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Bot Fraud Costs Online Advertising Industry Billions

Online advertisers are losing billions – not to rival advertisers, but to bots.

Online advertisers are losing billions – not to rival advertisers, but to bots.

According to a report from the Association of National Advertisers (ANA) and fraud detection firm White Ops, bot fraud will cost advertisers an estimated $6.3 billion in 2015 and an estimated $5.5 billion this year.

As part of the study, researchers analyzed 181 campaigns from 36 ANA member companies and measured 5.5 billion impressions in 3 million domains during a 60-day period between August and September.

During those two months, the research revealed 23 percent of video ad impressions were bot fraud, as were 11 percent of display ad impressions. Dan Kaminsky, chief scientist and co-founder of WhiteOps, noted that display ads don’t pay as much as video ads, and fraudsters follow the money.  

“We see campaigns with massive amounts of fraud, and we see campaigns that are remarkably clean,” he said in an email. “Quality control is the difference between 1 percent fraud and 50 percent fraud. Not to put too fine a point on it but bots don’t buy anything.”

“We were surprised to see so many premium sites, particularly those we weren’t even running on” he added. “In one major instance we saw a half million hits a day on a premium site that most assuredly did not have our code. It was being injected by malware, carried with the inserted ad.”

Publishers who bought sourced traffic from a third party as a means to drive additional unique visitors to their site were particularly hard hit, the study found, with a bot fraud rate of 52 percent detected on that sourced traffic. Bot traffic in programmatic inventory averaged 17 percent.

“Bot traffic comes from everyday computers that have been hacked,” according to the report. “Over 67 percent of bot traffic observed in the study came from residential IP addresses. Bot traffickers remotely control home computers to generate ad fraud profits. Bots hijack browsers to masquerade as real users, blend in with human traffic, and generate more revenue.”

Botnet activity was highest between midnight and 7 a.m., meaning that ad buyers can reduce illegitimate traffic by focusing on hours when people are more likely to be awake, the report notes. In addition, nearly 60 percent of the impressions coming from IE6 and roughly half of the ones coming from IE7 were identified as bots, so the industry should optimize media for the newest browsers, the report recommends. Organizations should also demand transparency for sourced traffic and include language on bot traffic in their terms and conditions, the report states.

“The findings from this study and our industry action plan reflect the joint mission of the ANA, IAB and 4A’s to create a trustworthy supply chain,” said Bob Liodice, president and CEO of the ANA, in a statement. “The eradication of bot fraud is critical to the ongoing health of the internet and the ANA is taking the steps necessary to meet this challenge.”

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