IAB Estimates 'Untrustworthy' Cost At $8.2 Bil, Consumer Ad Blocking To Prevent Malware At $781 Mil

The cost to the ad industry of consumers using ad blockers to protect themselves from digital malware is $781 million, according to findings released this morning by the Interactive Advertising Bureau. The figure, which the IAB attributed not to the cost of all ad-blocking, but just the portion motivated by consumers seeking to protect themselves from malware, was developed by an IAB-led task force that examined the entire “untrustworthy” supply chain, including explicit forms of fraudulent practices by industry players, as well as “unintentional activities by good actors,” according to the IAB’s Sherrill Mane.

The total estimated cost of all of the practices, the IAB estimated, is $8.2 billion annually.

The analysis, which was compiled by Ernst & Young, was not an explicit audit, but is being offered as a “research study” on industry practices. Here’s how the components of that total break down:

  • Invalid Traffic – As described above, ad fraud accounts for the largest portion of costs, at a total of $4.6 billion. Seventy-two percent of the loss associated with the web’s fraudulent traffic happens on desktops and 28 percent on mobile.

  • Infringed Content – At $2.4 billion, infringed content – stolen video programming, music, and other editorial content that is illegally distributed on the web – represents the most significant share of lost revenue opportunity costs. Two billion dollars of that total is based on an estimate of approximately 21 million U.S. consumers’ willingness to spend $8 per month on what is currently classified as infringed content. The additional $456 million represents the loss of potential advertising dollars. The findings show that unless the industry takes significant steps, there is a likelihood that the number of people consuming stolen content on digital platforms will increase.

  • Malvertising-Related Activities – Combating malware-related activities, which can expose web users to unknown or potentially dangerous third parties, comes in at $1.1 billion, with $781 million of those losses being generated from ad blocking instigated due to security and malware concerns. Costs associated with investigating, remediating, and documenting direct incidents of malicious advertising total $204 million.
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