Ad fraud: The marketing industry’s $7.2bn problem

Brands are continuing to waste billions of pounds on digital ads that consumers never see despite repeated warnings over the prevalence of ad fraud. It is time for marketers to step up and ensure they understand the issue and have procedures in place to deal with it or be more realistic about the efficacy of digital advertising.

Despite numerous warnings, marketers are continuing to waste billions of dollars on digital advertising that never gets seen. According to research commissioned by the Association of National Advertisers (ANA), advertisers will lose $7.2bn to bot fraud this year. That is up from $6.3bn in 2015.

Part of the issue is that marketers are spending increasing amounts on digital advertising, meaning ad fraud is bound to grow. The report found that the percentage of traffic lost to fraud has not actually changed, but given all the talk about ad fraud the ANA had expected to see this figure drop.

In fact, the changing nature of online advertising is making fraud more prevalent. More valuable ad inventory – video ads and display targeted at specific demographic groups – are more susceptible to bots. Programmatic is a particular problem; the ANA found that it attracts 73% more bots than direct buys.

“As markets change their targeting goals, bot traffic fills in the gaps between what marketers want to reach and the real online audience,” says the study.

The problem with digital advertising

The report studied 49 large advertisers including Ford, Unilever and MasterCard. While it does not break out results for a particular brand, it found that for a quarter of advertisers, at least 9% of those viewing the ads were not people but robots. That means the average advertiser is spending $10m on ads that no consumer ever saw. In the worst cases those losses totalled $42m.

The issue comes from networks of infected computers, known as botnets. They mimic human activity so it looks as though a person is “viewing” an ad. Fraudsters can either sell this bot-generated traffic to online publishers or place digital ads on websites that mostly only viewed by bots.

Marketers are keen to follow their audiences, which are increasingly to be found online, on mobile and on social media sites. The lure of digital advertising has also been the ability to get vast quantities of data on consumers and then target them with relevant and interesting content.

However, Johnny Hornby, founding partner at The&Partnership, which owns agencies including CHI and M6, says marketers must be careful not to get swept away with the newness, excitement and promise of digital marketing without also looking at the challenges.

“If you listened to presentations from tech companies and agencies you would think we knew everything about everybody and were able to chop creative up into different bits so we can place the right message to the right person at the right time in the right place. It sounds great but it’s not true,” he explains.

“In this industry we can get carried away by the latest thing – we look for the positives but we have to understand the negatives as well.”

Johnny Hornby, founding partner, The&Partnership

“Up to four in 10 of the people looking at our ads online could be fraudulent. And fraudulent money could well be going to terrorists or criminals.”

What the industry needs to do

Ad fraud goes hand in hand with some of the other big issues gripping the digital advertising industry – viewability and ad blocking. ISBA’s director of media and advertising Bob Wootton has said tackling these issues is key to repairing the “fractured relationship between advertisers and consumers”.

However he also describes a “malaise” gripping the industry, with brands, agencies, publishers and ad tech firms all knowing they need to do something but unsure what that something should be.


Hornby believes the reaction so far has been too defensive. Google, for example, wrote its own blog citing how it blocked more than 780 million ads last year for policy violations. The firm also highlighted how it is “always updating its technology and policies to stay one step ahead of fraudsters”.

“We have the IAB saying they are doing this, Google saying they have done something else – they are all saying ‘I’ve done my bit’ rather than coming together to solve the issue.”

There have been attempts to jointly tackle ad fraud. In the UK, ISBA, the IAB and the IPA have set up the Joint Industry Committee for Web Standards (JICWEBS) to establish good practice for media agencies, ad tech companies, publishers and ad networks.

The Trustworthy Accountability Group has also said it will start certifying advertisers, publishers and industry middlemen to make them more responsible for bot traffic.

However, Hornby says these measures are inadequate and has issued a call to arms for the marketing industry. “What we lack at the moment is a concerted cross-industry effort and the danger is that if we don’t tackle this then the Government will tackle it for us.”

Marketers also need to take ownership. The ANA recommends that advertisers and their agencies ensure they are aware of the problem and involved, that they include language about non-human traffic in their contracts with suppliers and that they use third party monitoring tools.

On programmatic buying Taylor Schreiner, VP of research at TubeMogul, says marketers need to start making viewability and ad fraud part of their terms: “Marketers have to make sure filtering for human traffic is part of the mix. The solution is fairly straightforward: including safety filters pre-bid and optimise for viewability.”

Hide Comments2 Show Comments
  • Dan Maurer 26 Jan 2016 at 5:51 pm

    “fraudulent money could well be going to terrorists or criminals.” is a pretty idiotic thing to say. Absolutely zero evidence to link something as (in the big picture) as inconsequential as ad fraud to something as globally relevant as terrorism. Way to keep things in perspective (TIC) Johhny!

  • Michael Snow 28 Jan 2016 at 11:42 pm

    It would be nice if the report broke out what they mean by “programmatic.” Is it open marketplace RTB, PMP, Header Bidding, Programmatic Direct?

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