The Internet is an amazing tool for businesses to connect with customers, which is why so many companies spend lots of money each year on digital advertising. But, that advertising can be a double-edged sword. It might bring in new customers, but it has also made many companies the victim of fraud. In fact, a recent study by the Association of National Advertisers suggests that online advertisers are losing about $6.3 billion in ad revenue each year.
The ANA and security firm White Ops looked at advertising traffic from websites belonging to major companies to provide a more in-depth look at the Internet advertising fraud problem. The results were astounding.
From Aug. 1 to Oct. 1, White Ops researchers studied and analyzed the digital advertising traffic of a who's who of 36 US major corporations from various industries -- all ANA members -- including Ford, Honda, General Mills, Lilly, MasterCard, Merk, MillerCoors, Home Depot, Verizon, Walmart, and Wendy's.
The study found that fake bot impressions have resulted in major losses for advertisers. ANA president and CEO Bob Liodice says the $6.3 billion loss estimate is conservative and actual losses could be as high as $10 billion.
The cybertheives make money by employing a large network of computers called a botnet. Hackers infect computers with malware and connect them together in a botnet to perform large scale scams.
So called bot "impressions" give the illusion of actual ad views, and the botnet operators behind them make money via cash-out points. "Aggregators and middlemen gain reach, ensuring they never lack inventory to sell, and a diversity of bot profiles that match any conceivable audience segment," the report says. "Publishers inflate their apparent audience size and pocket the difference between their traffic acquisition cost and the revenue received from Advertisers."
Click bots basically defraud advertisers by flooding ads with fraudulent clicks using the zombie computers connected with the botnet. The advertisers then pay for those clicks.
The study found that most botnet traffic came from Internet Explorer 6 browsers, which none of my readers should be using. I always remind you to keep your browser updated. Financial, family and food websites were the most likely to have the most bots.
The industry has been aware of the problem for some time but didn't realize how bad it was. The study was a real wake-up call. It can be tough to spot botnets because their clicks can be disguised as human activity. But, the ANA and other industry partners are now working on improving security.
"We're going to be heavily involved in behavioral change, credentializing, and certification" of digital advertising, [Liodice] says.