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Online Ad Fraud Costs Advertisers $5.8 Billion Annually (#GotBitcoin?)

Ad spending lost to schemes declined 11% since 2017, but fraud is shifting to platforms where it is more difficult to prevent. Online Ad Fraud Costs Advertisers $5.8 Billion Annually (#GotBitcoin?)

Online Ad Fraud Costs

Marketers are expected to waste $5.8 billion this year on buying online ads that will be viewed by bots instead of humans, a study published Wednesday found—an 11% decline from the amount the group estimated was lost to fraud in 2017.

But ad-fraud schemes on other platforms have quickly risen and been much more difficult to measure, according to the study, which was conducted by the Association of National Advertisers and fraud-detection company White Ops Inc.

For years, marketers, publishers and researchers have labored at the Sisyphean task of fighting the industry scourge of so-called bots, computer programs that mimic humans’ mouse movements and clicks to give the impression that a human is visiting a website.

Fraud-detection companies have created technology to detect and block bots, making ad-fraud schemes more costly. Ad fraud also has become more legally serious: The Justice Department charged eight people implicated in ad-fraud schemes last November.

“There is a point at which ad fraud becomes substantially less attractive,” said Michael Tiffany, co-founder and president of White Ops.

The greatest strides against ad fraud have been made in desktop display advertising, the study found. Such ads made up the majority of ad impressions observed in this year’s study, which tracked online ad buys by 50 brands from August through September.

In recent years much of the fraud has shifted to platforms where it is more difficult to prevent and measure, including in-app advertising and connected-television advertising, ANA and White Ops said in their report. Ads in connected TVs, in apps and in certain video formats are more difficult to measure than traditional display ads because their environments don’t allow JavaScript code to run, preventing researchers from verifying whether the viewer is real.

The $5.8 billion that the ANA and White Ops expect to be wasted on ad fraud represents less than 2% of eMarketer’s predicted $333.25 billion in digital ad spending for 2019.

While the results are encouraging, the study was hardly representative of the broader digital ad industry. Its participants showed above-average use of fraud-prevention measures.

Of publisher domains considered in the study, 78% were covered by Ads.txt, an industry initiative that lets publishers display a simple text file on their sites listing every company authorized to sell their ads. Of advertisers buying ads in the study, 90% had verification measures in place to prevent their systems from purchasing fraudulent traffic. The report also excluded certain types of advertising, such as search and paid social-media campaigns.

“Continued measurement, continued vigilance is still a must because the forms of fraud are flowing into areas that are less measurable and more lucrative,” said Augustine Fou, an independent ad-fraud researcher who reviewed the report. “They’re accurately reporting on what they can see.”

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