The inconvenient truth about Ad Fraud

Call me Al Gore, I’m here to talk about an inconvenient truth….

Global ad fraud is expected to cost the industry over $50 billion over the coming 10 years.  

Even that figure could be a low ball. Ad Fraud is the thorn in our collective side that just won’t go away. There are numerous types of fraud (16 according to JICWEBS) and that is going to mean countless more solutions are needed.

Ad Fraud in numbers, 2017:

  • Sites with bot only traffic make up 20% of all websites
  • 76% of sophisticated invalid traffic (SIVT) came from machines which have a human and a bot on the same machine, making them harder to detect
  • Fraud losses will amount to 9% of display spending and 22% of video spending this year (both numbers down 1% on last year)
  • Nearly 70% of fraudulent impressions come from 3% of publishers

In previous years, programmatic was at much higher risk of fraud than direct buys. However, thanks to sophisticated security measures, programmatic is outperforming direct buys in many instances.

Seasonality: 

In November and December last year, digital spend was 50% higher than other months, driven by retailers wanting a slice of the Black Friday/ Christmas action. However, many publishers cannot keep up with this demand and turn to traffic sourcing to make up those impressions. Sourced traffic generates 3.6 times the amount of fraud compared with non-sourced, so it’s unsurprising that fraud increased 13.5% between October and January last year.

It’s not just the holidays causing supply to outweigh demand. Bot networks are smart, they know advertisers have quotas to fill each quarter, hence we see budgets lost to fraud at their highest at the end of March, June, September and December- in line with budget spikes.

It’s not all doom and gloom:

White Ops project that global ad fraud is set to total $6.5 billion this year. Whilst this number is still a fairly eye watering amount, it’s a 10% decline on last year- which is made more impressive when we consider digital ad spend has increased 10% in the same period.

Industry solution:

This month the IAB published an open letter, aimed at ‘Creating a Gold Standard for Digital Advertising’. There are three elements to the programme, the first of which is ‘Reducing ad fraud through the implementation of the ads.txt initiative on all sites selling digital advertising’. Notable signees of the letter include AppNexus, Google, Facebook and News UK.

Although adoption of ads.txt was initially slow, with only 13% of the 10,000 most popular domains implementing it 100 days after its release in May, that number is now 44%.  For more information on ads.txt, click here.

Long term, there are interesting talks around the potential of Blockchain to combat fraud.

Media iQ solution:

 Regital Partner, Media iQ, forever at the forefront of all things ad tech is proactive in the fight against fraud. They’re already leveraging ads.txt and are a proud member of the Trustworthy Accountability Group (TAG) and are TAG certified against fraud. This means they have:

  • Media Rating Council (MRC) Accredited Invalid Traffic (IVT) monitoring on 100% of impressions bought
  • Fraud domain blacklist on 100% of impressions bought
  • Fraud IP blacklist on 100% of impressions bought

As well as this, they only run on humanly audited domains (with blacklists updated weekly), utilise third party pre-bid blocking from IAS and Grapeshot, and their IP blacklists are updated daily. It’s probably why in 2016 their fraud levels were 2% compared whilst the programmatic average was 9%.

If you would like more information on how we ensure our partners are fraud free and transparent, contact us via enquiries@regital.com or 0161 974 0496

Sources:

https://digiday.com/media/can-good-big-stick-thanks-google-ads-txt-taking-off/

https://integralads.com/uk/capabilities/ad-fraud/

https://digiday.com/marketing/blast-past-old-ad-fraud-tactics-wont-die/

https://www.mediapost.com/publications/article/309375/ad-fraud-to-increase-with-end-of-year-budget-dumps.html

http://www.thedrum.com/news/2017/10/18/facebook-google-and-news-uk-pledge-reduce-ad-fraud-with-iab-gold-standard-initiative

https://www.warc.com/newsandopinion/news/ad_fraud_peaks_in_q4/39497

http://blog.fraudlogix.com/blog/study-shows-3-percent-of-sources-cause-68-percent-of-ad-fraud-problem

https://econsultancy.com/blog/69125-despite-losses-of-6-5bn-there-is-some-good-news-in-the-fight-against-ad-fraud

http://adage.com/article/digital/iab-ads-txt-ad-fraud-wrong-right/309139/

IAS (2017). Ad Fraud, The Essentials. Download here: https://insider.integralads.com/uk/ad-fraud-essentials/