The true cost of ad fraud – and how to combat it in 2024
Opinion
The reason fraud proliferates is that as an industry we don’t take the available steps to mitigate. Time for a New Year’s Resolution.
It’s time we faced facts. Right now, ad fraud is the biggest threat to the ad industry.
In fact, the cost to advertisers is predicted to reach $84bn by the end of 2023 — equating to over a fifth (22%) of all online ad spend. This is according to Juniper Research’s latest ad fraud report, based on analysis of over 78,000 data sets of ad activity across 45 countries in eight key regions across the globe.
Over the course of the next five years, this figure is set to reach a frankly terrifying $172bn.
With numbers like these, it’s clear to see how much is at stake.
But with other priorities such as targeting and performance measurement capabilities taking centre stage in recent years, there is still more to do to persuade stakeholders to take meaningful action against the bad actors of the ad industry.
The state of ad fraud in 2023
Ad fraud has become a complex challenge to navigate and can affect everyone in the ecosystem.
According to Juniper Research, it can also take an overwhelming number of guises, including ad stacking, domain spoofing, source spoofing, pixel stuffing, click farms, location fraud, competitor click abuse, video viewing fraud, affiliate ad fraud, redirect attacks and incentivised clicks.
That’s a lot to tackle.
In a recent open letter to the advertising industry, UK Stop Ad Funded Crime highlighted the fact that despite all the box-ticking exercises put in place over the years — including promising technology and well-intended procedures — the industry is “still failing to protect businesses against fraudulent impressions or ads appearing in environments such as pirate domains”.
The good news is, by working collaboratively as an industry, and implementing tools such as fraud mitigation platforms, we can recover $23bn each year. Better still, this figure is predicted to rise to over $47bn by 2028 as adoption of fraud protection software increases.
Emerging solutions include monitoring of invalid clicks, blacklisting potentially fraudulent devices and IP addresses, geolocation tracking, real-time detection adblocking, customisable criteria for IP blocking, and managed fraud prevention services.
But we must act now.
Robert Webster, global VP of strategy at CvE Marketing Transformation Consulting, agrees. “With the range of solutions that have emerged to help mitigate fraud at each stage of the ad journey — from advertisers, through ad networks and publishers, to consumers — there’s no excuse not to take action,” he says.
A four-step action plan for 2024
UKSAFC.org was founded to provide a safe space for brands, agencies, publishers, industry trade bodies and tech companies to campaign against ad fraud.
Its core mission has been to develop a framework for advertisers to:
Identify best practice: Share different approaches and solutions to fraud detection, and identify positive progress.
Be accountable: Challenge the current landscape of data silos, over-reliance on dashboards and general lack of accountability. Normalise and standardise log-level data reviews and be able to clearly flag issues, identify missing ad spend, and encourage intermediaries across the supply chain to take ownership of issues within their control.
As UKSAFC.org’s Chairman Ian Moss explains: “As part of this objective, UKSAFC.org is setting out options for audit trails in 2024 including self audits, external audits, live tech audits, reporting/compliance reviews, and whistleblower encouragement.”
Be transparent: Share information for public use. Having combined access to log file data from all partners in the programmatic buying chain provides real-world insight, which allows for more granular (i.e. impression-level) analysis. For instance, are you getting the inventory you are expecting/paying for? Are your brand safety protections working? Is your invalid traffic detection working?
Moss adds: “As part of this objective, UKSAFC.org is setting out a requirement for transparency in 2024 whereby all partners must provide secure, tamper-proof systems with granular and accessible data to maximise trust and transparency for all stakeholders.”
Take collective action: Move forward together — without laying blame on other stakeholders in the chain — while also providing Government agencies with the support they need to take meaningful action.
What must happen now
According to Moss, in terms of enforcement of the above, key objectives for discussion in 2024 include turning all accountability and transparency requirements into a certified industry standard: “Having a certification in place, complete with trust badges as proof of compliance, will give advertisers a clear benchmark to follow, and motivate them to only work with other certified entities.”
Moss concludes: “In turn, brands and publishers will start to demand this type of certification from their agencies and tech vendors, driving a safer, less fraudulent ad ecosystem over time.
“We’re also planning to work with the UK Government and regulatory bodies to create better transparency through the system — ensuring that everyone “knows their customer” and are checking and verifying the identity of each part of the chain. Greater transparency and greater confidence that bad actors are being kept out of the system will greatly help to reduce fraud.”
Only by bringing together government and industry can we eradicate ad fraud completely — something UKSAFC.org is uniquely placed to do, as a coalition that represents the unified voices of both policy and industry advisers.
This is our chance to stand up and fight the bad actors head-on.
Webster agrees: “The reason fraud proliferates is that as an industry we don’t take the available steps to mitigate it. Let’s make 2024 the year we all choose to put this to an end“.
Julia Linehan, Founder and CEO of The Digital Voice and Founding Advisor to UKSAFC.org