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Dhwani Shah

Hannah WardNicole Weissman

Nicolette Sulaiman

Over the past few years, ad fraud has become agrowing problem within the advertising industry. Theindustry has still not come up with a solid definition,

which has caused a lot of confusion and disagreementsince everyone has different opinions on the topic. Ad

fraud is an issue affecting everyone from publishersto advertisers to average consumers. A 2014 study

that monitored 181 ad campaigns over the course of 60days found millions of bots infecting the advertising

of companies such as Anheuser-Busch, Ford, Verizon,and Pfizer, costing them millions of dollars. Ad fraudis expected to continue to grow since there is no strict

legal enforcement.

2 http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone

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http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone photo: https://assets.

pando.com/_versions/2014/02/bot-clicker_featured.jpg

Who are the fraudsters?

"These are not college kids

moonlighting to make cash or rebel-

techies in their Bay-area apartment.

The bad actors are organized

criminals, usually operating outside

of the United States and are often

funded by larger criminal

organizations" - Internet Advertising

Bureau

What are Bots?

"Bots are very sophisticated

programs often installed on a

consumer's computer through

seemingly innocent means. These

bots then "click" on ads or run

videos silently in the background

behind open browsers or

even invisibly."

What bots are capable of

doing:

Fooling and submitting

CAPTCHA’s (Completely

Automated Public Turing

tests to tell Computers and

Humans Apart)

Buying things - putting items

in a cart and executing the

purchase

Visiting multiple sites,

generating cookies making

the “user” appear

demographically appealing to

advertisers and publishers.

Program bots can act like

anyone they want to: car

buyers, sports fans, rich

people, grandmothers,

anything.

Stringing hundreds of infected

computers together to create

“botnets,” generating high

volumes of traffic and clicks

from what appears to be

significant, specific, desirable

audiences

Moving a computer’s mouse,

running the cursor over ads

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http://innovation.media/magazines/how_digital_ad_fraud_affects_everyonephoto: https://assets.pando.com/_versions/2014/02/bot-clicker_featured.jpg

“Bot fraud is the world’s most sophisticated cybercrime” -

Michael Tiffany, White Ops CEO and co-founder

continued

Meanwhile, advertisers and publishers think they’re getting real

human interactions, encouraging them to:

“Turns out [bots] can be made to act quite

human. Which is foiling efforts to detect them.” -

Alex Kantrowitz, Ad Age tech reporter

Aggressively “optimize” their ad campaigns around these

“consumers”

Increase their original campaign spending and budget new

money to retarget these “qualified leads”

“White-list” those bots, protecting the fraudsters from

monitoring and guaranteeing them future business.

Advertisers and publishers are actually optimizing for fraud,

intensifying and perpetuating their initial loses

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We have defined ad fraud as, "any

ad activity that can generate money

triggered by non-human activity."

This can include the use of bots, as well

as ads that have no chance of being

seen by humans.

Non-human traffic is mostly utilized

to create fake impressions and clicks.

Sophisticated bots can mimic human

behavior and fake conversions by filling

out form submissions and attempting to

complete purchases. Fraudulent

publishers can pay traffic broker sites to

send bots to their websites to spike their

numbers. In turn, this causes the

advertisers to have to pay more to run

ads on the publisher’s sites where the

majority of views are from bots.

There are several types of ad fraud

that can affect people like you and

me. The first is invisible ads.

Fraudulent publishers have come up

with ways to hide ads so that they are

never actually seen by humans.

Another type is domain spoofing,

which is the hardest to detect.

Fraudsters are able to change the URLs

of fake websites within the real

AD FRAUDtime bidding ecosystem to make them

look like reputable publishers advertisers

would want to advertise on. For

example, they falsely identify as

huffingtonpost.com, when in reality the

ad will be placed on a different domain.

Another example of fraud is called ad

stacking, where one ad is hidden

behind the other. The hidden ad is still

generating impressions even though it

cannot be viewed.

Another way of hiding ads is called

iFrames, where a 1x1 pixel is placed on

a site and loads another site that is not

viewable. The hidden site generates

impressions without ever being seen by

the users.

Ad injection occurs when fraudsters

offer consumer software that injects

unpaid for ads over paid for ads on

websites by creating ad inventory that

does not exist. This leaves the advertiser

paying for ads that are not seen. For

example, a Target ad was injected on

the Wal-Mart website.

http://marketingland.com/many-faces-programmatic-ad-fraud-142335

http://blog.ezanga.com/blog/ad-fraud-101-types-of-ad-fraud-that-plague-all-marketers

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Digital ad fraud

costs media

companies

US$4.5 million

an HOUR.

For every $3spent on digital

advertising,fraud takes $1

$7.2billion

Ad fraud is

expected to cost

brands $7.2 billion

globally just this

year alone.

56%

Incapsula reports

that bots account

for 56% of all web

traffic with 29%

being "bad bots"

(such as

impersonators and

scammers)http://www.adweek.com/news/technology/here-are-4-common-methods-ad-fraudsters-use-make-their-ill-gotten-money-169285;

http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone;http://adage.com/article/digital/ad-fraud-eating-digital-advertising-revenue/301017/;

http://www.mediative.com/problem-of-fraud-in-programmatic/

Nearly 25% of all

video ad impressions

are fraudulent.

of all US digital ad

dollars today, in 5

years will become

23%

92%6

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top 20 victims: http://innovation.media/magazines/how_digital_ad_fraud_affects_everyonehttp://blogs.wsj.com/cmo/2014/12/09/5-things-marketers-need-to-know-about-ad-fraud/

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Websites / Publishing Companies

"Advertisers trust publishers because they place their ads in the

context of high-quality, relevant content delivered to high-quality,

demographically appropriate, highly engaged audiences who

deliver results... Ad fraud wrecks every part of that equation.”

“The amount of bot fraud in our midst is unrivalled in any other

industry and is sadly leading to a crisis of confidence on the buy

side” – Ari Jacoby, Solve Media CEO in Advertising Age

"Worse, your company may also, unwittingly, be an actual

perpetrator or enabler of digital ad fraud...your own personal

computer could be defrauding other publishing companies,

advertisers, and even your own company."

Digital ad fraud affects 10%-60% of different types of digital ads.

Digital ad fraud are costing publishers and advertisers ~$6.3

billion a year, or $4.5 million every hour 1

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graph: http://www.bloomberg.com/features/2015-click-fraud/; http://blogs.wsj.com/cmo/2014/12/09/5-things-marketers-need-to-know-about-ad-fraud/

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4. Fraud makes campaign success

analysis suspect and less useful

5. Billions of dollars in ad fraud

funds the bad guys’ development of

high tech tools to defeat publishers’

defensive efforts.

The more successful ad fraud is,

the more money it generates. The

money can then be used to develop

better applications and software

that makes fraud more difficult to

detect, making it more successful --

all feeding back into itself.

‘We’ve reached a crisis point:36% of traffic is generated bymachines, not humans’ – Vivek Shah,president of IAB’s board of directors. “The surprise was the ubiquity ofthe fraud. It’s not just no-namewebsites, but it also affects premiumpublishers” – ANA VP Bill Dugganthe reputation of the publisher is nolonger a reliable benchmark to predictbot traffic level.

Clients & Brands Brands unnecessarily spend moremoney. “When a marketer assesses acampaign’s success, bot trafficappears in the results along realtraffic. The resulting inflatednumbers can affect the perceivedsuccess of a campaign and futuread placements decision” The Advertising Industry1. Fraud invites government regulationby undermining the perception that ourindustry can control itself.2. Brands lose confidence in digitalmedia3. Brands squander money oncampaigns that are served to a highpercentage of bots

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Ad fraud costs $4.5 million every hour, and the number of

bots seen online spikes between midnight and 5 am.

How is this happening?“The problem is really the industry’s own fault - we’ve been optimizing for

quantity and have created this crazy breeding ground for fraud." – Scott

Knoll, CEO and President, Integral Ad Science

http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone

Selling fraudulent ad impressions

Selling fraudulent traffic to publishers looking for more visitors

Selling their own ads on other publishers’ sites without the publishers’

knowledge or permission

Sending fraudulent traffic to affiliate sites in return for commission

Creating fraudulent sites that look legitimate and selling ads on those

sitesAdd a little bit of body text

So how do they make money?

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What's Next?The Future and Solutions

Ad Fraud is expected to be a $50 billion business come 2025.

The World Federation of Advertisers (WFA) suggests

4 protective practices:

The greatest way to prevent ad fraud moving forward is

unfortunately to limit digital media investments because

ultimately an entire attitude change is required across the

entire industry. Once the culture changes in which advertisers

build a coalition where they protect each other from this fraud,

and fraudsters are effectively punished for their acts, only then

may we secure a brighter future.

https://www.marketingweek.com/2016/06/06/brands-must-adopt-new-tactics-to-beat-ad-fraud-that-is-

expected-to-reach-50bn-by-2025/

In-House expertise in digital marketing to avoid

outsourcing unfamiliar digital ad placers and

strengthened relationships with cyber security firms.

Strict metrics between marketers and their partners

on the scope of audience and business outcomes.

Databases of safe sites shared between brands.

Revised contracts between marketers and partners

in digital marketing to distinguish punishment for

funds allocated toward ad fraud.

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FIGHT THE FRAUDPrevention for Ad Fraud

“Create a publicly stated or corporate statement...[committing] to fight ad fraud. Then

join the industry’s Anti-Fraud Working Group. Membership signifies commitment and

helps keep you up to date.”-David Sendroff, founder and CEO of Forensiq.

The more committed the industry body to defeating ad fraud the more cautiously business

will be carried out. A public statement can serve as a catalyst.

“Enforce your right to trademark...The number one thing to do is protect and police

your identities [from]...a phantom who has your name but is selling it at a fraction of

your cost.” - Andrew Casale, vice president/strategy of Casale Media.

An impenetrable business through trademark rights is a fraudster’s worst nightmare because

without the facade of a trusted name they have no business.

"Look at the neighbourhood of the exchanges where you put your impressions. If you

spent tens of thousands of dollars to give you a high market valuation but you put it

in a really bad neighbourhood, its value will suffer.” - Andrew Casale, VP/strategy of

Casale Media.

Ensuring the corporation is keeping good company is key. Exchanges with safety reviews

are a simple preventative measure to keep businesses out of danger zones.

“You need to make sure your own house is in order first. We have found again and

again huge media companies with bot traffic because someone at that organisation

who is responsible for growing audience is going to third parties to buy traffic and

that third party is giving the publisher bots.” - Michael Tiffany, CEO of White Ops

Confirming that all parties in a company are on the same page is crucial because fraudsters

could be stealing for extended periods of time while management is in the dark. The entire

company should be aware of the outsourcing that occurs so if there is an incident of fraud

during digital marketing it can be tackled across the company.

Transparency Notes from all:

Publishers can opt to be more transparent by displaying their pricing and policies so an

advertiser will know immediately if they are over-paying for their impressions while engaging

in business with said publisher.

Exchanges can opt to require the specific name of the organization the buyer is committing

to prior to the bidding process for an ad impression, opposed to simply asking the name of a

domain (which can be faked.)

http://innovation.media/magazines/how_digital_ad_fraud_affects_everyone 111

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CASE STUDY

REAL LIFE

The Association of National Advertisers (ANA) and White

Ops, a cyber security firm, collaborated to conduct a study of

bot fraud. It featured 49 members of the ANA, including Apple,

Kraft Heinz and Procter & Gamble. Over a time period of two

months the team monitored the bot activity of 10 billion ads. The

study found that companies with $15+ ad placement are most

likely to be affected suggesting that fraudsters specifically

choose to conduct ad fraud with expensive digital media such

as video.The company hit most severely had unknowingly

allocated 37% of their digital marketing funds toward bot

impressions. The study concluded that advertisers across the

world will lose $7 billion to ad fraud in 2016.

12photo: https://www.qubole.com/blog/big-data/big-data-solution-ad-fraud

Brands versus bots; FT BIG READ: DIGITAL MARKETING; BYLINE: Robert Cookson1

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We at Life Mill Media recognize that ad fraud is an ongoing issuewithin the industry. There have been many innovations toward ad

protection and fraud prevention, however the exponentialprevalence of fraud malware is proving challenging to keep up with.

With both transparency and the sophistication of ad fraud risingsimultaneously, the issue of security becomes a never-ending cycle.The more successful bots become at deceiving publishers, the moremoney they can generate from advertisers. This money is directed

towards the development of more sophisticated bot malware that isharder to detect and be black-listed. Unfortunately, this means that

fraudsters will be even more successful, generating even morefunding. This cyclical process is in direct combat with the rising

levels of transparency within the programmatic ad buying process.We at Life Mill Media find it imperative that agencies begin

transitioning the programmatic buying process in-house by firstmonitoring publishing activity and over time curating the resources

to entirely manage digital marketing.

Unfortunately there are foreseeable creative and legal barriers inthe future of advertising. If the government has to step in to

implement regulation, rigid structure for marketers and agenciesare likely to be implemented along with punishment for fraudsters.This means that moving forward there may be a restrictive naturein the industry that advertisers did not previously endure and are

therefore unprepared to operate under.

The current disconnect between players in advertising calls forindustry bodies to be more involved with the content they produceand the audiences they serve. We believe that moving the process

in-house will help prevent the necessity of formal governmentregulation. By creating space for digital marketing in-house and

bridging the gap between agencies and tech-security firms,advertisers will have more trustworthy relationships with

programmatic teams and can be better protected from fraud.

last word

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