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Click fraud plagues today's mobile ad economy

Ragnar Kruse CEO, Smaato Inc.
Click fraud is the bubonic plague of today's advertising world—a plague that cost marketers over $11 billion in 2014. Here's how to fight back.

Click fraud is the bubonic plague of today's advertising world—a plague that cost marketers over $11 billion in 2014. Despite widespread efforts from brands, advertising platforms, and even security companies, the Interactive Advertising Bureau (IAB) says click fraud "has never been a bigger threat to the industry." Estimates vary, but they indicate that up to 50 percent of all publisher traffic is bot activity. Ad fraud is a top CMO concern and threatens the overall growth of digital marketing.

Just as sanitation and personal hygiene were able to eradicate the bubonic plague, there are steps that advertisers can take to protect themselves. The key to eliminating click fraud is to catch the fraud before the click. Let's take a deeper look.

The scourge

For years, the Internet has run on pay-per-click advertising. Advertisers buy ads and pay the publisher for every click. Click fraud, in which an individual or automated software program clicks on ads to drive phony impressions and clicks, has exploded over the past decade to exploit this advertising model. Way back in 2004, Google's CFO George Reyes called click fraud the "biggest threat" to the Internet economy, and as evidenced by the aforementioned quote from the IAB, little has changed.

In fact, it has gotten worse as fraudsters have become more sophisticated. Today, they randomize IPs or device IDs to try to make the traffic look human. They also use bot networks that drive fake impressions to specific sites for concrete time frames and hide banners in the background (iframes), so that even though impressions were counted, the banner was never actually seen.

A recent analysis from SunTrust Robinson Humphreys found that bots account for 11 percent of display ad views and 23 percent of video ads. Between three and 31 percent of programmatically-bought ad impressions were found to be from bots—17 percent on average. Even "premium" programmatic campaigns on private advertising exchanges aren't safe, with around 10 percent of ad impressions coming from bots. These bots not only wreak havoc on initial impressions but also drive 19 percent of retargeted ads. Mobile, initially thought to be a safe zone for advertisers, is now rapidly approaching online ad fraud levels through a variety of nefarious tactics.

These staggering rates cause serious damage to publishers and advertisers alike. For advertisers who work tirelessly to increase their exposure and attract new users, it's money down the drain, because bots rob advertisers of their connection to targeted users. They also jack up the effective price of inventory for everyone, while chipping away at trust across the entire mobile advertising ecosystem. Playing the growing fraud problem out to its unsavory end, mobile publishers run the risk of being unable to monetize their applications due to a lack of advertisers willing to send ads to them.


The silver lining to the click fraud epidemic is that it is beginning to drive meaningful change in the industry. Advertisers are becoming increasingly savvy about how to protect themselves against fraudulent traffic and are making smarter decisions. They don't want to waste their money and are placing a higher priority on ad exchanges that maintain higher standards and offer transparency.

This incentivizes the exchanges themselves to crack down on fraudulent traffic and to take extra measures to keep their inventory clean. Ad platforms, especially in the programmatic space, don't want all their customers running to premium publishers because they think they're more trustworthy. When both advertisers and exchanges work together to keep click fraud out, real change will happen.

This will have dramatic effects across the entire industry. Advertisers will be able to get higher ROI for every dollar they spend and reach larger audiences. They'll also have access to better data about who is clicking on their ads, which will enable them to gain more insight and improve faster. A cleaner ad ecosystem will open up the entire market and drive acceptance. Programmatic and mobile advertising are going to play much bigger roles going forward.

Have you had experience with click fraud? I'd love to hear more about your best practices in the comment section below.


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