According to Forrester Research, € 6.3 billion was wasted on fraudulent online advertising in 2016. This number corresponds to the gross domestic product of the Bermuda islands. Whether it’s botnets spoofing clickthrough rates on ads, fake domains or just more traffic from dubious sources – there are a lot of variations on Ad Fraud. While this figure gives some indication of the extent of ad fraud, it does not necessarily say anything about its prevalence. Experts estimate that in the mobile sector alone, 50-60 percent of the ads are fraudulent.
That is amazing. Half of the ads that reach our (small) screens are fake.
Therefore, it is not surprising that companies take action to counteract this. For example, Google compensated advertisers for ads viewed exclusively by bots in August 2017. These bots were almost certainly malware explicitly designed by fraudsters to generate impressions and clicks with malicious intent. At the same time, the IAB Labs developed the text file ads.txt to allow publishers transparency and to show who can advertise on their websites and thus prevent unauthorized advertisements.
When fraud is associated with bad practices
To make matters worse, the quality of online advertising is often inadequate. Do you still remember the Levi’s advertisement? She was cool, the music was great, she was iconic. She brought the brand Levi’s alive. When was the last time you saw an ad online that you wanted to see a second time?
It is often difficult to differentiate online between fraudulent and real ads because the billboards are flooded with poor quality ads. In addition, the problem is exacerbated by the fact that companies hire agencies that in turn use a variety of tools and publishers for the campaign delivery. The whole process can be a kind of black box – companies vote the ads with their agency, add them to their ad serving tool and lose them immediately. In addition, Ad Fraud is an international problem and fraud is therefore difficult to establish. Even though all major advertising brands, agencies, platforms and publishers are tackling the problem with dedicated ad fraud teams.
A question of responsibility
Ultimately it is a question of responsibility. Google may take some responsibility by paying compensation, but that’s more the exception than the rule. In fact, it is unclear who is ultimately responsible: is it the publisher who shows the ad, the agency, the brand, the platform being used, or even the government or industry association? Ad fraud may seem like a “crime without a victim” at first, but if we lose 6.3 billion euros every year, it will not only affect GDP, it will also kill the industry.
The responsibility is undoubtedly with all involved. We know from experience that governments are usually slow to take action, unless it is a serious offense – and that is understandable. However, industry associations such as the DMA have already done a great job in the past and well-known agencies, platforms and publishers use fraud teams. This is how everyone deals with the topic from different perspectives.
Where is Ad Fraud going?
There are clear indications that it is harder for the fraudsters to keep up if we intelligently deliver better ads. Scammers often use a simple scam: they try to get a click through psychological tricks. The ads are seldom customized for a person, as they only target the quick click or impression, because that’s often what companies pay for. Success is often measured purely by attribution, not real metrics.
If we create better ads, the bad ones tend to stand out and make it easier to expose them. Of course, high-quality ads should not only be well-made, but also targeted. For an internal marketing team or agency, this means developing a clear idea of who you want to address and using sound metrics.
It sounds simple, but the better you know about your customers, the more they are recognized as real people with recognizable behavioral patterns. As this approach becomes more complex, it also makes it easier to identify fraudulent clicks. Because the programs that pretend click through rates, work too flat and smooth. Scammers will then have to start making fake profiles and trying to build a realistic identity for themselves – and that’s impossible on a larger scale.
But what about our initial question: Can we stop online advertising at some point? It’s similar to the question of whether we can ever eradicate crime – there will always be loopholes for scammers. It is important to realize that we are still at the beginning of the era of smart digital advertising. Our industry is barely a quarter of a century old and in constant change. There is still a long way to go for perfect personalization and advertising, but there are many things we can do right now – starting with creating higher quality ads and understanding the audience. These are the first steps in the right direction.
To the author: Elliott Clayton has been involved in media personalization for over a decade. The combination of technology and strategy with extensive data is at the center of his work and his clients include many of the Fortune 500 companies. As a senior vice president at Conversant He focuses primarily on making personalization scalable and thus measurable in terms of media spending.