Commentary

New Report Estimates 10% Decline In Losses Due To Ad Fraud

A new study by the Association of National Advertisers (ANA) and White Ops found that marketers are seeing some progress in their war against ad fraud.

The third annual Bot Baseline Report, released on Wednesday, revealed that economic losses due to bot fraud are estimated to reach $6.5 billion globally in 2017. That’s actually down 10% from the $7.2 billion reported in last year’s study.

The study is based on an analysis of 49 ANA members’ digital advertising activity between October 2016 and January 2017. Extrapolating the results of the participants to the overall global market would result in 2017 fraud losses of $3.3 billion — about half of the $6.5 billion general market projection.

Further, the top 20% of performers in the study scored even more gains when extrapolated globally, with annual losses projected at only $700 million, representing a 90% reduction from the general market.

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“Marketers worldwide are successfully adopting strategies and tactics to fight digital ad fraud,” stated ANA CEO Bob Liodice. “This is a powerful indicator that the war on digital ad fraud is winnable for those who establish proper controls and protocols.”

Among the study’s findings:

--Traffic sourcing remains the major risk factor for fraud. Traffic sourcing, or the process of purchasing traffic from inorganic sources, was a large source of fraudulent activity. The report said 3.6 times as much ad fraud came from sourced than non-sourced traffic.

--Nine percent of desktop display and 22% of video spending was fraudulent. This represents a decline from the previous year, when display advertising fraud was reported at 11% and the fraud rate for desktop video was 23%.

--Mobile fraud was found to be lower than expected.Overall, participants saw less than 2% of fraudulent activity in app environments and mobile Web display buys. This doesn’t include fraud in mobile Web video or pay-per-click fraud, which remain high.

The study made the following recommendations:

--Buyers should demand transparency from all vendors and publishers for sourced traffic. They should also add language requiring publishers to identify all third-party traffic sources in request for proposals and insertion orders.  When buyers can’t get the answers they need, they should reconsider relationships.

--Refuse payment on non-human traffic in media contracts. Insertion orders should include specific language indicating buyers will only pay for non-bot impressions.

--Avoid excessive restrictions. In situations where supply does not meet demand for a target audience, fraud often follows. Marketers should avoid any actions that may restrict potential scale -- e.g., too many simultaneous targeting parameters.

--Encourage MRC-accredited (Media Rating Council) third-party fraud detection on walled gardens. Large digital media companies referred to as “walled gardens” should work with MRC-accredited third-party fraud detection companies to support sophisticated invalid traffic detection. Some large digital media companies have taken steps toward seeking MRC accreditation, while others have not.

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