The global state of ad fraud in 4 charts

Digital ad fraud remains rampant, costing marketers a small fortune and cheating publishers out of revenue.

An estimated $7.4 billion (£5.5 billion) was wasted on display ads alone in 2016, a figure that will rise to $10.9 billion (£8 billion) by 2021, according to Forrester. Other reports put it even higher.

A public spat between Uber and its mobile ad agency Fetch shone a light on the unsolved problem of mobile ad fraud. Last week, the Financial Times warned 11,000 of its client and agency contacts of the scale of fraudulent inventory being bought, courtesy of the technique called domain spoofing.

The CMO Council also dropped a report last week, revealing that 72 percent of CMOs are facing pressure from their own bosses to figure out the trust issue between brands, agencies, publishers and customers, and gain tighter ad controls — indicating the problem has gone beyond the marketing department.

Online fraud takes many forms. There are click farms, bots and domain spoofing a la the “Methbot” scheme, and there is unscrupulous arbitraging of publisher inventory by unauthorized resellers and middle men. Ad misplacement also gets folded in, as it’s still a case of marketers wasting budget on ads that appear next to content unsuitable for their (or any) brand, like hate speech, or terrorist content, or against fake news.

Here’s a look at the current state of ad fraud in four charts:

Ad fraud is a global problem
Japan has the highest ad fraud rates, according to a report from fraud prevention ad tech firm Pixalate. In the first three months of 2017, 81 percent of the programmatic impressions traded in Japan were fraudulent, with Brazil second at 36 percent. The U.S. was third with 35 percent of programmatically bought desktop ad impressions fraudulent during the same time period. The U.K., which has the third-highest volume of programmatic impressions available, had a fraudulent desktop impression rate of 15 percent, according to the same report.

Source of chart: Pixalate.

Marketers are on the offensive
Ad fraud and ad misplacement were the second-highest pain points given by the 300 marketers surveyed in the CMO Council’s latest report. Half of respondents said social media risk and reputation management was their prime concern, while a third listed ad fraud, and another third listed ad misplacement.

Source of chart: CMO Council.

Fraudsters are hot for video 
Fraudsters go where the money is. Video accounts for 45 percent of spending and is responsible for 64 percent of ad fraud, while programmatic video is a particular problem child, accounting for 67 percent more fraud than direct video, according to Forester. India has the highest fraudulent video ad impression rates at 34 percent, with the U.S. taking second place at 27 percent, according to Pixalate’s Ad Fraud Benchmark report. The U.K. had a video ad fraud rate of 12 percent.

Source of chart: Pixalate.

Rise of mobile third-party verification
Ad fraud is equally rampant on mobile as it is on desktop display. In the U.K., the number of mobile media planners using third-party verification to detect fraud or verify brand safety within mobile campaigns, will rise from 24 percent to 45 percent within 12 months, according to a recent ExchangeWire/GroundTruth report. of those that are are already using the tools, 62 percent of them said having media partners with brand safety tools was more important than price.

Source of chart: ExchangeWire and GroundTruth.

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