A whopping 65 percent of online ads will be transacted programmatically by 2017. Advertisers are lured by the promise of better targeting, deeper insight into audiences, and increased effectiveness. Yet it's estimated that $7.2 billion will be lost in ad spend due to fraudulent activity perpetrated by both nonhuman and human traffic.
The biggest victims of ad fraud are the brands and agencies that are, essentially, financing it. For each and every campaign, the amount of fraudulent activity looks small, but on the whole, it adds up to huge numbers. It's death by a thousand cuts. But beyond that, ad fraud hurts the entire ad tech industry.
The problem with the real-time bidding ad marketplace is that it's open to any buyer or seller. One simply needs to sign up with a demand-side platform (on the buy side) or get his or her site approved on ad networks or exchanges. The egalitarian nature of this environment often makes it a prime target for deceit.
Bots, the most common type of fraudulent traffic, can be defined simply as computer software applications that automate activities on the web. They aren't inherently evil. "Good" bots perform tasks like sorting content for easy web searches. They're easily detected -- often identifying themselves -- while their nefarious counterparts masquerade as humans and muddy the ad-targeting waters.
The Association of National Advertisers estimates that more than 67 percent of all bot traffic originates from residential IP addresses; malicious hackers infiltrate home computers from afar and install bots, which can automate the action of visiting websites and, at times, replicate human behavior by simulating mouse movements. Sophisticated bots can even add items to a shopping cart and visit multiple sites to create cookies and browsing histories that align more closely with advertisers' and publishers' target demographics.
Advertisers should also watch for fraudulent human traffic. This can be generated in a variety of ways. For example, one tactic is serving ads beyond the browser viewing area or stacked and hidden behind other ads. Real humans are loading these sites, but the ads will never be seen -- yet companies are still paying for them because they were served.
Approaching this industry-wide problem with the following proven strategies will help you build trust and avoid financial pitfalls.
Re-examine the reports
Look at each campaign to set a benchmark for how much concern should be placed on fraudulent ads. Check domain-level reports for the top domains. Are they trusted sites? Look for odd domain names that string together random words. Do the sites lack author attributions on articles while offering mediocre content with no social media presence? Additionally, review any irregular performance metrics, including rapidly rising click-through and conversion rates on sites you've never heard of before.
Use technological countermeasures
Consider working with a measurement or verification partner or insisting that your ad-buying platform partner does. Look for rankings of trustworthiness and quality levels in buying platforms. Many of the major providers have pre-bid audience segments that help marketers only buy the impressions that are coming from verified IP addresses and publishers. These are available through companies like Integral Ad Science, DoubleVerify, comScore, and Pixalate. They quantify how much fraud is being observed in each campaign.
Cherry-pick partners with good reputations
Private marketplaces reduce risk because they feature known sellers. They add certainty about what's being purchased and who it's being purchased from. The best ones proactively monitor and remove misrepresented sites altogether. Marketers can also selectively buy from an approved list of trusted sites by building white lists. From another point of view, they can blacklist, or block, sites where they historically have seen high volumes of fraudulent traffic.
Avoid measurement KPIs that can be easily gamed
Consider turning off click-based optimization, as it can be unreliable and easy to fake. Instead, seek online conversion goals and proxy engagement metrics (e.g., time on site).
Ad fraud is a big problem with a big price tag. In an ever-adaptive landscape, marketers should always embrace defensive buying tactics. Everyone in the ad tech industry shares a duty to raise awareness, identify scammers, and protect client investments. Advertisers have a role to play in this effort.