The Association of National Advertisers predicts that advertisers will lose $7.2 billion to bots in 2016, globally. This astounding figure was one of the stunning revelations of the ANA’s joint report with White Ops titled “The Bot Baseline: Fraud in Digital Advertising”. The key findings of the report are the following:
- In 2015, advertisers had a range of bot percentages varying from 3 to 37 percent, compared to a 2 to 22 percent in 2014. But the overall rate of fraud was basically unchanged.
- Media with higher CPMs (cost per thousand impressions) was more vulnerable to bots, as these segments provide a stronger economic incentive for botnet operators to commit fraud.
- Sourcing traffic (any method by which publishers acquire more visitors through third parties) results in greater fraud. Sourced traffic had more than three times the bot percentage than the study average.
- Fraud varies by buy type. Direct buys had lower fraud. Programmatic buys had greater fraud. Programmatic video ads had 73 percent more bots than the study average.
- The annual financial impact of bot fraud ranged between $250,000 and $42 million for the 49 participating advertisers and averaged about $10 million per participant. The advertising industry overall could lose approximately $7.2 billion globally to bots in 2016.
The ANA also identified a number of “action steps” that advertisers could take to mitigate this tremendous volume of bot traffic which include –
- Selecting media partners that actively work to reduce fraud;
- Understanding, participating in and monitoring traffic source selection; and
- Increasing transparency about players in the process and the inventory itself.
AdWeek interviewed four experts and published notes from the discussion in its article titled “What’s Being Done to Rein In $7 Billion in Ad Fraud”. The article makes for very interesting reading, primarily because it points to a change in attitudes towards ad performance metrics.
To begin with, and as we suggested in our article titled “Beyond CTRs – 4 New Performance Metrics For Publishers”, advertisers and publishers should explore alternatives to metrics such as CPMs and CPCs which tend to be more susceptible to ad fraud with their emphasis on pageviews. Instead, the industry should focus on more meaningful metrics and outcomes. According to Amy Bartle, director of media and digital marketing, La Quinta Inns & Suites:
Most importantly, clients need to abandon low CPMs and CPCs as the driver of their inventory selection decisions and replace them with a focus on actual business KPIs, be it sales conversion, email sign up, loyalty program enrollment or a measured brand health metric impact. Using a ROAS [return on ad spend] metric rather than an expense metric is the better way to ensure value in your media selections.
One option is to continue the shift towards using private exchanges where there is more transparency about pricing, inventory and traffic sources. In contrast with DSPs which seem to foster ad fraud where they tend to be fairly opaque about inventory and traffic sources. Again, according to Bartle:
I put the primary responsibility on demand-side platforms [DSPs] and publishers to fix this problem. In the case of DSPs, the lack of transparency into their inventory and traffic sources leaves an open door for fraud to enter and remain in the ecosystem. Anecdotally, the clients I know that use private exchanges find they work best when there is complete pricing, inventory and traffic source transparency among all parties.
Michael Tiffany, co-founder and CEO of White Ops, pointed out some of the success factors employed by buyers with the lowest ad fraud exposure:
We found the buyers with the lowest fraud exposure were predominantly using a combination of independent monitoring technology and business processes that strongly incentivized their inventory sources to fill their orders with organic traffic only.
The fight against ad fraud is, ultimately, going to lead to a better engaged industry as publishers and advertisers collaborate more and more to find more meaningful, less vulnerable metrics. The result is likely to be better value for the industry as a whole and while there may always be a degree of ad fraud, targeting the metrics that fuel it may just shift the emphasis to more lucrative avenues.
Further reading:
- The Bot Baseline: Fraud in Digital Advertising
- What’s Being Done to Rein In $7 Billion in Ad Fraud
- The Internet Of Things Could Be A Back Door For Ad Fraud
- TubeMogul To Issue Automatic Refunds For ‘Nonhuman’ Video Traffic