Ad Fraud Declined 10 Percent, According to Bot Baseline’s Third Annual Report
NEW YORK, NY — Advertisers are making gains in the war against bot fraud, but still face challenges in combatting this ongoing threat to accountability in the digital advertising ecosystem, according to new study findings by the ANA (Association of National Advertisers) and White Ops.
The third annual Bot Baseline Report, released today at the ANA Advertising Financial Management Conference, revealed that the economic losses due to bot fraud are estimated to reach $6.5 billion globally in 2017. This is down 10 percent from the $7.2 billion reported in last year’s study. The fraud decline is particularly impressive considering that it occurred when digital advertising spending is expected to increase by 10 percent or more. The study is based on an analysis of 49 ANA members’ digital advertising activity between October 2016 and January 2017.
It is important to note that the new ANA and White Ops study indicates that the participants broke free of the general market trends and made even greater gains in reducing bot fraud. Extrapolating the results of the participants to the overall global market would result in 2017 fraud losses of just $3.3 billion — about half of the $6.5 billion general market projection. Furthermore, the top 20 percent of performers in the study scored even more striking gains when extrapolated globally, with annual losses projected at only $700 million, representing a 90 percent reduction from the general market.
Study Participants Saw a Marked Decline in Bot Fraud
“Marketers worldwide are successfully adopting strategies and tactics to fight digital ad fraud,” said ANA CEO Bob Liodice. “This is a powerful indicator that the war on digital ad fraud is winnable for those who establish proper controls and protocols. And that is exceptionally good news for the advertising, marketing, and media communities worldwide.”
“Despite the proliferation of fraud detection mechanisms, bots continue to become more sophisticated and evasive,” said Michael Tiffany, CEO at White Ops. “With this in mind, we’re pleased to see ad fraud rates decline in the ANA 2016–2017 Bot Baseline Report. But, as these declines are relatively modest, it’s critical that those affected by this threat remain vigilant. We look forward to collaborating as an industry to continue fighting the war on fraud and advise others to follow the industry best practices of many ANA members.”
Additional findings from the study revealed:
- Traffic sourcing is still the major risk factor for fraud. Traffic sourcing, or the process of purchasing traffic from inorganic sources, was again a large source of fraudulent activity. The report said 3.6 times as much ad fraud came from sourced than non-sourced traffic.
- Nine percent of desktop display and 22 percent of video spending was fraudulent. This was a decline from the previous year, when display advertising fraud was reported at 11 percent and the fraud rate for desktop video was 23 percent.
- Mobile fraud was found to be considerably lower than expected. Overall, participants saw less than 2 percent of fraudulent activity in app environments and mobile web display buys. However, this does not include fraud in mobile web video or pay-per-click fraud, which remain high and problematic.
- Fraud in programmatic media buys is no longer riskier than general market buys, as media agencies have improved filtration processes and controls.
The study recommended a wide range of steps advertisers should consider to further diminish bot fraud. Those action steps are drawn from what the top performing participants have put into practice, and include:
- Demand Transparency for Sourced Traffic: Buyers should insist upon transparency from all vendors and publishers about traffic sources, and build language into RFPs and insertion orders requiring publishers to identify all third-party traffic sources. When such transparency does not occur, buyers should reconsider relationships.
- Refuse Payment on Non-Human Traffic in Media Contracts: Insertion orders should include specific language indicating buyers will only pay for non-bot impressions.
- Avoid Excessive Restrictions: In situations where supply does not meet demand for a target audience, fraud often follows. Marketers should avoid any actions that may restrict potential scale — e.g., too many simultaneous targeting parameters.
- Encourage MRC (Media Rating Council)-Accredited Third-Party Fraud Detection on Walled Gardens: Large digital media companies referred to as “walled gardens” should work with MRC-accredited third-party fraud detection companies to support Sophisticated Invalid Traffic (SIVT) detection. Some large digital media companies have taken steps toward seeking MRC accreditation while others have not.
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