Advertising Technology

At current rates, online ad fraud will cost display and video advertisers more than $6 billion next year in frittered away spending.

This is according to a report released by Association of National Advertisers in partnership with WhiteOps, a platform for weeding out fraudulent ad traffic.

This study was quite massive. It comprised of 181 campaigns from 36 advertisers, which looked at more than 5.5 billion impressions over 3 million domains.

The expected losses make up more than 12 percent of the roughly $48 billion spent on display and video ads worldwide.

For a time, cash lost to ad fraud was thought of as an inconvenient tax on the system. But as that “tax” is now clearing 10 percent (a higher rate than any single state in the U.S. collects for sales tax, by the way), all industry players are trying to figure out how to stamp it out.

This report offers a little more insight into how these fraudsters work, how widespread the problem is, what sites are most targeted, and even some information the industry as a whole might use against them.

First, the infiltration: 11 percent of all display ads were served to bots (17% of the serving was done programmatically), and 23 percent of the video impressions were served to bots. Bots were even re-targeted for 19 percent of the ads served.

When it comes to which publishers are being targeted, the findings may come as a surprise. It turns out, premium publishers serve almost 20 percent of bot traffic. And some campaigns are completely trash.

“One premium, well-known publisher in the lifestyle industry vertical employed a web page layout consisting of a single large video player at the top of the page. Seemingly random selections of content surrounded the autoplaying video on the page,” the report stated. “On this publisher page, video ads for an auto participant in the study were consumed by a 98 percent bot audience. Out of almost 4,000 total video impressions from the placement, fewer than 100 were
served to humans.”

Small percentages of many campaigns going to bots might be something the ad buyers have been willing to put up with that in the past. However, the chance that an entire campaign could be served to bots could cause some serious concern for those on the buy-side.

In order to cut out the bots, the industry must first have an understanding about where the traffic is coming from.

One thought is that much of bot fraud came from huge computer farms, just creating false clicks around the clock. ANA's report, however, showed that a majority of the fraudulent traffic came from infected home computers. More than 67 percent of the bot traffic came from residential IP addresses.

The report also came with it some actionable data.

One interesting datapoint was that there was unrealistic amounts of middle-of-the-night traffic, with the report stating about “half the bots caught were not sophisticated enough to keep daylight hours.” Traffic spiked between midnight and 6 a.m. This would seem to be a finding that could help reduce traffic fraud. Older web browsers were also represented higher in the bot traffic.

Also take note that traffic purchased from third-parties, usually not even a good idea, came with it as much as 52 percent bots. This was the top trackable source for traffic in the study.

The report also concluded with possible action plans for both the buy and sell-sides of the online ad ecosystem. Those suggestions included using traffic-monitoring services and update blacklists frequently.

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Download a copy of the full report here.

Take a look at which sites are hit hardest by online ad fraud. See what industry insiders see as programmatic's biggest challenges. Viewable ads are certainly one of those challenges, and you can check out just what the numbers are on that front, as well as see what publishers think about moving to more time-based metrics. Also, Google made major headlines this week by introducing a new program that will allow web users to pay a few bucks a month to never see ads on certain sites.

• The 10 Premium Publishers Hit Hardest by Fraudulent Ad Sellers (Ad Week) – It's obvious that some of the internet's biggest sites are the ones hit hardest by ad fraud, as they deal in the largest scale of traffic. What's interesting is how hard they're hit. Also, this article has a pretty sweet infographic of one way that fraudsters beat the system.

• Programmatic's biggest challenges: Talent, education, fraud (Digiday) – For as promising as programmatic is for the digital ad industry, it is no secret that there are challenges to its adoption. But check out this roundup of how industry insiders, from all sides of the equation, are addressing these problems.

• Nearly Two-Thirds Of Non-Direct Inventory Deemed Non-Viewable (MediaPost) – When an ad loads, there's no guarantee it will be seen. Sometimes it loads and the user doesn't scroll down the screen to see it. Sometimes that “user” isn't even real. Recent data from Q3 of this year, however, shows just how many of the ads are not viewable. This is using the current viewability standard of 50% by 1 second. The article also breaks down how that number changes when you adjust the standard to some of the other ones that have been considered by the industry.

• How Time-Based Measurement is Grabbing Digital Publishers' Attention (Digital Content Next) – A recent report released based on research done by Digital Content Next shows that publishers are increasingly interested in moving to time-based measurement when it comes to the ads sold on their websites. The full report is available for download.

• Google Program Lets Readers Pay a Buck a Month to Block Ads (Ad Week) – You read that right, Google is going to let web users pay a dollar (or three) per month to never see ads on certain websites. It's a way to “subscribe” to Google's (rather growing) corner of the internet. It makes sense to be a little skeptical about wide-spread adoptions, however. The current offering only allows users to block Google AdSense ads on just a handful of sites. If a user visits one of those sites many times, it may be worth it. But that user will still see ads on every other part of the web. The price point is certainly set up to encourage wide adoption, but the question remains: Will not seeing ads on a small handful of websites be enough of a benefit for users to even bother, giving Google enough momentum expand on this experiment?

There's been a lot of chatter over the past week about banner ads. Perhaps it was spurred by the 20th anniversary of the first banner ad that took place last month. Perhaps the online ad pundits decided to take a week off from writing about fraud, transparency and measurement.

Either way, it just seems like it was time for someone to call for the death of the banner ad. You know, kind of like how 2015 will be the year of mobile. Again.

New York Times tech columnist Farhad Manjoo blatantly declared the fall of the banner ad last week, protesting that not only are they ineffective but that they have “they have ruined the appearance and usability of the web, covering every available pixel of every page with clunky bits of sponsorship.”

Every pixel, that is, besides those taken up by his 1,200-word opus. That's pretty hefty coverage, by the way.

Despite the claims by Manjoo — just the most recent of many — the banner ad business remains alive and well today.

Take the opinions of Manjoo's podcasting co-host, Business Insider writer Jay Yarow. To say that Yarow disagreed with Majooo's claims would be a bit of an understatement, and you can listen to his retort here at about the 11-minute mark.

Manjoo's podcasting co-host wasn't the only one to pick apart the claims of the columnist who works for a publication heavily funded by ad revenue (there were four banner ad placements on the page that displayed his column). The Wall Street Journal's Jack Marshall followed up with his response, adding that the “banner ad might be widely disliked by journalists, consumers, publishers and even marketers, but there's little evidence to suggest spending on banners is reducing significantly.”

But probably the best defense of the banner ad's effectiveness came from a person whose job it is to make sure client money is spent in the method that will yield the highest return. Tim Goosmann, chief creative at agency True North, writes in AdAge that his agency continues “to design and serve online display advertising … as an integral part of any multichannel campaign.”

He continues:

Through complex analytics, we know when a person first sees an ad, if and when they later used search to follow up on the message, and when they landed on the website. Deciding to visit a website didn't just come to them in a vision. When someone purchases at retail, you don't credit the cashier with getting him or her into the store.

Many have declared that banners are ignored and ineffective. Behavior tells a different story. We see the banner's influence again and again. When we have stopped using banner display ads for clients, we've seen traffic, search and conversions plummet.

…

I'm tired of pundits declaring the patient dead without first bothering to check the pulse. If the data tell us otherwise, we'll be the first to put our client's money elsewhere.

Compiling these responses isn't meant to pile it on against Manjoo. In fact, it's healthy for the industry to have these conversations. They act as a forced pause, getting decision makers in the space to “check their work,” so to speak — to make sure the current tools in the box are the right ones to get the job done.

Everything must be tracked and measured to ensure continued effectiveness. Those on both the sell-side and buy-side are doing that, and the data backs up that which we already know — the banner ad is still an effective marketing tool.

Therefore, as Goosmann closes his column, “the banner lives.”