How Bad Is Ad Fraud and What Can You Do About It?

By: Gina Lee De Freitas

Dr. Augustine Fou, a researcher who specializes in online ad fraud, usually publishes his findings on a quarterly basis. But he released his latest report two months early. According to Fou, “Digital ad fraud is so bad, I could not wait to update the numbers.”

Ad Fraud has become the Number One concern of marketers and agencies. A recent survey by MyersBizNet found that 78% of brand marketers are concerned with ad fraud and bot traffic, and with good reason. Recent research suggests even quality publishers spend only 68¢ of every dollar on legitimate advertisements viewed by real people.  In total, the cost of ad fraud is projected to reach as much as $16 billion globally by the close of 2017, according to Business Insider.  There are plenty of companies that are feeling the effects.

The Wall Street Journal recently reported that Google would issue refunds of as much as 10% to clients in a tacit acknowledgement of the problem.  Proctor and Gamble announced that it is reducing its online ad budgets by $140 million due in large part to its concerns of fake ad traffic driven by bots. JP Morgan Chase recently reduced its online ad presence from 400,000 websites a month to 5,000 pre-approved sites, yet witnessed little change in the cost of impressions or the visibility of its ads on the internet.

To advertising experts, the solution is clear. If the industry is to maintain the integrity of its online advertising, we need to build Transparency into many of our media buying and reporting. Fou found that “the difference in quality is so dramatic, it is worthwhile just buying clean to begin with. Savvy marketers are already starting to do this.” By "buying clean" Fou means buying from publishers that drive more interaction and traffic from real human beings, while decreasing funding to sites and networks with more known bot traffic.

Another practice that will improve Transparency is to utilize Blockchain Technology to create an open access ledger that tracks and reports the life cycle of an ad impression. Blockchain is a transparent ledger that can be audited, reviewed, and scrutinized by any willing party.

Blockchain Technology has the potential to completely eradicate ad fraud. According to Science Inc, founder and CEO Mike Jones, "There's no question Blockchain is a transformational technology that can disrupt the way nearly every business or financial transaction takes place.” Although Blockchain Technology is in its infancy, it is destined to grow in use. In a recent survey, 57% of executives from large corporations  who were surveyed said they were considering implementing Blockchain Technology into their systems by the end of 2018.

The ANA recently studied the digital activity of 49 companies for 15 months and compiled a full report detailing clear action steps to prevent ad fraud. They recommend clients should follow these recommendations:

  • Demand Transparency for sourced traffic.
  • Refuse payment on non-human traffic in media contracts.
  • Avoid excessive restrictions.
  • Encourage the Media Rating Council (MRC) accredited third-party fraud detection on walled gardens.
  • Support the Trustworthy Accountability Group (TAG).

The advertising industry can be slow to respond to new technologies and trends, but with  ad fraud robbing advertisers of billions of dollars each year the industry needs to focus on and solve this massive problem now.  

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At IMM, creating action isn’t just what we do — it’s who we are. Our agency is built to deliver full service capabilities while also delivering measurable results. Big data is the marketing buzzword everyone talks about but few understand. We are here to explain in plain English how data-driven, bottoms-up marketing strategies can help generate leads, drive sales and build your brand. We leverage the expertise of the staff at IMM, a data-driven, full-service digital advertising agency based in Boulder, Colorado.

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