Brands ‘the only victims’ as ad fraud becomes $50bn problem

The World Federation of Advertisers (WFA) has warned brands to be wary of investing too much in digital marketing until the ad tech industry takes action to combat the growing threat of ad fraud, which is expected to exceed $50bn by 2025.

In a new report commissioned by the WFA and Advertising Fraud Council, marketers are urged to take practical steps to ensure that as little as possible of their advertising falls victim to ad fraud. The report warns that advertisers are the “only victims”, with agencies, vendors and media agencies all benefiting albeit unintentionally from fraud.

“Advertisers are the sole victim of ad fraud and the WFA wants to equip them with the tools to minimise their exposure. There is much that advertisers can do to improve the situation in terms of setting new standards, contractual changes and increased transparency, but ultimately behaviour change is required across the industry,” says Stephan Loerke, CEO at WFA.

The report highlights four areas that marketers should focus on to avoid falling prey to ad fraud.

1. People and technology

The report says that brands need to develop their in-house expertise. To support vendor selection they must work with cyber security partners to help understand common threats and demand full transparency of investment. This should include full disclosure of the websites being used to promote their products or services.

2. Education and communication

According to the WFA brands should set clear expectations of what they demand from partners. Appropriate metrics should be set up where possible and these should relate back to business outcomes. Brands should also encourage open information sharing in relation to preventing ad fraud.

3. Standards

Research highlighted that 40% of mobile ad clicks are essentially worthless and that 88% of digital ad clicks are deemed fraudulent.

Standards need to be maintained through brands using the databases of “safe sites”. Advertisers needing to hit digital investment target will have to accept that these “may not be achievable without exposing themselves to high levels of fraud.”

4. Governance

The report says that contracts with agencies and vendor partners need to be revised to ensure there are “clear penalties” in place for misallocating spend to ad fraud inventory, if prevention could have been reasonably achieved. Those that have benefited from fraudulent activity in the form of commissions and fees should return the money to the advertiser.

The WFA admits these changes “will require brands to show leadership to work closely with the eco-system partners to drive major change”.

Even if brands adopt the WFA’s recommendations, success is not guaranteed,  as an overall behavior change is required across the industry. Until then, the WFA says advertisers must be cautious when it comes to their digital media investment “to limit their exposure to fraud”.

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