The global online ad fraud problem could be costing advertisers more than twice as much as first estimated, according to new research released on Tuesday.
A study commissioned by WPP ad agencies The&Partnership and conducted by ad verification company Adloox estimates advertisers could be wasting $16.4 billion to fraudulent traffic and clicks manufactured by bots in 2017.
That is more than double the $7.2 billion the Association of National Advertisers estimated would be lost to ad fraud in 2016. The World Federation of Advertisers, meanwhile, predicted last year that ad fraud will cost advertisers $50 billion by 2025, describing the malpractice as an organized crime “second only to the drugs trade.”
Adloox conducted its study across 200 billion daily bid requests, 4 billion ad calls, and 10 billion ad impressions a month, over a period of 12 months.
Across the 200 billion bid requests, 50% were detected as being either non-human traffic (either a bot or a hijacked device) or fraudulent traffic, which includes bad actors trying to spoof real web domains to attempt to pass off to ad buyers as premium publishers.
Adloox estimated that nearly 20% of global digital ad spend in 2016 – or $12.48 billion – was wasted on fraudulent ad placements.
The&Partnership founder Johnny Hornby said in a press release that the figures serve as a “stark reminder” that the industry has a duty to come together to rid the digital ecosystem of the ad fraud problem.
He said in a statement:
“We have a duty to come together as an industry – from media agencies and industry bodies, to big-platform players like Google and Facebook; bringing in government help if we need it – in order to protect our own future and those of our clients.
“Good work is already being done by many, including (ad industry bodies) the ANA, IAB, ISBA and the IPA, as well as the recent combined efforts of TAG (Trustworthy Accountability Group) in the US and JICWEB (the Joint Industry Committee for Web Standards) in the UK – but these new figures show that we need to move further, much faster. And there are concrete steps we should all be taking to make that happen.”
He added that advertisers too need to take responsibility by focusing on quality ad placements rather than cheap inventory.
Hornby said: “Clients likewise need to be willing to get themselves off the drug of cheap digital media and invest in proper band protection. Pre-bid verification technology costs all of 3 pence per 1,000 impressions, accounting for about 2% of a brand’s overall media spend – but, for all the diligent clients out there, there are still plenty of others who are refusing to pay for it. If nothing else, this report proves what a false economy that is.”