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Digital Ad Fraud

Q&ADr. Augustine Fouhttp://linkd.in/augustinefouacfou @mktsci .comJanuary 2014

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Q: Everyone’s known about digital ad fraud forever; why hasn’t it been solved already?

A: Couple of reasons: 1) many constituents are insufficiently motivated to aggressively solve the problem, 2) bad guys don’t play by the rules and they have entire ecosystems set up to defraud. Good guys need to band together, rather than fight the fight individually, in order to stand a chance.

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Why Now?“As more ad inventory is bought and sold programmatically on ad exchanges, bad guys are finding it far easier to commit fraud because few agencies and advertisers actually check in detail the hundreds of thousands of sites on which the ads are run. It’s easier to hide in a far larger haystack.”

-- Dr. Augustine Fou

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“The above countermeasures are all good, and advertisers should continue using them. But they are not enough. If the good guys fight the fight individually, there is little chance they can overcome the entire ecosystem of the bad guys. The good guys need to band together into their own ecosystem and put

the bad guys on a ‘digital ad fraud equivalent to the National Sex Offenders Registry’.”

-- Dr. Augustine Fou

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Q: What are some things advertisers are doing now to combat fraud?

A: There are a slew of fraud fighting techniques. These include blacklists and whitelists of sites where ads can be shown; enforcing viewability or only paying for ‘viewable’ ads; using bot-detection platforms to mitigate non-human impressions and clicks, which can never turn into paying customers.

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Blacklisting SitesValueExclude sites from serving your ads

CaveatFor every site excluded, bad guys put up more (because they don’t have to play by the rules).

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Enforcing Viewability

Source: Spider.io May 2, 2013

ValueOnly pay for ads which are viewable (i.e. above the-fold)

CaveatBad guys have already defeated “viewability” by stuffing ads in hidden layers, all above-the-fold.

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Bot Detection

Source: Spider.io March 2013

ValueGood guys use algorithms to detect unusual behaviors indicative of bots (rather than humans)

CaveatIt’s an arms race between good and bad; bots are more sophisticated and can fake mouse movements and keep cookies.

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Using CAPTCHAs

“Startup called Vicarious automatically solves CAPTCHAs.” Oct 2013http://bit.ly/1bFo9lZ

ValueCaptchas deter bots from filling in forms and stealing content and cookies.

CaveatSome bots can now solve some captchas, most captchas don’t protect content pages.

Source: Solve Media Dec 31 2013

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Q: What is the industry doing about it; any actions by the associations?

A: “Yes, Nielsen, IAB, comScore, and other groups are really getting active now to help define and size the problem and then propose solutions. For example, defining viewability will help advertisers focus on useful inventory (e.g. ads above the fold) and therefore increase their ROI.”

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Industry Players

Solve Media

Using CAPTCHAs to detect humans versus bots.

Global Bot Traffic on Pace to Waste Up to $9.5 billion in 2013 Ad Budgets. Sep 2013

Spider.io

Nielsen/IAB

Algo detection of bot-like activity and other malware.

Botnet Costing Display Advertisers $6 Million per month. Feb 2013

Industry working group to define ad viewability.

Viewable rates (of display ads) ranged from 14% to 79%.

IntegralAds (AdSafe)Verify ad placement against blacklist of known fraudulent websites.

Viewable rates (of display ads) ranged from 14% to 79%.

DoubleVerifyAd placement, behavioral compliance, fraud detection

PageFairAd blocking detection

WhiteOpsRealtime bot detection algorithms

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Q: Does reducing ad fraud mean reducing ad spend?

A: No, in fact most brand advertisers can’t take the money back. They have an annual budget and they will spend it all. What it does mean is their ad dollars will be more ‘productive’ because the ads will be seen on legit sites, by humans, who can convert into paying customers.

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Display Ad Productivity

77% Not AdBlocked(PageFair)

46% Viewable(comScore)

71% Human (not bot)(Solve Media)

x

6%

Total Ads Served100 million

x

x25% On-Target Delivery

(Nielsen)

Viewable

Human

Not Adblocked

On-TargetOn-target

ads seen by humans

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“If I am only running 10 percent productive impressions then if I reduce waste by only 10 percent I DOUBLE my ROI.”

-- Ted McConnell

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Q: Why should I invest money on digital ad fraud mitigation instead of other digital marketing tactics?

A: Reducing ad waste due to fraud is like paying off high interest credit cards. It is a sure way to “earn” the interest dollars immediately, compared to any other way you can invest. Once ad fraud and waste are eliminated, then other tactics come into play.

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Low Hanging Fruit

23% Ad Blocked(PageFair)

54% Not In View(comScore)

24 – 29% confirmed bot(Solve Media)

25% On-Target Delivery(Nielsen)

The most immediate, direct impact on ROI comes from reducing waste

82% Ignored(Harris Interactive)

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“Financial advisors always recommend paying off credit cards before any other kind of investing...  as a sure way to ‘earn’ 18%. Reducing ad waste due to fraud yields immediate ROI because your ad spend goes towards legit sites with human visitors who can actually convert into paying customers.” 

-- Augustine Fou

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Q: How much savings can I expect to achieve?

A: The exact dollar amount or percent of spend will vary based on the industry, product category, and how the ad dollars are allocated – e.g. display vs search, search partner networks vs on-Google/on-Bing, etc. But we have consistently seen double digit shifts of dollars from bad guys’ sites to legit mainstream sites.

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Before and After

18% of spend shifted from fraudulent websites to good guys

BEFORETop 2 “good guys” = 76%

AFTERTop 5 “good guys” = 94%

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Q: What brand safety? I thought those would have taken care of the problem already.

A: “Unfortunately, those solutions rely on taking samples and sometimes if the sampling interval is not frequent enough or the sample size is too small, bad stuff still gets through the cracks. So it is very useful and advertisers should be using those services; but there is more work to be done.”

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Brand Safety Issue

Geico ad next to AdultFriendFinder slideshare

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Q: How big of a problem is digital ad fraud really?

A: “It’s hard to pin down an exact dollar amount or even a percentage, because it varies widely by industry and product type (e.g. CPG brands use a lot more display ads; consumer electronics brands use search ads). But fraud could be costing all advertisers significant portions of their spend (i.e. big dollars) because bad guys steal from every cookie jar.”

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Buckets of Ad FraudImpressions

(CPM fraud)

Botnets generate fake pageviews which produce ad impression “inventory” that is sold into ad exchanges.

Clicks(CPC fraud)

Leads(CPL fraud)

Sales(CPA fraud)

Bots type search queries to bring up search ads and then click on the ads to earn share of CPC.

Bot or low wage workers fill in lead forms with real addresses and get paid bounty per lead.

Fake sites set up to do cookie stuffing or trick users to click on affiliate links to earn rev share.

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500 billiondisplay ad impressions /mo

Impression (CPM) Fraud

29%confirmed bot traffic

~$1 - $3.50 cost per thousand

$2-6 billionwasted ad spend (annualized)

Display Ads

35 billionvideo ad impressions /mo

40%estimated fake views

~$8 - $12cost per thousand

$1-2 billionwasted ad spend (annualized)

Video Ads

Source: Vindico, 2013Source: Solve Media 2013

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Q: How are the different types of digital ads affected by fraud?

A: “Display ads are most prone to ad fraud because bad guys can create pages, load tons of ads on them and repeatedly hit those pages with bots. Search ad fraud is harder to commit so it is a bit less on a percentage basis. But notice video ad fraud is on a significant tear, because video CPMs are currently 10x more lucrative than display ads.”

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Waste Due to Fraud• Display ad fraud is the easiest to commit and bad guys

sell tons of “junk” inventory into ad exchanges; ad buyers are goaled on number of impressions so that perpetuates the problem.

• Video ad fraud is the new area of focus because video ad impressions are 10x more lucrative than display; ad buyers are goaled on “tonnage” of impressions and therefore perpetuate the problem.

• Search ad click fraud is harder to commit and usually occurs on “search partner network” sites; but high spending categories like insurance and high CPC categories like pharma are favorite targets of the bad guys who can earn $78 per click.

30-75%

50-80%

20-40%

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Q: How is what you do different from WhiteOps or Spider.io?

A: “Those sophisticated tech platforms help to detect bot traffic and clicks on legit sites; but there is a whole bunch of other bad guy sites which carry ads (display and search) which do not rely on humans visiting them; they simply use bots to load the page and generate ad impressions and those sites obviously don’t deploy WhiteOps tracking solutions. So we recommend using multiple solutions to better combat different types of fraud.”

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White Ops Bot Analysis

Source: White Ops

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Q: Why doesn’t ad fraud detection solve the problem?

A: Sometimes, it is not about detection of ad fraud – from fake impressions to non-human traffic to a site. For example, bad guys who start up fraudulent sites don’t install good guy’s tracking code on their sites. But they do show ads from various ad networks they can make hundreds of millions of dollars fraudulently, without raising red flags on standard fraud-detection mechanisms and algorithms.

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Q: What’s in it for the bad guys? Is it really that lucrative?

A: Yes, digital ad fraud is highly lucrative. In fact, it is SO profitable and SO low risk compared to other kinds of fraud (like robbing banks) that individual criminals and organizations are jumping on the bandwagon. See the following data on the insane margins (e.g. 94% profit) and the sheer amounts of money $256M annually being stolen.

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Profitability of Ad Fraud Sites“Highly Lucrative, ProfitableThe aggregate ad revenue for the sample of 596 sites was an estimated $56.7 million for Q3 of 2013, projecting out to $226.7 million dollars annually, with average profit margins of 83%, ranging from 80% to as high as 94%.”

Source: Digital Citizens Alliance Study, Feb 2014

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Related ArticlesDigital Ad Waste EstimatesBy: Augustine Fou, January 2014

Fashion Brands Suffering Ad FraudBy: Augustine Fou, January 2014

High Ad Load Bad Guy SitesBy: Augustine Fou, December 2013

How Bots Are Used in Ad FraudBy: Augustine Fou, November 2013

ROI Case for Solving Ad FraudBy: Augustine Fou, Feb 2014

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Digital Ad Fraud BriefingBy: Augustine Fou December 2013

Ad Fraud Fighting TechniquesBy: Augustine Fou October 2013

How Display Fraud WorksBy: Augustine Fou, May 2013

How Click Fraud WorksBy: Augustine Fou, November 2013

The Magnitude of Digital Ad FraudBy: Augustine Fou, November 2013

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Digital Ad Forensics Process

Sizing of ad fraud

Forensic AnalysisPreliminary Scan

Implementation

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• Technology Tools• Statistical analysis

Maintenance

Preliminary analysis of paid campaigns and analytics to determine magnitude of the ad fraud impacting client.

FREECreating recommended list of changes, including list of sites to exclude in each ad channel.

$$$Subscribe to triangulated, cross-industry database of “ad fraud offenders” to continuously update blacklists and whitelists.

$

• Budget shifts• Further optimization

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Dr. Augustine Fou – Technical Forensics“I advise clients on optimizing advertising across all channels. One main area of focus is reducing ad waste due to fraud – fake impressions, clicks, leads, and sales – in order to raise ROI.”

FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM)

MCKINSEY CONSULTANT

CLIENT SIDE / AGENCY SIDE EXPERIENCE

PROFESSOR AND COLUMNIST

ENTREPRENEUR / SMALL BUSINESS OWNER

PHD MATERIALS SCIENCE (MIT '95) AT AGE 23

@acfou

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