Bots Will Inflict $7.2 Billion In Fraud On Digital Advertisers In 2016

Despite heightened awareness about digital ad fraud, criminals operating massive botnets continue to completely game the online advertising marketplace. A new report today by WhiteOps and the Association of National Advertisers (ANA) shows the bot masters are making billions of dollars by tricking advertisers into thinking more people viewed and clicked their ads than actually did.

In its second year running, the 2015 Bot Baseline study examined over 10 billion online advertising impressions from dozens of brands across hundreds of campaigns for two months. The study showed that the average brand suffered $10 million in damages. By extrapolating the rate of fraud across the industry, WhiteOps estimates that bots will inflict $7.2 billion in damages to digital advertisers in the coming year.

That's higher than in 2014, when advertisers worldwide lost $5 billion, and within the range of the predicted rate of loss for 2015 concluded in the first report conducted by WhiteOps and the ANA.

The criminals use these bots against advertisers by infiltrating systems at numerous points in the digital advertising ecosystem. With much of today's advertising world run by automated systems and complicated advertising platforms, the fraudsters have figured out how to either use bogus sites that serve up ads to phony "viewers" that are actually just bots, or through unethical traffic sourcing or audience extension services used by publishers who need to boost traffic in order to fulfill inventory requirements promised to advertisers. In the second case, that relationship could be engaged knowingly or ignorant of that third-party's links to shady bot practices.

"Advertising fraud has the curious status of almost seeming legitimate; you couldn’t expect to get away with raiding a bank account or accessing someone else’s Gmail account, but defrauding advertisers, even by using the host user’s identifying cookies, doesn’t seem nearly as criminal," says Dan Kaminsky, co-founder and chief scientist for WhiteOps, explaining that end users see little impact from the fraud while bot operates rake in the cash.

"Many do not even operate their own infrastructure. So this sort of fraud has a surprising number of  'legitimate' participants," Kaminsky says. "We’ve found companies where not everyone at the company knew they were fraudulent operations."

Some bots afflicting advertisers are not necessarily technically sophisticated, but most ad fraudsters operate with a high degree of sophistication in their knowledge of the way digital ads are bought and sold. For example, bots target programmatic advertising 73% more than average. Most specifically, the more expensive programmatic video ads that reap more profitable gains from bot operators saw a 273% higher bot rate than average.

Similarly, bot operators home in on targeted campaigns based on demographic or geographic quotas because advertisers pay more for impressions in these cases. Some targeted campaigns saw a prevalence of twice as many more bots than others.