TBT: A glass of bot fraud: Half-full or half-empty?

This week for TBT: A refresher on how some companies rip off digital advertisers. Originally posted August 25, 2017.

IF YOU’RE A glass-is-half-full kind of person, I have good news. About 80 percent of what you spend on digital advertising is likely to show up under the noses of people you’d like to reach.

If you’re a glass-is-half-empty kind of person, the news isn’t so cheery. About 20 percent of what you spend on digital advertising is likely to show up under no noses at all.

This is reportedly due to bot fraud, automated systems that inflate views and clicks, on which, as you know, digital advertising rates are based. Individual bot fraud apps, hard to detect on their own, are often networked into—what else?—botnets, which have the power to make advertisers overpay in increments that add up fast. The overage, of course, lines the pockets of bad guys.

There is no shortage of ways to commit bot fraud. You can pile multiple ads atop one another with only the top ad visible, while each hidden ad is counted as having been viewed. You can reduce ads to a single, invisible pixel and crowd oodles of them onto a page where, again, they’ll be counted as viewed. You can create content-less sites loaded with stacked and single-pixel ads, and then “launder” to them ad impressions from legit sites. For more such activities—despicable, ingenious, or both, depending on how you look at them—check out Ryan Joe’s entertaining and informative Ad Exchanger article, “The Book Of Fraud: A Marketer’s Guide To Bots, Fake Domains And Other Dirty Deeds In Online Advertising.”

Just how serious are the numbers? According to CNBC,

New figures released today suggest that ad fraud will cost brands $16.4 billion globally this year, and that nearly 20 percent of total digital ad spend was wasted in 2016.

So-called invalid traffic, where bots rather than humans view or click on adverts on websites, was estimated to cost advertisers $12.5 billion in 2016 by ad verification company Adloox.

In December, in what it called “the biggest ad fraud ever,” Forbes reported:

A group of Russian criminals are making between $3 million and $5 million every day in a brazen attack on the advertising market, security firm White Ops claimed today. It’s the biggest digital ad fraud ever uncovered and perpetrated by faking clicks on video ads, the company said.

Not to be overlooked, Business Insider projects even higher numbers for 2017:

The amount of global advertising revenue wasted on fraudulent traffic, or clicks automatically generated by bots, could reach $16.4 billion in 2017, according to a new study commissioned by WPP and cited by Business Insider.

That figure is more than double the $7.2 billion the Association of National Advertisers estimated would be lost due to ad fraud in 2016.

Not a few other publications, including Fortune and Adweek, report similar, unsettling numbers. But a study by cyber security firm WhiteOps, commissioned by the Association of National Advertisers, predicts a downturn in bot fraud in 2017:

The third annual Bot Baseline Report reveals that the economic losses due to bot fraud are estimated to reach $6.5 billion globally in 2017. This is down 10 percent from the $7.2 billion reported in last year’s study. The fraud decline is particularly impressive recognizing that this is occurring when digital advertising spending is expected to increase by 10 percent or more.

One can only hope. By my calculation, $6.5 billion is nearly ten billion less than $16.4 billion predicted by CNBC and Business Insider.

Still, $6.5 billion could pay for a lot of lunches. Happily, the White Ops report offers suggestions for fighting bot fraud. Among others are demanding transparency for sourced traffic, refusing payment on non-human traffic in media contracts, and encouraging Media Rating Council (MRC) accredited third-party fraud detection on walled gardens. You can download the WhiteOps report in its entirety by clicking here.

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