We all need to be worried about online traffic fraud

Traffic fraud is one of the oldest problems in digital media advertising but it has become a multi-billion dollar problem that cannot be ignored anymore. According to the Interactive Advertising Bureau (IAB), 36% of all Web traffic is considered fake. Reporter Suzanne Vrancia traces the rise of this trend and concerns among digital advertisers in a recent Wall Street Journal article, “A ‘Crisis’ in Online Ads: One-Third of Traffic Is Bogus.” While the article describes fraudulent activity as “growing pains” of digital marketing, it is really a series of industry trends that is fueling the perfect storm for the growth of traffic fraud:

  • Digital is getting a larger share of marketing budgets including brand dollars. This attracts cyber criminals who target the easiest and largest profit opportunities.
  • The rise of programmatic exchanges has created complex media supply chains. This complexity enables cyber criminals to hide fraudulent traffic and make it difficult to detect.
  • Advancements in malware technology that enables cyber criminals to utilize millions of computers from unsuspecting consumers. Traffic fraud can be difficult to detect when it looks very much like real traffic from real people.

Traffic fraud harms society

Traffic fraud hurts the entire marketing industry. According to research conducted by Experian Marketing Services, there are largely three types of fraudulent activities taking place today:

  • Impressions that are ‘served’ but never seen by humans. This can be as basic as below the fold pages that are stacked with ads (publisher gets paid without a detrimental impact to user experience) but it is usually much more sophisticated today with ‘hidden pages’ that are counted by web servers as real impressions – they are real, just not visible. Many publishers and content networks knowingly engage in this practice to increase their revenues.
  • Laundering phony traffic on legitimate websites. This is the favored tactic of affiliate marketers – they operate a real business but launder a lot of fraud through it. Publishers will buy or allow phony traffic on their legitimate website to boost performance metrics to increase their CPM rates. This tactic is particularly effective for programmatic buying platforms that focus bidding on media sources with higher performance metrics.
  • Indirect Fraud or fraud that is allowed to persist by publishers and networks. They do not initiate the fraud but they knowingly allow it to exist because they benefit from it. This involves SSP/DSP/Ad Networks/Publishers that allow clearly fraudulent web pages to be part of their inventory supply.

While publishers and other supply intermediaries benefit financially from traffic fraud, this is a myopic benefit and the continuation of the crime will ultimately harm their brands and business. As the Wall Street Journal article describes, advertisers are losing billions of dollars on traffic fraud and widespread awareness of the issue is keeping advertisers from increasing spend. Therefore, the efficiency gains of digital media are being offset by waste from traffic fraud. Value added services may not meet client ROI expectations when the measurement includes so much fraud.

Ultimately, it’s not just the advertisers or the marketing services companies, like Experian, that are harmed by this business; it’s society at large and consumers that are also harmed by traffic fraud. The vast majority of the benefits that consumers enjoy from the Internet are supported by ad dollars. The Internet has democratized information access and education all over the world. This is one of the most important events in the history of humankind and it has largely been driven by ad dollars. When these ad dollars are compromised, it reduces the primary fuel that drives online innovation for consumers. This crime also funds some of the worst elements of our society – these are the same people that steal your identity and try to convince your generous grandmother to donate to a bogus charity.

What can be done about traffic fraud?

There is currently no way to prevent traffic fraud but analytical tactics can serve as effective countermeasures for this problem. Working with their marketing services partners, advertisers have effective ways to monitor the supply sources of online media for early detection of traffic fraud, for both direct and programmatic media buys. For example, at Experian Marketing Services we have found that early detection not only mitigates the impact from these sources but also helps to prevent the same fraud to the marketer’s other ad programs. Even the most basic methods of early detection, like monitoring top level domain metrics, can eliminate significant amounts of traffic fraud.

Ultimately, it will take a collective effort from industry participants to solve this problem and greater innovation to automate the processes of early detection. Experian has a long history and tradition of combating fraud in commerce. With our recent acquisition of 41st Parameter, a company with advanced fraud detection technology for the financial services industry, we’re working to repurpose this technology to combat media fraud.

Traffic fraud is a problem that everyone should be concerned about. Better marketing practices and technology will help to mitigate the impact of this crime but only a collective effort from the digital media industry can truly stop this problem from destroying the value of the Internet.