Rampant online ad fraud is ‘the last thing the industry needs’

In an environment in which over half of display ads aren't even visible and adtech middlemen are scraping 60-70 per cent of working media dollars, rampant fraud is the last thing we need, argues Bob Hoffman

A difficult problem for advertisers to come to terms with is the size and scope of online ad fraud.

Everyone knows it’s a headache, but no one knows what kind of headache. Is it just eye strain or am I having a stroke? If you don’t already have a headache, trying to reconcile the various estimates of the size of the problem will give you one.

Group M, a WPP-owned media company, says that ad fraud is “significantly contained” and that “2 per cent of impressions purchased by the biggest advertisers in Western markets remain non-human.”

The&Partnership, another WPP-owned company, says that ad fraud constituted about 20 per cent of online spending or about $12.5b last year. I think it’s cute when two divisions of the same corporation disagree by 1,000 per cent.

The Association of National Advertisers claims that about $7.2 billion was stolen last year by online ad fraudsters, which would amount to about 11 per cent of total ad spend.

The World Federation of Advertisers say that fraud could be as high $30 billion which would be almost 50 per cent of online ad spend.

Last year Facebook announced that they had cancelled a buying platform they were testing when they found that 75 per cent of the inventory coming into the platform was “valueless.” Oxford BioChronometrics says fraud could be as high as 90 per cent.

In other words, everyone has an opinion and no one has a clue. Most of the people I talk to who appear knowledgeable guess that the number is probably between 20 per cent and 40 per cent. But the problem is, no one really knows.

From what I understand the difficulty in ascertaining a real number is that the people who measure fraud (the cyber-security crowd) all have different criteria for deciding whether a visitor is a human or a bot (WARNING: DUMBASS BLOGGER EXPLANATION COMING UP…)

Remember, in the digital realm everything is either a one or a zero. There ain’t that much difference between a human one and a robotic one. So the security boys have to set up filters that look for patterns and try to interpret what’s a human pattern and what’s a robotic pattern.

Meanwhile, the bad guys are constantly sending feelers to see which patterns they can invent will pass through the filters. Once they find a winning pattern they bombard the system with fraudulent traffic and clicks.

Consequently, when a cyber-security firm reports that 5 per cent of traffic is fraudulent, what they are really saying is that their nets were able to catch 5 per cent of the fish, but they don’t really know how many fish got through the nets.

In one instance, as a test, an ad fraud fighter sent 100 per cent robotic traffic through a network and only 17 per cent of it was identified as such by a leading cyber security firm.

Fraud is a major problem. In an environment in which over half of display ads aren’t even visible and adtech middlemen are scraping 60-70 per cent of working media dollars, rampant fraud is the last thing we need.

Bob Hoffman has been the CEO of two independent agencies and is the author of the Ad Contrarian blog, where this article first appeared


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