ad...digital ad fraud costs media companies us$4.5 million an hour. for every $3 spent on digital...
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Dhwani Shah
Hannah WardNicole Weissman
Nicolette Sulaiman
Over the past few years, ad fraud has become agrowing problem within the advertising industry. Theindustry has still not come up with a solid definition,
which has caused a lot of confusion and disagreementsince everyone has different opinions on the topic. Ad
fraud is an issue affecting everyone from publishersto advertisers to average consumers. A 2014 study
that monitored 181 ad campaigns over the course of 60days found millions of bots infecting the advertising
of companies such as Anheuser-Busch, Ford, Verizon,and Pfizer, costing them millions of dollars. Ad fraudis expected to continue to grow since there is no strict
legal enforcement.
2 http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone
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http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone photo: https://assets.
pando.com/_versions/2014/02/bot-clicker_featured.jpg
Who are the fraudsters?
"These are not college kids
moonlighting to make cash or rebel-
techies in their Bay-area apartment.
The bad actors are organized
criminals, usually operating outside
of the United States and are often
funded by larger criminal
organizations" - Internet Advertising
Bureau
What are Bots?
"Bots are very sophisticated
programs often installed on a
consumer's computer through
seemingly innocent means. These
bots then "click" on ads or run
videos silently in the background
behind open browsers or
even invisibly."
What bots are capable of
doing:
Fooling and submitting
CAPTCHA’s (Completely
Automated Public Turing
tests to tell Computers and
Humans Apart)
Buying things - putting items
in a cart and executing the
purchase
Visiting multiple sites,
generating cookies making
the “user” appear
demographically appealing to
advertisers and publishers.
Program bots can act like
anyone they want to: car
buyers, sports fans, rich
people, grandmothers,
anything.
Stringing hundreds of infected
computers together to create
“botnets,” generating high
volumes of traffic and clicks
from what appears to be
significant, specific, desirable
audiences
Moving a computer’s mouse,
running the cursor over ads
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http://innovation.media/magazines/how_digital_ad_fraud_affects_everyonephoto: https://assets.pando.com/_versions/2014/02/bot-clicker_featured.jpg
“Bot fraud is the world’s most sophisticated cybercrime” -
Michael Tiffany, White Ops CEO and co-founder
continued
Meanwhile, advertisers and publishers think they’re getting real
human interactions, encouraging them to:
“Turns out [bots] can be made to act quite
human. Which is foiling efforts to detect them.” -
Alex Kantrowitz, Ad Age tech reporter
Aggressively “optimize” their ad campaigns around these
“consumers”
Increase their original campaign spending and budget new
money to retarget these “qualified leads”
“White-list” those bots, protecting the fraudsters from
monitoring and guaranteeing them future business.
Advertisers and publishers are actually optimizing for fraud,
intensifying and perpetuating their initial loses
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We have defined ad fraud as, "any
ad activity that can generate money
triggered by non-human activity."
This can include the use of bots, as well
as ads that have no chance of being
seen by humans.
Non-human traffic is mostly utilized
to create fake impressions and clicks.
Sophisticated bots can mimic human
behavior and fake conversions by filling
out form submissions and attempting to
complete purchases. Fraudulent
publishers can pay traffic broker sites to
send bots to their websites to spike their
numbers. In turn, this causes the
advertisers to have to pay more to run
ads on the publisher’s sites where the
majority of views are from bots.
There are several types of ad fraud
that can affect people like you and
me. The first is invisible ads.
Fraudulent publishers have come up
with ways to hide ads so that they are
never actually seen by humans.
Another type is domain spoofing,
which is the hardest to detect.
Fraudsters are able to change the URLs
of fake websites within the real
AD FRAUDtime bidding ecosystem to make them
look like reputable publishers advertisers
would want to advertise on. For
example, they falsely identify as
huffingtonpost.com, when in reality the
ad will be placed on a different domain.
Another example of fraud is called ad
stacking, where one ad is hidden
behind the other. The hidden ad is still
generating impressions even though it
cannot be viewed.
Another way of hiding ads is called
iFrames, where a 1x1 pixel is placed on
a site and loads another site that is not
viewable. The hidden site generates
impressions without ever being seen by
the users.
Ad injection occurs when fraudsters
offer consumer software that injects
unpaid for ads over paid for ads on
websites by creating ad inventory that
does not exist. This leaves the advertiser
paying for ads that are not seen. For
example, a Target ad was injected on
the Wal-Mart website.
http://marketingland.com/many-faces-programmatic-ad-fraud-142335
http://blog.ezanga.com/blog/ad-fraud-101-types-of-ad-fraud-that-plague-all-marketers
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Digital ad fraud
costs media
companies
US$4.5 million
an HOUR.
For every $3spent on digital
advertising,fraud takes $1
$7.2billion
Ad fraud is
expected to cost
brands $7.2 billion
globally just this
year alone.
56%
Incapsula reports
that bots account
for 56% of all web
traffic with 29%
being "bad bots"
(such as
impersonators and
scammers)http://www.adweek.com/news/technology/here-are-4-common-methods-ad-fraudsters-use-make-their-ill-gotten-money-169285;
http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone;http://adage.com/article/digital/ad-fraud-eating-digital-advertising-revenue/301017/;
http://www.mediative.com/problem-of-fraud-in-programmatic/
Nearly 25% of all
video ad impressions
are fraudulent.
of all US digital ad
dollars today, in 5
years will become
23%
92%6
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top 20 victims: http://innovation.media/magazines/how_digital_ad_fraud_affects_everyonehttp://blogs.wsj.com/cmo/2014/12/09/5-things-marketers-need-to-know-about-ad-fraud/
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Websites / Publishing Companies
"Advertisers trust publishers because they place their ads in the
context of high-quality, relevant content delivered to high-quality,
demographically appropriate, highly engaged audiences who
deliver results... Ad fraud wrecks every part of that equation.”
“The amount of bot fraud in our midst is unrivalled in any other
industry and is sadly leading to a crisis of confidence on the buy
side” – Ari Jacoby, Solve Media CEO in Advertising Age
"Worse, your company may also, unwittingly, be an actual
perpetrator or enabler of digital ad fraud...your own personal
computer could be defrauding other publishing companies,
advertisers, and even your own company."
Digital ad fraud affects 10%-60% of different types of digital ads.
Digital ad fraud are costing publishers and advertisers ~$6.3
billion a year, or $4.5 million every hour 1
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graph: http://www.bloomberg.com/features/2015-click-fraud/; http://blogs.wsj.com/cmo/2014/12/09/5-things-marketers-need-to-know-about-ad-fraud/
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4. Fraud makes campaign success
analysis suspect and less useful
5. Billions of dollars in ad fraud
funds the bad guys’ development of
high tech tools to defeat publishers’
defensive efforts.
The more successful ad fraud is,
the more money it generates. The
money can then be used to develop
better applications and software
that makes fraud more difficult to
detect, making it more successful --
all feeding back into itself.
‘We’ve reached a crisis point:36% of traffic is generated bymachines, not humans’ – Vivek Shah,president of IAB’s board of directors. “The surprise was the ubiquity ofthe fraud. It’s not just no-namewebsites, but it also affects premiumpublishers” – ANA VP Bill Dugganthe reputation of the publisher is nolonger a reliable benchmark to predictbot traffic level.
Clients & Brands Brands unnecessarily spend moremoney. “When a marketer assesses acampaign’s success, bot trafficappears in the results along realtraffic. The resulting inflatednumbers can affect the perceivedsuccess of a campaign and futuread placements decision” The Advertising Industry1. Fraud invites government regulationby undermining the perception that ourindustry can control itself.2. Brands lose confidence in digitalmedia3. Brands squander money oncampaigns that are served to a highpercentage of bots
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Ad fraud costs $4.5 million every hour, and the number of
bots seen online spikes between midnight and 5 am.
How is this happening?“The problem is really the industry’s own fault - we’ve been optimizing for
quantity and have created this crazy breeding ground for fraud." – Scott
Knoll, CEO and President, Integral Ad Science
http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone
Selling fraudulent ad impressions
Selling fraudulent traffic to publishers looking for more visitors
Selling their own ads on other publishers’ sites without the publishers’
knowledge or permission
Sending fraudulent traffic to affiliate sites in return for commission
Creating fraudulent sites that look legitimate and selling ads on those
sitesAdd a little bit of body text
So how do they make money?
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What's Next?The Future and Solutions
Ad Fraud is expected to be a $50 billion business come 2025.
The World Federation of Advertisers (WFA) suggests
4 protective practices:
The greatest way to prevent ad fraud moving forward is
unfortunately to limit digital media investments because
ultimately an entire attitude change is required across the
entire industry. Once the culture changes in which advertisers
build a coalition where they protect each other from this fraud,
and fraudsters are effectively punished for their acts, only then
may we secure a brighter future.
https://www.marketingweek.com/2016/06/06/brands-must-adopt-new-tactics-to-beat-ad-fraud-that-is-
expected-to-reach-50bn-by-2025/
In-House expertise in digital marketing to avoid
outsourcing unfamiliar digital ad placers and
strengthened relationships with cyber security firms.
Strict metrics between marketers and their partners
on the scope of audience and business outcomes.
Databases of safe sites shared between brands.
Revised contracts between marketers and partners
in digital marketing to distinguish punishment for
funds allocated toward ad fraud.
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FIGHT THE FRAUDPrevention for Ad Fraud
“Create a publicly stated or corporate statement...[committing] to fight ad fraud. Then
join the industry’s Anti-Fraud Working Group. Membership signifies commitment and
helps keep you up to date.”-David Sendroff, founder and CEO of Forensiq.
The more committed the industry body to defeating ad fraud the more cautiously business
will be carried out. A public statement can serve as a catalyst.
“Enforce your right to trademark...The number one thing to do is protect and police
your identities [from]...a phantom who has your name but is selling it at a fraction of
your cost.” - Andrew Casale, vice president/strategy of Casale Media.
An impenetrable business through trademark rights is a fraudster’s worst nightmare because
without the facade of a trusted name they have no business.
"Look at the neighbourhood of the exchanges where you put your impressions. If you
spent tens of thousands of dollars to give you a high market valuation but you put it
in a really bad neighbourhood, its value will suffer.” - Andrew Casale, VP/strategy of
Casale Media.
Ensuring the corporation is keeping good company is key. Exchanges with safety reviews
are a simple preventative measure to keep businesses out of danger zones.
“You need to make sure your own house is in order first. We have found again and
again huge media companies with bot traffic because someone at that organisation
who is responsible for growing audience is going to third parties to buy traffic and
that third party is giving the publisher bots.” - Michael Tiffany, CEO of White Ops
Confirming that all parties in a company are on the same page is crucial because fraudsters
could be stealing for extended periods of time while management is in the dark. The entire
company should be aware of the outsourcing that occurs so if there is an incident of fraud
during digital marketing it can be tackled across the company.
Transparency Notes from all:
Publishers can opt to be more transparent by displaying their pricing and policies so an
advertiser will know immediately if they are over-paying for their impressions while engaging
in business with said publisher.
Exchanges can opt to require the specific name of the organization the buyer is committing
to prior to the bidding process for an ad impression, opposed to simply asking the name of a
domain (which can be faked.)
http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone 111
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CASE STUDY
REAL LIFE
The Association of National Advertisers (ANA) and White
Ops, a cyber security firm, collaborated to conduct a study of
bot fraud. It featured 49 members of the ANA, including Apple,
Kraft Heinz and Procter & Gamble. Over a time period of two
months the team monitored the bot activity of 10 billion ads. The
study found that companies with $15+ ad placement are most
likely to be affected suggesting that fraudsters specifically
choose to conduct ad fraud with expensive digital media such
as video.The company hit most severely had unknowingly
allocated 37% of their digital marketing funds toward bot
impressions. The study concluded that advertisers across the
world will lose $7 billion to ad fraud in 2016.
12photo: https://www.qubole.com/blog/big-data/big-data-solution-ad-fraud
Brands versus bots; FT BIG READ: DIGITAL MARKETING; BYLINE: Robert Cookson1
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We at Life Mill Media recognize that ad fraud is an ongoing issuewithin the industry. There have been many innovations toward ad
protection and fraud prevention, however the exponentialprevalence of fraud malware is proving challenging to keep up with.
With both transparency and the sophistication of ad fraud risingsimultaneously, the issue of security becomes a never-ending cycle.The more successful bots become at deceiving publishers, the moremoney they can generate from advertisers. This money is directed
towards the development of more sophisticated bot malware that isharder to detect and be black-listed. Unfortunately, this means that
fraudsters will be even more successful, generating even morefunding. This cyclical process is in direct combat with the rising
levels of transparency within the programmatic ad buying process.We at Life Mill Media find it imperative that agencies begin
transitioning the programmatic buying process in-house by firstmonitoring publishing activity and over time curating the resources
to entirely manage digital marketing.
Unfortunately there are foreseeable creative and legal barriers inthe future of advertising. If the government has to step in to
implement regulation, rigid structure for marketers and agenciesare likely to be implemented along with punishment for fraudsters.This means that moving forward there may be a restrictive naturein the industry that advertisers did not previously endure and are
therefore unprepared to operate under.
The current disconnect between players in advertising calls forindustry bodies to be more involved with the content they produceand the audiences they serve. We believe that moving the process
in-house will help prevent the necessity of formal governmentregulation. By creating space for digital marketing in-house and
bridging the gap between agencies and tech-security firms,advertisers will have more trustworthy relationships with
programmatic teams and can be better protected from fraud.
last word
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