The Challenge of Advertising Fraud

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The Challenge of Advertising Fraud

Retailer John Wannamaker was quoted as saying “I know that half the money I spend on advertising is wasted.  I just don’t know which half.”  In today’s world of on-line digital advertising, it’s clear that the money lost to “click fraud” and other scams is a big part of that wasted half.

To appreciate the seriousness of the problem, just consider the dollars involved.  Global on-line advertising has grown from $60 billion in 2010 to an estimated $140 billion in 2017.  About $32 billion of that was allocated to so-called programmatic advertising.  Programmatic advertising uses machine learning algorithms to target consumers with advertisements across thousands of sites based on a swath of personal information, including browsing history, shopping habits, age, gender and more.

With fraudulent companies using ‘clickbots’ to generate illicit advertising traffic to bring in revenue, advertisers are paying billions for ads that never reach customers.  Recent reports in MarketingTechNews make clear that the advertising fraud problem is widespread, and so-called “click farms” are fast becoming professional, large-scale operations. For instance, authorities in Thailand raided a click farm at a house and confiscated nine computers, 500 mobile phones, 350,000 SIM cards and 21 SIM card readers, in June of 2017. And, as with marijuana farms, each one shut down is quickly replaced by new ones.

These click farms are highly adaptable and are used to influence all manner of things on the Internet, from the number of followers on a social media account to the amount of plays a song has received on Spotify.  But using these farms for advertising fraud purposes has caused a serious rift in the industry, with the cost of such fraud totaling billions of dollars a year.

In May of this year, Dr Augustine Fou a researcher who previously work as Senior Vice President of Digital Strategy for McCann Worldwide, produced an astounding article that really puts the bot-fueled ad fraud problem into perspective...

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