One in three online advertising dollars now lost to fraud

Online has established itself as the ultimate in measurable media. Not only can we track every single step consumers take, but we can mix it with a deep understanding of who they are, what they like and the products and services they are most likely to be curious about. 

Our ability to target consumers with messages that might be of highest appeal and then seeing how they respond to these has seemingly never been greater.  

Last week the Advertising Association in the UK reported that 50 per cent of all 2015 advertising budgets will be allocated to online, making the UK the first country where online advertising now commands such a significant share of advertising budgets.

Within this impressive performance, mobile is the platform de jour as advertisers now spend more than £1bn ($1.6bn) on the medium in an aggressive attempt to place their budgets where the eyeballs are. And why shouldn’t they? 

Well a new report released by Distil Networks last week suggests that advertisers may not be getting quite as many eye balls or the kind of eye balls they had bargained for, as one in three online ad dollars are being lost to fraud. 

Fraudulent activity including overstated mobile traffic, high-jacked devices serving ads in the background, bot activity and skewed analytics will all contribute to estimated losses of $18.6bn in the US this year. 

If the same fraud ratio applies to the UK, it potentially means that advertisers are now loosing up to 17 per cent of their total advertising budgets, or £2.7bn, to online fraud. To put a different perspective on it, advertisers are potentially losing more to online ad fraud than they are investing in national newsbrands, consumer magazines, radio and cinema combined!

Your Financial Director may need a change of underwear or at least a hanky to deal with that bit of news I suspect. 

Advertising bots obviously play a huge role in this. They behave much better than humans do, will obediently click on any ad you ask them to and are happy to stick around longer to look at your ads or pages to show you that they are really interested in what your brand has to say. 

This impeccable behaviour then gets rewarded by agencies who ask clients to redirect funds so that they can optimise the campaigns to attract more of the behaviour. 

As a simple Google search on the term “click farm” will reveal, even some of the actual human eye balls scanning your ads may not necessarily be the highly defined, tightly targeted and desirable audience you’ve been sold, but instead offer up the attention of some poor sod whose eye-lids are stuck open with sticky tape so s/he can knock out a few thousand more likes, clicks or page views before their 16 hours shift ends. Needless to say they don’t earn enough to buy your brand, let alone the thousands of brands they “like” every day.   

In an effort to be seen as accountable, online has resorted to counting instead, and the things that are being counted are increasingly appearing to hold very little value for advertisers. 

Sadly the systems that we are putting in place to make trading easier and more efficient like programmatic trading may only be adding fuel to the fire. 

Since programmatic has taken off in 2010, online ad fraud has been ballooning in tandem and as automation increases, the market for fraud will become increasingly attractive.

Dealing with the incidence of fraud is however, only one side of this troublesome coin that advertisers need to contend with.

The cost of becoming a content provider has pretty much dropped to zero, and anyone with a laptop, internet connection and a will to put a site together can do so easily. Increasingly many such content providers have very little interest in producing great content or an efficient advertising environment.  

If you’ve ever (or regularly) made the horrible mistake of clicking on one of those “Twenty of the best [insert any topic]” click bait articles you will know exactly the type of low quality, high ad inventory environments I’m talking about.

Click baiting has one objective in mind: to lure people into a toxic advertising environment and pepper them with a huge amount of ads. It takes extra care to make sure that finding the content you were lured in with is almost impossible to find without being served dozens of ads, and being tricked into clicking on a few more. 

If a brand does make an impact in such an environment, is it is bound to be viewed in a very negative context. 

It is no surprise then that most consumers are getting fed up of such behaviour. As a result they have not only become much more astute at not only automatically filtering out advertising but are increasingly starting to actively screen out advertising using ad blockers. The number of people doing so may still be relatively small at the moment, but seeing whether this technology has the momentum to go mass market is a test the industry will do best to avoid.

It is impossible to turn back the clock on any of these developments, but it does increasingly feel that we are reaching the point of no return as far as advertising effectiveness is concerned. 

If ever there was a time for publishers to do a rallying cry for the merits of quality content and a quality advertising environment where the expectations of both (real) consumers and advertisers are met, this would be it. 

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