Digital ad fraud gets it’s own category because it’s a huge issue that the advertising industry has been facing for a long time. The big question is how to solve the problem and who should take the responsibility for those efforts. Digital ad fraud is not only botnets, but other big issues including “malvertising” and “infringed content.” We’ll be discussing botnet related ad fraud in the context of this site.
Alternate Names and Examples:
Advert fraud
Adware traffic
Click bot
Click fraud
Hit fraud
Impression fraud
Pay per click advertising abuse
Phony ad traffic
Potential Symptoms:
• Unusual spikes in the number of clicks
• Unusual spikes in impressions (number of times your ad shows on a search results page)
• No increase in the number of conversions during spikes in impressions or clicks
• Reduction in the number of page views during spikes in impressions or clicks
• Higher bounce rate (number of people clicking your ad and then quickly going back to the search results page) during spikes in impressions or clicks
What is digital ad fraud?
There are two common advertising models that advertisers choose from. CPC and CPM. The former is a cost per click model, which means they only pay for the ads that are clicked on. CPM stands for cost per thousand impressions exposed. Bots drive digital ad fraud by exposing ad impressions and clicking on ads, both of which cost money. The advertiser pays a rate for each clicked ad as well as for every 1,000 impressions shown. If humans are not the ones seeing or clicking the ad, then it’s a complete waste for the advertiser.
What’s the impact of digital ad fraud?
The Interactive Advertising Bureau conducted a study in 2015 which showed that digital ad fraud costs advertisers about $8 billion a year. Half of this cost is from bot related traffic. Reid Tatoris, a MediaPost contributor, ran some numbers and found that only about 8% of online ads even have a shot at being seen by a human. Those are staggering numbers. As you can imagine, if only 8% have a chance to be seen, then what percentage of the 8% actually drive results?
Who should take responsibility for bot related ad fraud?
This is a tough question and one that stirs the pot in the online advertising industry. Unfortunately, there is nothing the advertiser can do other than make the decision as to whether it makes sense to advertise online or not. In order to actually try to prevent bots from causing digital ad fraud, it’s on the publisher or ad network.
Publishers
Publishers provide the real estate for ads to exist and therefore, also provide the location for the fraudulent activity to occur. In the context of selling ad space, some will argue that publishers constantly push the fact that they have the most valuable user base and can drive high conversion rates. Therefore, publishers should invest in technology to block ad bots and drive a more “pure” ad audience. The higher the human to bot ratio, the better the results will be for the advertiser.
Ad Networks
Ad networks provide the technology that actually serves the ads on the publisher’s website or mobile application. Some argue that they’re the ones who should be responsible for the bot issue. The view from the ad networks is that they are not hearing many complaints from advertisers, so why should they be concerned? So as you can see, it’s a grey area on who should take responsibility. It probably makes sense that both publishers and ad networks take responsibility. They are the ones making money and both are required for the transaction to take place.
Advertisers
While there isn’t much the advertiser can do to mitigate ad fraud botnets, since they have no control over the technology and ad space, they can definitely stay informed. They can make sure they understand the programmatic supply chain and request visibility on inventory. They should make sure there is terms and conditions language around botnet traffic. They should comply with anti-fraud policies and implement a 3rd party monitoring tool. The bottom line is stay informed and cover your tracks.