Is Your Company Wasting Marketing Dollars? The 7 Billion Dollar Ad Fraud Problem

Too often, advertisers pay for digital ads that weren’t actually seen by a human. Here is what your small business needs to know before investing in paid digital marketing. 

Digital marketing encompasses the tactics businesses use to raise awareness about their offerings and drive sales online, from social media advertising to search engine marketing to mobile and video ads. While small businesses aren’t spending as much or as often in this realm as their larger counterparts, digital marketing spending has increased across the board. Seventy percent of small to medium-sized businesses said they will increase their digital marketing budgets in 2017, according to research from GetResponse as reported in Entrepreneur.

Digital marketing is so popular because it works. Marketers use cutting-edge technology to target their audiences with increased precision and with increasingly personalized messages. They can monitor their efforts in near real-time and make changes based on data to optimize their results. But it is not just advertisers who are interested in digital marketing. Cyber criminals also recognize an opportunity.

What You Need to Know about Bots

Let’s say you own a local dental practice and decide to invest in digital advertising to connect with residents in your area. At the end of the campaign, you are told your ad was seen 500,000 times, a fraction of which generated clicks. But what if you learned that some of the ads you paid for weren’t seen by real people, and that even some of those clicks were fake?

It is estimated that $7.2 billion ad dollars were wasted globally as a result of fraudulent traffic last year, according to the Association of National Advertisers (ANA), which conducts in-depth studies on ad fraud in partnership with the digital security company WhiteOps. Most ad fraud stems from bots, computer programs that masquerade as real people and can even scroll and click. Bots can be used to spread malware and harvest personal data, and they are disrupting the digital advertising ecosystem.

The tech company Zvelo offers a nice summary of how this works: “Ad fraud happens when a bot attempts to imitate legitimate web traffic (acting like a real person visiting a website) and generate additional (but fraudulent) web page views (and therefore revenue) for the website publisher. The advertisers’ budgets are compromised, as their dollars are being wasted on ads being served to bots rather than humans. This results in the advertisers and the end users paying the price for this fraud, as well as being exposed to the risks associated with malicious and fraudulent bots.”

Most publishers do not knowingly charge their advertisers for fraudulent traffic, but ad fraud can be challenging to police. Just this past December, Russian hackers pulled off what has been dubbed the “biggest ad fraud ever.” They created domains and URLs which appeared to belong to real publishers, including ESPN and Vogue. Then they created a bot farm to generate fake traffic to these pages. Much of digital ad buying is automated. Computer programs determine where to serve ads on behalf of advertisers, based on the advertisers’ target audience. The fraudsters were able to trick these algorithms. Via automated buying, advertisers served their legitimate ads on these nefarious sites to fake visitors—the bots! Digital advertising often uses a pay-per-click pricing model, which means advertisers pay every time a user clicks their ad. Well, these bots did a lot of clicking, so the hackers were getting paid big bucks — $3 million to $5 million a day!

What Small Businesses Can Do to Protect against Ad Fraud

Before you go swearing off digital marketing forever, know that members of the advertising ecosystem have teamed up in the fight against ad fraud. For example, the Trustworthy Accountability Group (TAG) was created by the American Association of Advertising Agencies (4A’s), the Association of National Advertisers (ANA) and the Interactive Advertising Bureau (IAB) to find ways to eliminate fraudulent traffic and combat malware.

For small business marketers, the first step is awareness—you must realize this problem exists. Then you need to find partners you can trust. Reputable companies like Google go to great lengths to protect advertisers. When choosing a digital advertising partner, ask them about the steps they take to identify and prevent ad fraud, as well as about their approach to viewability, which refers to how they determine whether or not an ad was seen and counted as a billable impression. Facebook is another fantastic tool for small business marketing in part because of its easy-to-use, self-serve platform, but also because it is vigilant about sniffing out fraudulent traffic.

If you will be doing extensive advertising, consider investing in a third-party solution that can help track your ads and monitor for ad fraud. White Ops, Integral Ad Science, FraudLogix and Forensiq all offer these types of solutions. Simply visiting their sites will help you learn more about the fight against ad fraud. Additionally, observe your traffic during the length of your campaign, and if something seems suspicious, reach out to your partner. Warning signs include stats that seem too good to be true, i.e., suspiciously high click-thru rates and abnormal patterns, like every impression served to a particular site generating a click.

Digital ad fraud is complicated, but the bottom line is simple. You need to choose your partners wisely and take education into your own hands. Doing so allows you to take advantage of digital marketing’s tremendous potential while mitigating wasted spending.

Cyber crime extends far beyond advertising and can affect every area of your business. Are your employees in the know? Anderson Technologies, a team of cyber security specialists in St. Louis, helps small businesses educate their employees about effective cyber security practices. For more information on our cyber security training services, email info@andersontech.com or call 314.394.3001 and check out our free ebook, An Employee’s Guide to Preventing Business Cyber Crime.