Technology

Report: The Costs of Click Fraud Are High, But Improving

By / Jan 21, 2016 (iStock/Thinkstock)

According to a report from the Association of National Advertisers, automated bot traffic remains a major problem for ad buyers, but ANA members are seeing success in reining in click fraud problems by following best practices.

The dangers of click fraud have long been known to the advertising industry—who can forget this harrowing statistic?—and remain significant in 2017. But they’re not as bad as they once were.

A freshly updated study by the Association of National Advertisers (ANA) and the advertising-fraud firm White Ops suggests that globally, marketers could lose as much as $6.5 billion from click fraud in 2017 without an increased focus on click security.

While that number is huge, it represents progress, according to the report. That number is down 10 percent from the $7.2 billion tally reported in 2016, during a period when digital advertising grew by more than 10 percent.

And among the 49 advertisers that took part in the most recent edition of the Bot Baseline Report, the picture was a bit rosier, because those companies were more likely to follow best practices. If their approaches were followed by the industry at large, losses would be $3.3 billion—or roughly half of the 2016 total.

ANA President and CEO Bob Liodice, who said last year that “the level of criminal, nonhuman traffic literally robbing marketers’ brand-building investments is a travesty,” noted that the progress made by his association’s members represents validation of fraud-fighting tactics used by the industry.

“This is a powerful indicator that the war on digital ad fraud is winnable for those who establish proper controls and protocols,” Liodice said in a news release. “And that is exceptionally good news for the advertising, marketing, and media communities worldwide.”

Some other highlights from ANA and White Ops’ research:

Bot traffic and sourced traffic go hand in hand. In 2015, advertisers had rates of automated traffic ranging between 3 and 37 percent of overall traffic, with sourced traffic—that is, traffic that is acquired through third-party sources—being the most common source of automated traffic. This remained true in the most recent edition of the report, which found that sourced traffic was 3.6 times more likely to see fraudulent traffic than non-sourced traffic.

Higher CPMs equal higher fraud rates. The problem of automated traffic, as you might imagine, becomes more common as the ads become more valuable. The 2016 edition of the ANA/White Ops report found that advertising with a cost per mille (CPM) rate above $10 was far more likely to be targeted by automated traffic than those with a lower CPM rate. This followed through in the latest edition of the report, which found that ad fraud was most common with desktop video advertising, where CPM rates are massive—and fraud rates were around 22 percent.

Mobile less of an issue. The 2017 edition of the report found that fraud tended to be more common on desktop clients, while mobile advertising saw fraud rates of less than 2 percent. While mobile web video still caused some problems, the lower CPM for mobile ads, the challenges of building install bases around fraudulent apps, and the challenges of building up fraudulent ad inventory have limited the issue for mobile platforms.

When bots become a problem. The 2016 edition of the study found that bots, which are often hard to detect, were more of a problem for programmatic ads, which tend to be automated across the web. Direct buys are typically less of a problem. Bots also tend to come about when an ad is failing to hit its target.

What can be done? The 2017 edition of the study recommends taking a proactive approach to fighting click fraud by demanding transparency from vendors, targeting sources narrowly, and actively tracking your data for evidence of fraud. The report also recommends getting involved with third-party certifiers such as the Trustworthy Accountability Group—and getting your vendors to do the same.

White Ops CEO Michael Tiffany says, based on the improved findings, the industry is making progress on the fraud issue.

“But, as these declines are relatively modest, it’s critical that those affected by this threat remain vigilant,” Tiffany said in the news release.

The full 2017 study can be downloaded via the ANA website.

Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. More »

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