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June 6, 2014updated 22 Sep 2016 11:31am

Why advertising fraud is so high on the Internet

...and how the industry is trying to fix it.

By Jimmy Nicholls

When news that a sample of Mercedes-Benz’s adverts was more widely viewed by bots than humans breaks in the same week that an audit company reveals four in five British advertisers have no idea how many of their advert impressions are fraudulent, you know an industry is in some sort of trouble.

"The market has been has been relentlessly pursuing success and performance and in so doing has lost sight of where adverts actually appear," said Duncan Trigg, chief executive of Project Sunblock, an auditing firm for advertisers and the authors of the aforementioned report.

"Brand safety" has long been important for Project Sunblock’s clients, with regular investigations run to check whether adverts are displayed alongside undesirable editorial content such as pornographic or racist material. But since the rise of programmatic advertising in 2009, in which space is bid for based on which demographics a company wishes to target, bots have become an increasing concern.

The Interactive Advertising Bureau (IAB) surveyed enterprise marketers last November, and found that 85% were using programmatic advertising. Of those who did half were trying to buy adverts more efficiently, with slightly more trying to target more effectively, and only 16% motivated by cost-cutting. Over the next two years 91% of advertisers are expected to take up programmatic advertising, despite anxieties about the practice.

Ascertaining who is actually viewing the campaigns is a growing trend for the auditors. Adverts appearing below the fold of a web page are much less likely to be seen than those visible when the page opens. But more problematic than that is the rise of botnets in directing fraudulent traffic, with the IAB claiming that as much as a third of online traffic for adverts is robotic rather than human.

"Botnets are already surprisingly sophisticated and will only become more potent in time," said Andrew Goode, chief operating officer of Project Sunblock. "There are many pieces of malware used to infect PCs which are used to create fake traffic and then sold on to publishers through ad exchanges, and some of the bots are almost indestructible."

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Bots can be detected by tracking patterns of behaviour by those visiting the websites, such as the time spent on a webpage. Visitors who spend less than half a second on a site are flagged up as potential fraud, and investigators can also look at other factors such as IP addresses.

Fraudsters are also buying "drone pools", a cloud based service that allows them to emulate thousands of users without the hassle or reliability issues of hacking into others people’s machines. But despite bots and drone pools being well known within the industry, Goode said that there are few advertisers willing to take action on the subject.

"There’s no catch all technology that will ever be a full stop answer to fraud," Trigg added, although he is seeing some progress in the industry. "The elephant in the room is starting to be addressed and people are starting to react to it."

Unsurprisingly, some deny there even is an elephant in the room, or at least whether it’s a big one. "A year ago, I was concerned because I felt that the industry was not talking enough about the fraud problem, and now, I am worried about the opposite," said Scott Knoll, chief executive of advertising firm Integral. "If we’re not careful, we are going to get carried away and cause irreparable harm to the future of digital advertising."

He finds claims that the annual losses from the online display advert industry are as high as $20bn implausible, blaming ham-fisted methods of calculating how much traffic is fraudulent for inflating the damage estimates. "Despite what you may hear, fraud levels have dropped over the past year," he said.

Either way, companies are becoming increasingly less willing to pay solely for numbers when it comes to advertising. Not only do they want to ensure their adverts are actually seen, they want to ensure they are seen by people who will actually want to engage with their product. A successful campaign is not merely about visitors, but about eyeballs, clicks, and purchases.

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