Every industry has a share of criminals and crooks that find a way to exploit the gaps and vulnerabilities in the system to gain financial rewards at the expense of legitimate counterparts. Successful fashion brands face revenue loss due to knock-off and counterfeits and the entertainment industry had to deal the issues of piracy that cut into the sales of licensed products. The holy grail of criminal activity in the digital world (perhaps the entire world), now seems to be centered on Ad Fraud.
What is Ad Fraud?
Here is a definition put forth on TechTarget: Ad Fraud is a type of scam in which the perpetrator fools advertisers into paying for something that is worthless to them, such as fake traffic, fake leads or misrepresented and ineffective ad placement.
Using human “click farms” is one (probably already obsolete) way of committing Ad Fraud. Incentivised programs, often masked as “work from home” or “make money online” are created to pay real people to click on digital ads and even fill out forms resulting in useless impressions, clicks and conversions (metrics used to measure an ad campaign). The crime has now evolved into something much more sophisticated with exponentially better results achieved through the use of methods like Ad Fraud botnet. Here, instead of using real humans to fool advertisers, criminals deploy a distributed network of computers controlled by a botmaster (a piece of computer script) to defraud advertisers.
This gives us an overview of the Ad Fraud types, but not a clear picture on the actual financial impact and how much is at stake.
What is at stake?
It was estimated that global advertising revenue wasted on fraudulent traffic, or clicks automatically generated through bots was $7.2 billion in 2016, and it could more than double to reach $16.4 billion in 2017. According to World Federation of Advertisers, total Ad Fraud is likely to exceed $50 billion globally by 2025 and is second only to the drugs trade as a source of income for organized crime. These are mind-blowing financial numbers with serious social consequences.
The sad reality…
The sad reality is that while millions are being transferred to cyber crooks (apparently, a Russian ring is making $3 million per day!), digital advertising industry is still searching for the answer to this question – who should take responsibility to clean up this mess?
We started this article saying that fraudulent activities are something most industries have to deal with. One of the key unique concerns with Ad Fraud crime is that the most powerful legitimate businesses in this industry could be benefiting from this crime. If fraudsters rake in millions everyday it is at the expenses of advertisers and society in general while the advertising platform providers like Facebook and Google could still keep making money from such criminal activities. It should be worth noting that these two companies captured an astounding 99% of revenue growth in digital advertising in 2016 and, if anything their control is accelerating!
We already highlighted that one of the biggest problems with the digital world is the lack of checks and balances, and more importantly, social accountability. We are now in a state where two for-profit companies have absolute dominance on a market that is projected to reap $50 billion for organized crime. If their financial incentives are aligned with cyber crooks perpetrating Ad Fraud, then who will take ownership and stop this menace from growing?