Forget ad blocking; this is the real multi-billion dollar nightmare that should be keeping advertisers awake at night.
$8.2 billion annually.
That’s the amount of money that criminal ad fraud activity is costing the U.S. marketing and media industry according to George Siefo in AdAge.
Siefo cites statistics from the Interactive Advertising Bureau’s landmark study on the scope of the digital ad debacle, saying “More than half of the money lost each year derives from ‘non-human traffic’– fake advertising impressions that advertisers pay for but don’t represent contact with real consumers….”
Let that sink in for a minute….more than half of the money you spent on digital advertising this year was completely wasted; those ad impressions you bought were never seen by a human.
On top of these losses, the industry spends plenty more trying to counter the problem, Siefo notes. “An estimated $169 million is spent each year fighting invalid traffic, the IAB said.”
Advertisers have had a difficult time adjusting to the realities of the digital ad unicorn, as the promise of those “perfectly targeted ads” and their expected returns have failed to materialize. And now they must grapple with the fact that at least half of the money they spend on digital advertising is a complete and utter waste. Meanwhile publishers are seeing their digital ad space plummeting in real and perceived value as the extent of the problem comes to light.
Meanwhile the dollars continue to burn. And those dollars you’re throwing away? They are lining criminals’ pockets. Make no mistake about it; much of this fraud is outright criminal activity, as Mikko in Medium.com explains in an excellent article on advertising cybercrime.
“Did you ever ask yourself who is it that really makes money out of ad fraud, and how much?” Mikko asks. He provides an excellent analysis of the money flow behind the fraud, and the implications are staggering.
“The fact that in the adtech industry there is no particular concern for security, helps to explain why advertising exchanges have become the playground for the world’s largest cybercrime,” he notes.
Who are these criminals? Black hat marketers, adtech companies that run websites with fake traffic, even legit-looking ad networks and data companies. “Many of these startups appear legit enough to even the most seasoned technology decision makers,” Mikko cautions. And the scope goes far beyond even that, to U.S. media agencies and ad networks in “sleazy” deals with publishers, explains Samuel Scott in Moz.
Part of the problem is the wink and nod mentality that exists between ad networks, buyers and ad agencies, as Scott describes in his article.
“Agencies have been receiving kickbacks and indirect payments from ad networks under the guise of ‘volume discounts’ for serving as the middlemen between the networks and the clients who were knowingly sold the fraudulent ad impressions,” he writes.
So what can you do?
“I will be the first to admit that I don’t have a clear answer,” confesses Mikko, who does recommend in boning up on free ad fraud research at his site, www.botlab.io. Get educated. Read the full report from IAB and share the info with your ad teams. If you work with an agency, talk to them about it. Be vocal.
Most importantly, don’t stay in a game in which the deck is stacked from the start. The criminals are providing something the market thinks it wants. When demand dries up, they’ll move on to something else. Until then, at least be aware of what you’re dealing with.