Botty language: Ad fraud forced to drop 10 percent this year

A bit of good news for advertisers: Global ad fraud is slated to take a significant downward turn this year, dropping 10 percent over last year.

Businesses worldwide should expect to lose about $6.3 billion globally as a result, reports the Association of National Advertisers (ANA). But some firms are making more progress than others; the top 20 percent of ANA members have made such progress they stand to lose a relatively modest $700 million of that total.

What’s working? As marketers become more protective, the business of fraud is gradually becoming less profitable. Authors of the ANA study speculate its headline should read "The war on digital ad fraud is winnable for those who pay attention and set proper controls." White Ops CEO Michael Tiffany agrees.

“The cost of succeeding at ad fraud has gone up, and as a result the golden age of low-end display arbitrage where you can buy bot traffic for a fraction of a cent and monetize it in cheap CPM inventory is just no more,” he recently told AdExchanger.com.

Some industry gurus are cautiously optimistic about the trend, while others say the industry pestilence will be difficult or impossible to fully eradicate. In Adweek, Pepsi Co. exec Atin Kulkarni attributed this year’s headway to improved data and closer corporate relationships with Facebook and the Media Rating Council, but noted ad impression prices are still widely skewed by fraud.

“Any fraud is extra pressure we should not have,” Kulkarni said.

Other trends noted in the ANA study:

• The riskiest activity remains traffic sourcing or buying traffic from inorganic sources.
• Areas realizing somewhat less fraud include desktop display (down from 11 percent to 9 percent of all such activity) and desktop video (down from 23 to 22 percent).
• Mobile is less a target for fraud than anticipated, representing less than 2 percent of all fraudulent activity in app environments and mobile web display buys — an encouraging sign for investors in smartphone and tablet ads. Mobile web video and pay-per-click fraud rates still remain unwieldy, however.
• Fraud in programmatic media buys and general market buys has equalized due to sophisticated filtration processes by media agencies.
• Paid traffic accounts for 360 percent of the fraud associated with non-sourced traffic.

What safeguards are most effective? In general, the ANA recommends:

• Insisting on transparency when it comes to sourced traffic.
• Denying payment for any non-human traffic within media contracts. While cash-out sites incorporating ads and fake content are one issue, the issue exacerbates during busy seasons when digital ad inventory demand exceeds supply, pushing publishers to gain new visitors through third-party sources.
• Supporting the Media Rating Council by seeking its accreditation when it comes to third-party fraud detection on walled gardens.
• Supporting industry watchdog the Trustworthy Accountability Group in its efforts. The 2-year-old organization is powered by reps from big players including Google, Facebook and Motorola and fights piracy, fraud, malware and transparency.

ANA CEO Bob Liodice notes the AdTech industry continues to find ways to fight such revenue theft.

“This is a powerful indicator the war on digital ad fraud is winnable for those who establish proper controls and protocols,” he said of the 10 percent drop. “That is exceptionally good news for the advertising, marketing and media communities worldwide.”

What are your thoughts on this ongoing topic?