Commentary

On Understatements, Exaggerations And Billions Of Dollars Lost To Fraud

A new report from the Association of National Advertisers (ANA) and White Ops notes that global advertisers could lose $6.3 billion to bots in 2015, if current bot rates continue.

Again, that is not a “here is the worst case scenario” report. It’s a “here is what you are on pace for” warning.

Some note that fraud issues may be over-exaggerated. The Wall Street Journal ran a piece asking whether or not “reports of online ad fraud [have] been greatly exaggerated,” noting “some industry execs say the fraud problem is being overestimated, often by companies selling technologies designed to prevent it.”

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In the case of the White Ops and ANA report, White Ops falls under the category of a company that sells tech designed to prevent fraud. They do, after all, have a horse in the race, and as much as their business, or any other fraud detection firm, is about eradicating fraud -- and I don’t doubt that it is -- it’s also fueled by the existence of fraud. However, the fact that ANA participated in the study should at least give even the most ardent of conspiracy theorists pause. 

However, to put the $6.3 billion in perspective, that’s still only about 1.2% of total global ad spend projections for 2015. When put in that light, it doesn’t seem that bad, and it does make the problem seem overblown.

But the $6.3 billion projected by White Ops and the ANA deals with digital display and digital video advertising only, which is estimated to be around $50 billion annually, per the study. That would mean a hefty 12.6% of digital display and video ad spend is lost to fraud, which gives legitimate cause for concern. It’s not apocalyptic, but when combined with faltering viewability rates it makes the issue more concrete.

In reality, some fraud problems are being exaggerated while others are understated. Some marketers are probably doing more than enough while others don't do much at all. Panic will not help, nor will apathy. 

Either way, I can think of much better ways to spend $6.3 billion.

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