Is online advertising fraud becoming an epidemic?

Web Bot

The Interactive Advertising Bureau recently estimated that 36% of all web traffic is considered fake, prompting The Wall Street Journal to call this growing problem an”epidemic.” So what can advertisers do about it?

The official industry term for the issue is “online traffic fraud”, which is defined as web traffic generated by non-human activity that produces false page views, ad clicks and site visits using robotic programs.  These “bots” are smart enough to mimic human behavior, making them difficult to detect.  However, since the action is driven by code rather than humans they have no ability to generate real conversions or purchases and end up artificially inflating inventory as well as wasting advertisers money on fraudulent impressions that are never seen by real humans.

Fraudulent traffic is generated in numerous ways, from computer malware to programs that mimic a smartphone running mobile apps, to ad stacking where multiple ads are placed on top of each other in a single ad placement.  Even branded toolbars exists that can be installed without a user’s knowledge and hijack the user’s browser.

This is a growing issue in the digital ad community with potential deep ramifications.  In fact the Interactive Advertising Bureau (IAB) estimates wasted ad spend in the US alone amounted to over $6 billion last year.

To combat the problem, large advertisers like GM, Verizon and L’Oreal are hiring digital security firms like Telemetry and White Ops to investigate fraud, and some are negotiating with major ad networks and exchanges to provide free ads to make up for the fraud.

While this problem will probably never be completely solved, there are tactics that can help mitigate the issue.  Setting specific goals and consistently measuring results is the first line of defense.  Since bots can’t engage the way humans can, agencies like PILGRIM are recommending clients set goals and measure campaign results using more sophisticated metrics that ensure humans are actually interacting with your ads.

Activity that Indicates Human Behavior

  • Purchases
  • Subscriptions
  • Verifiable brand survey results
  • Validated panels
  • Other verifiable engagements

Activity that is Easy for Bots to Fake

  • Ad Views
  • Clicks
  • Click-Thru-Rate
  • Video completes
  • Cookie attribution

Working only with trusted and certified vendors is another obvious step.  Partnering with vendors that have made fighting fraud and malware a key business initiative will not only help combat the problem in the short term but can help propel industry wide reform in the long term as well.

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