Advertising Leaders: Come Clean with Industry Fraud

“Warning: The Internet advertising market is dangerous, unregulated and crawling with bots, scammers and questionable traffic. There’s a serious risk a quarter of your ads will never be seen by a real person. And even the biggest publishers aren’t safe.”

So reads an effective graphic illustrating a story on Adweek titled “ANA Is Assessing the Extent of Digital Ad Fraud.”

The story chronicles the action taken by more than two dozen members of the Association of National Advertisers, who have embarked on a 30-day study examining digital fraud in their industry. The initiative has been dubbed “The Marketer’s Coalition.”

The ANA estimates one-quarter to one-half of digital-advertising costs are wasted because of computer bots, which trick companies into believing their messages are generating traffic.

“Bot fraud refers to sites with phony traffic that collect payments from advertisers through the middlemen who aggregate space across many sites and resell that space,” according to the ANA Web site.

During the study, the ANA, which has partnered with the company White Ops, will tag each participant’s advertising. Participants will receive a customized report detailing fraud rates by channel, format and platform. It is a strong statement from the agency, which said bot fraud costs marketers billions each year.

“These results will create urgency for all legitimate players in the ecosystem to work together to eliminate bots and botnets that target unsuspecting advertisers,” the agency’s Bill Duggan said.

Among the companies participating: General Motors, Johnson & Johnson, Kellogg and Procter & Gamble.

Kellogg’s Amaya Garbayo summed up the industry’s fraud-fed frustration: “If we are paying any [cost-per-thousand rate] for an impression it should be an impression,” she told Adweek. “Imagine you buy a dozen donuts, and you open the box and there’s one donut. I want to understand what I am getting for the money.”

Meanwhile, the ANA joined two other major trade groups in the United States to combat digital-advertising fraud. The coalition with the American Association of Advertising Agencies and Interactive Advertising Bureau took shape at the 2014 Advertising Week Mixx conference.

According to The Wall Street Journal, the trade-group trio will address fraud, as well as malware and piracy, via “an independent, jointly controlled body responsible for formulating principles to which companies across the online ad ‘supply chain’ must adhere.”

IAB Executive Vice President Mike Zaneis said the coalition will be in place by the end of the year and start enforcement procedures in early 2015.

“Time is of the essence,” Zaneis told The Journal. “We need to get out in front to make sure we’re not irreparably harmed as an industry by this.”

There are several concepts / terms advertisers should be familiar with – and on the lookout for – in order to protect themselves from fraudulent digital publishers. They include:

Display-advertising fraud, also known as CPM (cost-per-thousand) fraud, search-advertising fraud and video-advertising fraud.

Affiliate fraud, which arises when publishers cheat their customers by collecting cost-per-click revenues when those clicks actually aren’t conducted by humans but by sophisticated software.

Nonhuman traffic, which refers to seemingly real Web-site visitors that crawl pages to create fake impressions on display ads.