'Bot fraud' set to cost advertisers $6.3bn globally, study says

Out-Law News | 15 Dec 2014 | 4:45 pm | 1 min. read

Almost a quarter of video ad impressions are viewed by “fake consumers” created by cyber crime networks and more than half of third-party sourced traffic is fraudulent, according to a new study.

The study of bot fraud in the digital advertising industry, carried out by the US Association of National Advertisers (ANA) and online fraud detection firm White Ops, said fraudsters are increasingly collecting payments from advertisers for “non-human impressions”.

According to the study, conducted in August and September 2014, advertisers are projected to lose $6.3 billion globally to bots in 2015.

The ANA said the study analysed 181 campaigns from 36 of its member companies, which were tagged to identify bot fraud. ANA said during the study, 5.5 billion impressions in three million domains were measured over 60 days in line with industry spending patterns.

The study found that “publishers who bought sourced traffic from a third party, as a means to drive additional unique visitors to their site, had a bot fraud rate of 52% on that sourced traffic”. In addition, “bot net controllers hijack everyday consumers' identities and home machines to conduct ad fraud”, the study said.

ANA said: “Bot fraud originates from malicious sites with phoney ad traffic that passes through both legitimate and ‘phantom’ elements of the digital advertising ecosystem. Fraudsters collect payments from advertisers for non-human impressions.”

The study “also revealed that bot fraud levels vary across the day with peak activity occurring when users are sleeping, but their computers are still awake, between midnight and 7am”, ANA said. “Additionally, impressions coming from older browsers such as IE6 (Internet Explorer 6) and IE7 had fraud levels of 58% and 46% respectively.”

In response to the study’s findings, ANA and White Ops have published an ‘action plan’ for key industry players such as advertisers, agencies and publishers “to substantially reduce bot fraud”. The action plan includes “key tactical advice on how to structure business operations in a way that will protect against ad fraud”, ANA said.

The action plan’s recommendations include conducting advertising “during waking hours”, and “include language on non-human traffic in terms and conditions”. In addition, advertisers are encouraged to “use independent monitoring and conduct ongoing fraud analysis of advertising traffic”.

The chief executive officer of White Ops Michael Tiffany said: “Ad fraud is hugely profitable and is one of the major sources of funding for a global underground responsible for a broad spectrum of cyber crime. To protect this cash cow, adversaries are aggressive, smart and adaptable. As such, the results of this study should not be about building better mousetraps, but about driving substantive change in the industry to alter the economics for criminals, and ultimately drive them out of business.”