goes from zero to 255. If you do the math on that, that's about 2.1 billion unique combinations that you can generate using IPv4. I'll leave the IPv6 for another discussion because that gets, I think, a little too too much into the weeds. Anyway, so every computer on the internet, in order to communicate with each other, so in other words, you log on to a computer. In order for your computer to be recognized on the internet, it needs an address. So it knows where to send and receive data from. So when you connect to your ISP, they assign you an IP address. And that IP address says, as for this session that you're connected to the internet, this is you. So that if somebody wants to get to you, they can just type that address in and the system knows how to route to your computer. But this is important because you go to Google.com, right? You don't know the IP address of Google. Google.com goes to a what's called a DNS server, a domain name service, and it looks up google.com, finds the appropriate IP address, almost like a phone number, and sends your computer, which you have your own IP address, to that Google IP address. And to you, it just says Google.com, but behind the scenes, the computers are communicating over the IP address location. They know, okay, I'm sending a request to Google, search for restaurants in my area. And then Google says, okay, I got to send this information. How do I get it back? Oh, I know his IP address. Let me send it back to the IP address. And that IP address is used to communicate. So anytime you connect to the internet, you have an IP address. And at that point of time, if I log into Verizon, right, that's my ISP. Yeah, if I log into Verizon and I'm giving it an IP address, and just for simple sake, we'll call it 1.1.1.1, right? Four octets separated by periods. Um Verizon knows my username, my account information, everything I use to log in, and the time frame that I was currently using that IP address. So if I was to commit fraud of any kind, and somebody said, Ha, I have fraud being committed by 1.1.1.1, I can look it up. Oh, Verizon owns that. I can then subpoena Verizon for the records and find out, hey, it was rich con. So that becomes a problem. Everybody's trackable, everybody's traceable. This is how everybody works, right? Fraudsters know this. So they hide themselves. They bounce off of different IP addresses. So there is without getting to too technical, because like I said, I the audience, I don't want to go, you know, we're not a tech crowd here, so we'll keep it light. But I know a way where I can bounce off of um, let's say, Michael's IP address. I can hack into his cable modem, bounce off his IP address. Commit my fraud and disappear, and nobody's going to find me because they think Michael committed fraud. So it becomes a bigger problem. And but every IP address out there is traceable.

Detecting Fraud With 800 Signals

SPEAKER_00 22:12

It's amazing how our conversation just keeps leading into explaining how this works. So when you're in the world of finding fraud, explain what your company does and how it works.

SPEAKER_01 22:26

Sure. So I have an example that I talk to people about when I try to explain it. So when you connect to a website, we have a piece of code that runs and scans your machine for over 800 data points. So I'm getting hardware, software, plugins, anything and everything that I can grab. I know how that data is supposed to look, how that data interacts with each other. And based on that information, I can give a real answer. So to give you a real world example, let's say I scanned your machine using a very basic filter. I looked at just the IP address and user agent. From that IP address, I can see, oh, that's owned by a Starbucks. So that's legitimate. You know, you go to Starbucks, you can use a free Wi-Fi. I see the user agent tells me it's an iPhone 17 Pro, legitimate device. Everything looks good. I would normally say, hey, that's a good user. Our software comes in, scans that device, and says, wow, this iPhone has no touch screen. Every iPhone ever created has touch screen. So we're looking at that level of detail. And I can say, wow, this claims to be an iPhone, has no touch screen. What else can I find with the other 800 data points that this doesn't look right? And so if I get enough information confirming, I can say, this is fraudulent.

SPEAKER_00 23:47

It's always interesting. Now, does this apply to anything that's recording numbers? In other words, like podcast. I've seen where people go, you know, I was getting about 50 downloads, and then all of a sudden one day I got 580, and I don't know what's going on. So are people using it across the board on the internet to these bots to just inflate numbers and mess with people?

SPEAKER_01 24:12

There's there's always a reason for it. Um, I don't know all the reasons, right? I just know I can tell if it's a real person or not. And like I said, maybe that podcast was having a commercial air and somebody wanted to, you know, spike up the numbers to make more. Um, you know, usually it's not the podcaster, right? They're they're, you know, I believe the good in everybody. There, there, I'm sure there's some podcasters out there that are just jacking up their numbers just so they can sell more ads or whatever they're trying to accomplish. Um, but generally speaking, I believe the good in people, and I believe that they're not trying to do anything wrong. It's just how they advertise, they may be advertising in a in a spot where, hey, if I advertise on this channel, they promise me I'm gonna have more followers, and that channel might be latent with fraud, knowing that the end KPI, the key performance indicator, is to drive in more viewers. So that bot knows to, hey, I gotta jack up the viewers to make it look like my marketing's working. And that's where the fraud comes in. And like, again, every channel, every place where fraud's involved, could be for different purposes. Generally speaking, fraud is committed to make money in some fashion, whether it's direct or indirectly. And it's just a matter of knowing the channel really well and running through it with a mind of like a fraud. So, like, if I was going to try to defraud the system, why would I do it and how would I do it? And you can eventually come down to a point of, hey, this is what's going on.

Why Podcast Metrics Get Faked

SPEAKER_00 25:40

So we introduce AI in this world of havoc. I would think that it's made it easier for hackers and harder for people like yourself, or maybe, maybe not true.

SPEAKER_01 25:51

It's a combination of both because both sides have the same tool, right? Both sides have AI. So we get to use AI to help us, you know, iterate our software faster. They get AI to iterate their software faster. Um, I'll give you an example. In Q3 last year was one of the biggest AI-assisted bot attacks I've ever seen. Um, it hit a certain vertical. Um, we had clients in and we saw it hit. It actually was so advanced, it took us three months to solve that issue. We had to revamp our entire process because we had we saw what they were doing, we knew how to solve it, but we had to rewrite our software to secure certain things and allow us to be um protected and protect our clients for years to come. So rather than just doing a quick fix, this required a whole new rewrite of our entire software. So our team got together, worked night and day, and resolved the issue. And end of Q4, we rolled out this new update and we're catching stuff that nobody's catching right now, which is awesome. So it keeps us ahead of the competition, which is always a good thing.

Protecting Clients Instead Of Chasing

SPEAKER_00 26:57

Absolutely. Well, this question may be subjective. So, do you feel like most people like yourself and other companies are doing their best? And and FBI, all these people that are trying to track these scammers, are they working just as hard trying to keep up with them, or are they actually trying to find them and persecute them, or is there just too many of them that we just want to try to keep people safe? We can't find them.

SPEAKER_01 27:24

I I have a couple of uh competitors in the space, one or two in particular, where they're always trying to make an example, you know, trying to find, I mean, really trying to find who's doing it and trying to shut their operation down. And I kind of laughed at one of their findings. Like they made this big deal about it. They were at some of the big shows talking about this new fraud find, and they were able to shut down five million dollars a year in fraud. And I laughed. I said, it's a$140 billion problem. Five million dollars is a drop in the bucket. You shut them off. Whoever was funding them just opened up another shop, you know, two doors down. And they're, you know, so the biggest problem is we have very strong privacy laws in our country. Everything's about privacy. Everybody wants privacy. Nobody wants to be, but that also protects the fraudsters because the same laws that protect you and I, because we want to keep our privacy protected, protects them as well. So for us, uh, we're a relatively small company, but we're we're beating some of the big companies in the industry with our technology. And we're able to do that because we're focused on one thing, solving the problem, keeping fraud off our clients' networks. Um, trying to chase down these people would take a lot more resources. And at the end of the day, what are you really stopping? Like it's such a big problem. You're better off just protecting your clients so well that fraudsters try and try and try and then say, you know, I give up, I'll go somewhere else. It's kind of like I use the old saying, um, I think it's ADT had the commercial out, right? They they had the commercial out where you put the sign on the property says protected by ADT, and a burglar comes up and says, Ah, there's such a hard system, I'm just gonna go next door. They don't have it.

SPEAKER_00 29:07

Yeah.

SPEAKER_01 29:08

Just they realize they got the protection, they don't even want to try, they just go to the next guy on the block.

Reaching One Million In Sales

SPEAKER_00 29:13

Yeah, they they've been talking about that in a neighborhood by my neighborhood, where they're like, you know, if you leave your doors unlocked, you are going to get things stolen out of your car. Most of the time, they're if it's locked, they're gonna go to the next car that's not, you know. So yeah, great example, great example. Well, you've built some some pretty massive companies here. Most of our listeners are probably doing less than half a million or so, and they're stuck. And so, any insights, advice of how you've gotten to that next level that would help our listeners as well?

SPEAKER_01 29:50

Well, I'll give you a little story. I like stories. Um, I um a lot of the stuff that I've created over time, when I decided to launch it, and I'll just use ANORA for example. We launched ANORA as a state, we actually built Anora in 2005 when nothing existed because I knew what the problem was. I had seen fraud before in the past, and I remember saying, look, I just want to license a fraud solution, bolt it onto my platform, and just go about my business. And in 2005, nothing existed because the first commercially available fraud solution didn't come out until late 2008, 2009. So I had no choice. I built it myself, and then it was working great for us. We're just cranking along, doing our thing. And then I had the bright idea, you know, you know, we got a lot of people asking to use this software outside of our network. We should maybe consider that. So, and long story short, we launched it in 2017. Meanwhile, the first one came out almost 10 years prior. Wasn't new. And we we did some testing to find out that we felt we had a stronger solution, was finding more stuff more accurately. And we did lots of tests. I spent six figures of my own money testing it just to make sure it was right before I took out a second mortgage on my house to go build up another platform. So you do all this work and you look at it and it's like, okay, what made me successful? So, you know what? We we launched this product, we're like, there's a great product, but it doesn't sell itself, right? Nothing sells itself. You got to get out there, you got to compete. There's billions of websites out there. How do you compete? So I sat down there and I was the first sale, obviously the first salesperson on the company because you know, you don't have any money at that time, and you're just, I got a proof of concept. Proof of concept for a SaaS solution is a million dollars a year in business. How do I get there? And I had at the time I had about 2,000 followers on LinkedIn or connections I had on LinkedIn, and I personally emailed every one of them. Like I worked all day long. I got home, had dinner with the family, sat down in my basement and started emailing. I wouldn't leave until I emailed at least 100 people a night, just saying, hey, I've got this new solution, would love you to test it out, give me your feedback, you know, start that initial process. And, you know, you just gotta, you just gotta, I don't want to say will it into existence, but you got to really work hard in the very beginning because there's that old saying that first million is the hardest to make. And that's so true because you're trying to put once you get a million dollars in business under you, you've got clients, you got testimonies, you got social proof that you can take to the next group of clients and grow to the next level. You know, that's all available, but it's not available on day one when you're trying to get that first client. Their first question is Do you have any case studies? Can you can I I don't know who you are, can I talk to one of your clients? And you're like, No, I don't have any. You can't do that, it doesn't work. So that's the that's the hardest part, and you just got to really work through that. Um, and just you know, know that you're doing the right thing. You know, you got to believe in the product, you got to know you have a good product, do some far a market fit analysis to make sure that you you're you're solving the problem. And then you got to go get somebody to believe enough in you to give you some money. And you just gotta, it's just hours. You got to put the hours in.

SPEAKER_00 32:53

Yeah, put the reps in. And it sounds like relationships are kind of what you were building in the beginning. And because I see so many business owners when they come to us, I'm like, well, where are you spending your time? Sales are down. Where are you spending your time? And they're doing TikTok videos and dabbling on their website and fixing this word and that word. And I'm like, you should be out having a coffee because someone can say yes right now, versus when whenever or if they ever find your website or that video, they might say yes then. So you're you're kind of going back to the old school of doing the grind, reaching out, personal conversations. Did you do that with most of your businesses?

SPEAKER_01 33:36

I would in fact, um, every one of them. We've always done trade shows where you're face to face with people. You're you put the computer aside and you're now you're now you're having conversations. And it's a perfect example. We're in a process again, we're changing our, well not changing, but we're going after a different um ICP, a different, you know, um type of client that we're going after because brands care most about this product because they're the ones spending the money for the traffic. So I love it when I get a brand, oh, we're spending a million a month. And I'm like, well, on average, we find 25% of fraud, which means$250,000 a month is being supporting fraud. And then they always ask the question, well, where does fraud come from? I'm like, well, over the years it comes from all over the place, but you know, one of the big places it comes from is organized uh crime. So if you really put a stretch together, you're you're giving organized crime 250 grand a month. You want to keep doing that? And that becomes that we got to talk. Like you have those conversations, but so we're going after a different ICP at this point because we're as we're growing as a company, we have to expand our our the relationships that we're going after, the size of the companies that we're going after. So we started hitting a different sector of trade shows. Like this year, we'll do 17 trade shows. Um, probably 10 or more of them are trade shows we've never done before. So we have no relationship there. Um, so this year we just hit two more trade shows that we were at last year, and all of a sudden we're running into the same people because they they stay the same trade show and they're like, oh, wait a second. Yeah, we talked last year. You know, we never did that, you know, traffic quality audit. You know, we need we need to do that because now they're seeing you, they're building up trust, maybe having a drink, maybe having a cup of coffee or a dinner, depending on where it makes sense. And you just have to build that trust in the relationship, and that happens over time. It's not something you're gonna generate over a quick TikTok video.

SPEAKER_00 35:29

With the digital experience that you've had and that you know how it works behind the scenes, what would you say is a good percentage that business owners should spend on digital versus what you're doing relationships?

Trade Shows And Relationship Selling

SPEAKER_01 35:44

Just I know it's subjective, but it's like if you can, or so here's the thing if you're doing digital and it's driving in new business, what you want to do is look at your ROAS, right? For all you gotta do, it's just return on ad spend. So if I spend a dollar on Google, Facebook, TikTok, whatever, and I can generate three, four, five, six, seven dollars in new revenue. If you can get your ads to do that, sink all the money you can into that, right? Um, because it's a winning ad. As long as you as as you scale that, those numbers continue to hold or get better, if if anything. Um in addition to that, I am a big believer in the face-to-face trade shows. Um, and you got to decide like how many trade shows your team can handle, if it's just you, how many you want to handle? Because you know, you want to prepare for the show, you want to reach out to people ahead of time, book some appointments, you want to get to the show, you want to pretty much you're up at six, you're you're you're in bed by by 1 a.m. Like it's it's it's a work, it's work. And it's all about and you're on 24-7 at these shows. And the show is usually three or four days long. So, how many shows do you want to do a month? How many shows do you want to do a week? Like, I I know some people that do 50 trade shows a year. I'm like, I don't know how you do it. I mean, I'm tired after you know, last year I did, I think, 16 trade shows. I meant, I'm exhausted.

SPEAKER_00 37:09

That's a lot of power.

SPEAKER_01 37:09

I still believe it's it's you want to do both. And the spend is going to come down to what's working for you. Because in the beginning, when you don't have a lot of money, every dollar is precious. Every dollar you spend, you want to spend it in an area that's going to produce some revenue. So if you get some really good hits, some good ads that are producing a good ROAS, you want to milk that as much as you can because that's the fastest way to get there. You know, the trade shows do take time, um, but it's the long game. If you you know you're gonna be here long term, you want to be doing those trade shows now so that by the time you see them year two, year three, relationships are there, you start to bring in those uh new contracts.

SPEAKER_00 37:48

That's great advice. Is there anything specifically? I know I've been on other podcasts and I'm like, oh, I wish I would have said this or captured that more. Is there anything that we haven't talked about that you really want to share with our audience?

SPEAKER_01 38:03

So here's a piece of advice to help reduce fraud on Google, at least on Google. Um, you can't do this if you're growing your campaign. Like if you need a, if you're if you're going after a specific audience and you and you're trying to get the largest audience possible, this isn't going to work. But in the beginning, when you're when every dollar is precious and you're trying to spend it, when you set up your Google campaign, along those check boxes, there's one that says include partner networks. Uncheck that. Because that means you only want to buy traffic from Google.com.

unknown 38:36

Right?

SPEAKER_01 38:36

Google.com obviously has no reason to commit fraud on the site. It has the very, very minimal, minimalist amount of fraud you can have. But again, it's it's good if your budget's small. Once your budget starts to get to a certain level, that technique won't work anymore. You're going to need to use a solution like ANORA to help you mitigate and reduce fraud while you're getting the bro the broader audience.

ROAS And Budgeting Guidance

SPEAKER_00 38:56

I love that. What's the best way to follow you, like you, learn more about you?

SPEAKER_01 39:04

Since I am a big believer in business-business relationships, LinkedIn is my social media of choice. Um, easy to find, RichCon. Um, easy to find there. Um, or just go to anora.io. Everything we have is listed there. What's nice about anora.io is we have a tremendous amount of blogs, ebooks. We have uh the only uh comprehensive guide to ad fraud that I've seen out there. It's like an 80-page document. Um and if you think you if you're if you're spending some money and you think you have some fraud problems, you know, just sign up for our traffic quality audit. We'll help you understand exactly what's going on, where it's coming from, and how we can help.

SPEAKER_00 39:44

Reminds me of a question I meant to ask earlier. What is it like to work with a company like yours? Is it like a retainer each month and you just uh monitor the website every minute, every day, or is it where you do this analysis once a month? How does that work?

SPEAKER_01 39:58

So it's it's a retainer-based, it's a SaaS-based solution, right? So there's a retainer base based on the amount of visitors that we're scanning. So the more visitors you scan, the cheaper per scan it gets. So it scales nicely. Um, but um essentially what we're doing is we're we're scanning your stuff in real time, keeping tabs on all that information. But then we also allow real-time actions. So we can actually we have a product called Search and Social Protect that runs in real time. And over the first 90 days that we're running it, we've reduced your fraud in half. That's pretty much how it works. Sometimes sooner, sometimes a little bit longer, but that's about how it works. Um but yeah, so it we can also do real-time blocking. So, like let's say if I know that this person that's on your on your site right now is about to charge a credit card and I can guarantee you that they're fraud, do you want to take their credit card? Probably not. We can block the credit card from being uh entered at that point. So depending on what our clients want, like we always tell clients, okay, I can tell you very quickly in real time if they're real or not. What do you want to do with them once you know they're not? And then clients do different things. Don't fill out my form, don't flood my CRM, don't let them charge a credit card, don't let them log into my system. Uh, we were working with um ADT. They were basically having people logging in, you know, hacking people's user accounts and then changing where the direct deposit went. But we can identify that before they even log into the system so we can help situations like that.

SPEAKER_00 41:24

So you just catch them and then it's up to the user to decide what to do with it.

SPEAKER_01 41:29

They make the business decision as to what they want to do, and then we can help them, you know, customize the code to do that for them.

A Simple Google Ads Fraud Fix

SPEAKER_00 41:34

So that's cool. Very cool. All they got to do is deploy code and everything's hands-off. I encourage our listeners to go check it out. I always end with one last question. If you're in front of an audience of business owners, different industries, different sizes, what's one last bit of applicable advice? It could be a quote, it could be a book, it could be just something you've learned that you'd like to share with all of them.

SPEAKER_01 41:56

Um, one of my favorite books is How to Win Friends and Influence People by Dale Carnegie. I mean, you can't go wrong with that book. And unfortunately, like I talk to a lot of people. Yep, there you go.

SPEAKER_00 42:07

I carry it with me everywhere in my briefcase.

SPEAKER_01 42:10

It's a great book. Um, and it just it really taught it teaches you how to talk to people and get people to like you and just be more effective at, and again, this is going to be useful at trade shows. It's gonna be useful of, you know, let's face it, most software demos are done over Zoom at this stage or some type of video conferencing. And you want the person on the other end to like you, you know, and sales, salesmanship, you know, sales 101, get them to like you first by sell yourself. So that's a great book for that. So if you haven't read that book, I'd be shocked, but that's the book to read.

How To Work With Anora

SPEAKER_00 42:40

Yeah, there's still people I talk to that haven't. I'm like, well, if this is the best sales book, it's the best personal development book, it's just the best all-around book from cover to cover, I think. So I agree with you. You've been a blessing to many, appreciate you, and wish you continued success. Appreciate it. Thanks for having me on today. My pleasure. Thank you for listening to Small Business Pivots. This podcast is created and produced by my company, Boss. Our business is growing yours. Boss offers flexible business loans with business coaching support. Apply in minutes and get approved and funded in as little as 24 to 48 hours at business ownership simplified.com. If you're enjoying this podcast, don't forget to hit the subscribe button and share it as well. If you need help growing your business, email me at Michael at michaeldemorson.com. We'll see you next time on Small Business Pivots.