Stephan Loerke
Feb 2, 2016

Lack of scrutiny has given ad fraud criminals a head start

For the most part, perpetrators of ad fraud have operated without fear. How does the industry begin to change that?

Lack of scrutiny has given ad fraud criminals a head start

The cost of ad fraud is commonly quoted as a range of between US$10 billion and US$50 billion in 2015 globally. The upper limit would represent around 33 per cent of the global digital media market. So on that basis one dollar in every three spent on digital goes to fraud. And some say this is a highly conservative estimate. But in truth, an accurate figure remains elusive. 

Whatever the exact figure, ad fraud is seen by many as the biggest cybercrime in the world and one of top 10 international crimes. The damages from ad fraud are likely to run into the hundreds of billions. The costs to marketers and even the costs to society are likely to be far greater than we can know. The implications are serious.

The WFA recently completed a study across a selection of its membership to gauge how ad fraud is being treated by brands. Globally, 11 per cent of those surveyed said that more than 30 per cent of their digital media budget had been hit by fraud, but the greater share, 36 per cent, acknowledged that they do not know to what extent they are affected. Additionally, just under 40 per cent of respondents had made ad fraud a critical or major priority. 

Herein lies the problem. The lack of scrutiny and lack of prioritisation have given the criminals a strong head start. All brands, regardless the size of their digital media investment, will almost certainly have been (and are still) exposed to ad fraud. This needs to be addressed.

Of course this isn’t easy to resolve. Some 78 per cent of WFA survey respondents agree that the structure and systems in place in the digital media ecosystem play a large role in perpetuating the ad fraud issue. Programmatic has many benefits for marketing purposes but, arguably, greater automation has resulted in greater ad fraud.

Additionally, some of the difficulty arises from the fact that ad fraud can inadvertently benefit legitimate players in the market. Data from Botlab.io, a research company WFA works with, shows the beneficiaries of fraud include not just the spammers and botmasters but also networks, agencies, tech companies and others. 

The principal losers are the brands who pay the bills. This makes it vitally important for them to identify the scale of the problem and actively make changes to reduce the impact on budgets. Not everyone is tackling this with the urgency that is required. Data from our survey finds that almost 40 per cent of multinational brand owners have no plan in place to respond to ad fraud. 

Read more
Bots versus brands:
Ad fraud in APAC

At the WFA Mediaforum, a network of hundreds of client-side media directors from 80 global firms, we are increasing our focus on the threat.

Clearly identifying how ad fraud manifests itself is the starting point. WFA survey respondents say that they have been most acutely affected by impression and click fraud. Companies and marketers will be affected in different ways according to their geographic focus and the nuances of digital media consumption within those regions. 

Asian respondents to our survey put levels of social media fraud even higher than the global figure and this is likely to affect the tools and approaches that regional marketers use to respond to the threat.

Among those WFA members that have taken steps to reduce their exposure to ad fraud, the most powerful countermeasure has been the use of third-party technology — rated as highly effective for 46 per cent. Whitelists and blacklists are also commonly being deployed, but research from ad fraud specialists is beginning to show that the greatest successes may come from the analysis of log files and other forensic research techniques.

Easier said than done perhaps, but smart marketers will be talking to people with experience of dealing with information security threats outside the advertising industry, who can provide the scrutiny required. Just as the banks worked closely with these companies in the past, brand owners also need to make these experts part of their advisory team.

Of course, ad fraud is one of many issues that brand owners need to contend with today to ensure their advertising is as efficient and effective as possible. Viewability remains an unresolved issue, and for many companies the baseline standard of 50 for one is not sufficient. The increase in prevalence of viewable but non-human impressions compounds the ad fraud issue.

We need to get to grips with ad fraud and other issues acutely affecting the digital ad market, but the bottom line is that brand owners may need to take a lead. The good news is that brands need not tackle this in isolation and the WFA exists to connect and provide support to marketers. You are not alone. 

Stephan Loerke is CEO of the WFA

 

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