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ad fraud risk to marketersOnline ad fraud – it’s pervasive and may be even more widespread than most marketers believe. Fraudsters create fake websites and bogus web traffic in order to collect lucrative advertising income. Sophisticated malware replicates clicks of real humans to convince advertisers that their ads appeared on popular websites and received engagement. By some accounts, bots account for 40 percent or more of web traffic.

Two of the largest digital ad fraud schemes reportedly infected 1.7 million computers with malware to remotely direct traffic to “spoofed” websites that hosted ads purchased through programmatic ad exchanges.

The Methbot operation was “the largest and most profitable ad fraud operation to strike digital advertising to date,” states cyber security firm White Ops, which exposed the operation late last year. Using an army of automated web browsers run from fraudulently acquired IP addresses, the Methbot operation appeared to view as many as 300 million video ads a day on falsified websites.

Another ad fraud, 3ve, also operated on a massive scale: at its peak, it controlled over 1 million IPs from both residential botnet infections and corporate IP spaces and thousands of servers across many data centers, according to Google and White Ops. It generated billions of fraudulent ad spaces on web pages that advertisers bid to purchase.

High Returns, Low Risk

While the operations were unusual in their size and sophistication, their strategy is common, White Ops states. High returns and relatively low risk attract many fraudsters. Their main risk is being discovered and shut down. They simply move onto another scheme.

An article in New York Magazine asserts much of the internet is fake. The internet bloats with fake metrics, fake people and fake websites. In the past, Facebook admitted its video metrics overstated the time users watched videos and that it misreported the reach of posts on Facebook Pages. Although Facebook says it corrected the miscalculations promptly, small advertisers sued the company, accusing it of covering up overstatements of video views for over a year. For its part, Facebook introduced new metrics in a bid to please advertisers. It also agreed to an audit by the Media Rating Council “to verify the accuracy of the information we deliver to our partners.”

Pointing to the large numbers of bots and fake accounts on social media networks, the magazine also asserts the internet is filled with fake people.

“Years of metrics-driven growth, lucrative manipulative systems, and unregulated platform marketplaces, have created an environment where it makes more sense to be fake online — to be disingenuous and cynical, to lie and cheat, to misrepresent and distort — than it does to be real,” the magazine states. A solution requires cultural and political reform in Silicon Valley and around the world.

Industry Battles Ad Fraud

Others take a more sanguine tone. Improving technology will help companies place their ads on legitimate, brand-safe websites, and investigators will expose more fraudsters in 2019, experts told ExchangeWire.

“The focus on transparency will continue to squeeze agencies and ad tech vendors in the next 12 months. As a result, only those that truly add value to the supply chain will thrive, while others will collapse or be acquired,” predicts Andrew Buckman, Managing Director EMEA, Sublime.

The onus is on ad buyers and their agencies to design campaigns with objectives that can’t easily be spoofed, Ana Milicevic, Principal & Co-founder, Sparrow Digital Holdings, told ExchangeWire.

Beware Ad Fraud Red Flags

It’s essential for marketers involved in display advertising to beware of ad fraud red flags, warns Marketing Land columnist Ratko Vidakovic. They include:

  • Lack of performance such as sales or conversions, especially comparted to other channels.
  • High bounce rates and short session durations compared to other channels.
  • A data center IP address. This means that the “visitor” to the page originates from a hosted server, not a residential or corporate computer.
  • Strong click-through rates that produce high bounce rates, short session durations and no conversions.
  • Suspicious site lists. Most fraud originates from obscure sites; most real humans visit recognizable publishers. While a placement on a site you don’t know does not prove fraud, a bundle of obscure sites calls for deeper investigation.
  • Nonsense from vendors. No agency or tech vendor that manages display advertising wants to admit they purchased fraudulent ads. They’ll attempt to confuse clients to save face and avoid refund requests. Be suspicious of agencies that harp on viewability, send massive yet meaningless spreadsheets, and bombard you with buzzwords.

Bottom Line: Ad fraud presents a dangerous threat to marketers. Some experts predict progress against ad fraud this year, but the problem will likely remain. Closely monitor display ad campaigns for ad fraud red flags.