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It's Time To Unite Against Ad Fraud

It's Time To Unite Against Ad Fraud

May 03, 2017

As criminal activities go, digital ad fraud has a certain appeal. The potential gains are high, the costs and resources required are minimal, and there have been very few successful convictions thus far. With Hewlett-Packard classifying ad fraud as the most attractive type of hacking in terms of financial gain and effort, it’s no wonder this type of criminal enterprise is thriving.

Estimates on the scale of ad fraud are alarming, with a recent report indicating it will cost brands $16.4 billion this year and the World Federation of Advertisers (WFA) predicting it will cost advertisers anywhere between $50 billion and $150 billion by 2025. But all reports agree the problem is growing rapidly and without sufficient countermeasures, it will eventually make the digital economy untenable. 

Ad Fraud Explained

A plethora of ad fraud exists within the digital advertising ecosystem, and any activity where impressions, clicks or other actions are falsely reported to generate revenue are defined as such. There are, however, some particularly prevalent forms of ad fraud, such as botnets.

Bots are created when real computers are infected with malicious software that runs in the background without the owner’s knowledge. This software can mimic human browsing behavior, including visiting websites, clicking on links, viewing videos to completion, and even adding items to shopping carts on e-commerce sites. Large groups of bots – or botnets – can be directed to visit and interact with specific websites. These are either ghost sites created by the criminal network, which humans are unlikely to find or visit, or genuine websites owned by a third party who pays to have traffic levels boosted. The ad impressions on these sites are then made available for advertisers to buy programmatically, with the website owners pocketing the revenue.

There is a misconception that fraud only impacts low-quality, low-cost display advertising, but this is far from the case. Ad fraud generally follows revenue, and certain types of fraud such as domain spoofing – where a genuine domain name is hijacked so advertisers think they are buying an impression on a premium site – escalate during big events such as sporting fixtures, where ad spend is high and inventory is scarce. The most valuable ad placements are also the most vulnerable to fraud, and Methbot – a Russia-based botnet that generated an estimated $3 to 5 million per day – targeted the premium video advertising ecosystem. The operation spoofed around 6,000 premium domains and used bots to watch around 300 million video ads per day on these falsified sites. 

Ad fraud is often viewed as an issue for advertisers, as they are the ones wasting valuable budget on ads that are only served to bots. But the impact on publishers is also significant. If a large proportion of digital ad revenue is being wasted on fraudulent impressions, it stands to reason there will be less to be earned honestly by publishers. In addition, fraud may be preventing advertisers from investing in digital, with the WFA advising: “Until the industry can prove that it has the capability to effectively deal with ad fraud, advertisers should use caution in relation to increasing their digital media investment, to limit their exposure to fraud.”

Industry-Wide Action Is Vital

Ad fraud is a problem across the entire ecosystem, from publishers to advertisers and everyone in between, so industry-wide action is needed to get it under control. Both advertisers and publishers need increased transparency in the digital media supply chain, which can involve a multitude of middlemen from DSPs and exchanges to ad networks and SSPs. They need to understand who they are actually working with, and question the anti-fraud technologies and methodologies these providers are using to detect and filter out fraud.

Various initiatives currently exist to identify providers that are committed to combatting fraud, including the Trustworthy Accountability Group (of which my agency is a member), a joint marketing-media industry program, created by the American Association of Advertising Agencies (4A’s), Association of National Advertisers (ANA), and Interactive Advertising Bureau (IAB). Set up to "eliminate fraudulent traffic, combat malware, fight internet piracy, and promote transparency," TAG runs a Certified Against Fraud Program open to buyers, sellers and intermediaries across the digital advertising ecosystem. Proctor & Gamble is taking the lead in the fight against fraud by demanding all companies involved in its media supply chain are TAG certified by the end of 2017.

Where there’s money to be made with minimal effort, criminal activity will always flourish. The digital ad industry as a whole must unite and take action against ad fraud to close that window of opportunity and ensure ad revenues are used to effectively engage audiences, not line the pockets of fraudsters.

(As published on Forbes)