Digital Ad-Fraud Losses Decline

Industry-wide efforts to combat fraud in digital advertising appear to be paying off: advertisers globally will lose about 11% less - about $5.8 billion - to fraud this year compared to $6.5 billion lost in 2017, a new study found.

White Ops and the Association of National Advertisers (ANA) analyzed data from a total of 2,400 ad campaigns that were run by 50 ANA members. The ads were placed is some 606,000 domains and garnered over 24 billion impressions in total.

For the first time, a majority of fraud attempts are getting blocked before fraudsters get paid, as ad buyers and sellers become savvier about dealing with the threat. Without those efforts, digital ad fraud would have topped $14 billion this year, White Ops and the ANA estimate.

"The fight against fraud has not been won," says Michael Tiffany, president and co-Founder at White Ops. "But it is winnable, thanks to collective efforts to reduce the profitability of the crime and increase its cost and risk."

Digital ad fraud has cost advertisers tens of billions of dollars in recent years. Much of the fraud has stemmed from the use of bots to create fake page views and fake clicks on ads. One of the most common uses for botnets, for example, has been for ad fraud.

Experts consider non-human traffic, or bot traffic, to be one of the biggest sources of digital ad fraud. Other kinds of ad fraud include the use of non-viewable ads on websites and the use of click farms where humans are paid to click on ads to increase page views and ad impressions.

White Ops and the ANA estimated that fraud attempts account for some 20% to 35% of all ad impressions in a year, but the number actually getting through has become substantially smaller because of the industry-wide response to the problem.

Stopping Bots

Several factors are contributing to this success. More built-in controls and filters are available across the digital ad pipeline for spotting bot traffic and other forms of fraud including blacklists and parameter-based detection techniques, White Ops and the ANA said in their new report.

Some of the biggest bot-traffic retailers have been shuttered as well, making it harder for low-level cybercriminals to profit from ad fraud. Arrests of the operators behind major botnet operations—3ve and Methbot—have had a real impact on ad fraud operations based overseas.

"It's harder to buy realistic bot traffic at 'retail,'" Tiffany says. With some of the biggest bot traffic retailers knocked out of business, others offering similar services have been forced to move underground to invite-only forums and chat networks, he says. "Realistic bot traffic that won't get caught costs more money, reducing the arbitrage opportunity for those who buy it."

Ads.txt, a relatively new mechanism from the Interactive Advertising Bureau (IAB), has been another major factor, Tiffany notes. Ads.txt, according to the IAB, is basically designed to give content publishers and distributors a way to publicly declare "the companies they authorize their digital inventory." The transparency enabled by this mechanism has made it harder for criminals to commit ad fraud.

Billions of dollars in fraud are getting stymied by programmatic filtering and by the use of sophisticated analytics to identify and not count invalid traffic, Tiffany says. Advertisers demanding clawbacks, or refunds for payments for invalid traffic, have been another factor.

Unfinished Business

At the same time, a lot more work remains to be done, according to White Ops and the ANA. One of the biggest problems continues to be the very uneven auditability of ads in different formats and environments, they say.

Video ads and mobile ads are especially problematic areas. "The frontiers in fraud are in mobile apps and connected TV," Tiffany says.

In both of these platforms, fraud is innovative and growing, but so far has not outstripped the gains in other areas. "The big question is what happens from here," Tiffany says. Without the same kind of industry wide-collaboration on these fronts, the current reduction in fraud may only be temporary, he warns.

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