Advertisers lost more than $23 billion globally to ad fraud in 2019, according to a report from CHEQ called “Ad Fraud 2019: The Economic Cost of Bad Actors on the Internet.” Another report, released from WhiteOps and the Association of National Advertisers (ANA), found that advertisers would lose $5.8 billion to ad fraud in 2019, down from its $6.5 billion estimate reported in 2017.
Compared to CHEQ’s eye-watering estimate, WhiteOps and the ANA’s prediction makes it seem like the fight against ad fraud is winnable. WhiteOps arrived at its estimate by measuring 27 billion impressions across 50 brand marketers, counting fraud that was actually effective plus the price of the ad rather than using a high-CPM average. This methodology, then, explains the disparity between CHEQ’s conclusions and WhiteOps and ANA’s conclusions. In any case, WhiteOps’ finding—that ad fraud declined by 11 percent in two years—could mean there’s hope for marketers battling ad fraud considering digital marketing ad spend increased by 25.4 percent between 2017 and 2019.
But inside CHEQ’s clairvoyant ball, there is no future with less ad fraud as its report states, “Where studies have shown that ad fraud is lower or even declining, we think this particularly unlikely. Digital ad marketing is growing at a high rate and thus is an attractor for increased fraudulent activity.” Left unchecked, CHEQ says the level of ad fraud is expected to reach $26 billion by 2020, $29 billion by 2021 and $32 billion by 2022.
Neither estimate paints the whole picture because marketers prefer to keep data private. But ad fraud is still prevalent, and not just for digital marketers. In its Global Insights Report 2019, DoubleVerify found there was a 120 year-on-year percent increase in fraudulent ads in connected television (CTV) and mobile apps. DoubleVerify defines the majority of mobile app fraud as ad impression fraud or invalid traffic practices such as misrepresentation, laundering and hidden ads.
Mobile apps are a breeding ground for deception. So much so that Google recently removed nearly 600 Android apps from its Google Play app store and banned them from its ad monetization platforms, Google AdMob and Google Ad Manager. The apps, Google wrote in a company blog post, violated its disruptive ads policy and “disallowed interstitial policy.” Google says it’s working to protect the mobile ecosystem by mitigating a type of disruptive ad on the rise called out-of-text ads, which are ads that malicious developers serve on a mobile device when users are not actually active in their app. The consequences of out-of-text ads running rampant include a poor user experience and wasted ad spend. Google has developed a machine-learning-based approach to detect these out-of-context apps and prevent threats that can produce invalid traffic.
According to DoubleVerify, both CTV and mobile app fraud have shown growth. Fraud rates remained steady year-over-year with 3.1 percent in 2019 compared to 3.5 percent the year prior. Yet while desktop fraud rates decreased by seven percent, mobile app fraud grew by six percent.
In February 2019, DoubleVerify detected a new kind of ad fraud that involved launching bot networks to avoid ads.txt protections that publishers use to list authorized sellers of their inventory. In a nutshell, the botnets wiped websites clean and created new ad slots to falsified versions of the websites then sold the fraudulent ads under fake URLs through ads.txt authorized sellers. The Wall Street Journal reported that the activity potentially cost advertisers $70-80 million.
Shortly after the ads.txt scheme, another kind of bot emerged, what the Integral Ad Science (IAS) Threat Lab called 404bot, which was imitating domains. Since its arrival, IAS estimates that 404bot has impacted 1.5 billion ads, mostly targeting publishers in digital markets worldwide, specifically videos. Similar to ads.text, 404bot activity includes false misrepresentation of a URL so that buyers think they’re getting valid inventory when in fact the domain doesn’t exist.
Fraudsters have also siphoned away ad dollars from online video streaming, which a new CHEQ report projects will cost advertisers $4 billion in over-the-top (OTT) ads in 2020. In short, OTT spend will reach nearly $24 billion in 2020, with ad fraud levels reaching 17 percent.
“Marketing budgets are steadily flowing to OTT, offering a mouthwatering proposition of brands being able to reach consumers on their screens with relevant messages at the right time,” said Guy Tytunovich, founder and chief executive officer of CHEQ.
Knowing what ads are appearing and where can prevent fraudsters from exploiting ads. Or Lencher, chief executive officer of Luminati Networks, cites IP proxy networks as one viable solution. Because proxy networks provide access to accurate data in real-time from anywhere in the world, brands can use them to follow their ad campaign exactly as target audience sees them and test multiple different ads that might be presented to the consumer. Leveraging proxy networks then ensures brands know their ads are being delivered to the right customers at the right times.
To win the fight against ad fraud, marketers’ efforts must also match the sophistication of ad fraudsters’ methods. That starts by partnering with reputable verification companies in the supply chain and updating ads.txt files often. It also means avoiding the use of high click-through rate as a primary campaign metric as much as possible because buying will encourage scaled cheap inventory that’s fraudulent.