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The Magnitude of
Digital Ad Fraud
Dr. Augustine Fou
http://linkd.in/augustinefou
November 2013
-1-

Augustine Fou
Executive Summary
• CPM impression fraud estimated to be $3 - $7
billion per year (19% total digital ad spending)
• CPC cl...
Ad Fraud Value Chain
impressions
clicks
leads
sales

Networks of algo-generated
content sites that attract free
organic se...
Buckets of Ad Fraud
Impressions

Clicks

Leads

Sales

(CPM fraud)

(CPC fraud)

(CPL fraud)

(CPA fraud)

Bot or low
wage...
Display (CPM) Fraud
Display Ads

Video Ads

480 billion

20.1 billion

display ad impressions /mo

video ad impressions /m...
Where Click Fraud Comes From
Ad exchanges are particularly prone to fraud because shady sites sell enormous
quantities “ad...
How Display Fraud Works

http://modernbab y.com/
http://interiorcom plex.com/

Bots load page repeatedly to
generate ad im...
Click (CPC) Fraud
22.3% of search ad
spend ($16.8B in 2012)

$4B

Source: ClickForensics 2006 - 2010
-8-

Source: IAB 2012...
How Search Click Fraud Works
“vacuum cleaner” keyword

Walmart search ad

Bot clicks through
to walmart.com
-9-

Augustine...
“Lead Gen” Fraud

http://www.webranking.com/blog/lead-click-fraud-adsense-scamgoogle-adwords-advertisers
- 10 -

Augustine...
Affiliate Sales Fraud

http://www.businessinsider.com/ebay-the-fbi-shawn-hogan-and-briandunning-2013-4
- 11 -

Augustine F...
IAB Full Year 2012

Source: IAB 2012 Annual Report

- 12 -

Augustine Fou
Related Articles
Bad Guys Happily Rob Display Advertisers
By: Augustine Fou, July 23, 2012
Everything Fake (Display Ad Fra...
Dr. Augustine Fou – Digital Consigliere
“I advise clients on optimizing
advertising across all channels. One
main area of ...
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The Magnitude of Digital Ad Fraud Impressions Clicks Leads Affiliate by Augustine Fou

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ad fraud in the digital space is rampant and large. With the advent of programmatic buying and ad networks, it has made it even easier for bad guys to "push" (or sell) fraudulent inventory into these exchanges, because there are simply too many sites to really check. This makes the case for "programmatic direct" with legit premium publishers.

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The Magnitude of Digital Ad Fraud Impressions Clicks Leads Affiliate by Augustine Fou

  1. 1. The Magnitude of Digital Ad Fraud Dr. Augustine Fou http://linkd.in/augustinefou November 2013 -1- Augustine Fou
  2. 2. Executive Summary • CPM impression fraud estimated to be $3 - $7 billion per year (19% total digital ad spending) • CPC click fraud estimated to be $5 billion per year (14% total digital ad spending) • Search is more efficient, and less prone to fraud especially if the ads are run on the main search properties like Google.com or Bing.com -2- Augustine Fou
  3. 3. Ad Fraud Value Chain impressions clicks leads sales Networks of algo-generated content sites that attract free organic search traffic Botnets generate fake pageviews which produce ad impression “inventory” (get paid for CPM) Click farms generate fake clicks (get paid for CPC) Fake leads (get paid for CPL minus cost of filling out lead forms) Fake sales via affiliate revenue shares; money laundering, especially on digital goods/subscriptions -3- Augustine Fou
  4. 4. Buckets of Ad Fraud Impressions Clicks Leads Sales (CPM fraud) (CPC fraud) (CPL fraud) (CPA fraud) Bot or low wage workers fill in lead forms with real addresses and get paid bounty per lead. Fake sites set up to do cookie stuffing or trick users to click on affiliate links to earn rev share. Botnets generate fake pageviews which produce ad impression “inventory” that is sold into ad exchanges. -4- Bots type search queries to bring up search ads and then click on the ads. Augustine Fou
  5. 5. Display (CPM) Fraud Display Ads Video Ads 480 billion 20.1 billion display ad impressions /mo video ad impressions /mo 29% 40% Source: Solve Media 2013 Source: Vindico, 2013 confirmed bot traffic $1 - $3.50 ~$10 cost per thousand cost per thousand $2-6 billion $1 billion wasted ad spend (annualized) -5- estimated fake views wasted ad spend (annualized) Augustine Fou
  6. 6. Where Click Fraud Comes From Ad exchanges are particularly prone to fraud because shady sites sell enormous quantities “ad impression inventory” into the exchanges for re-sale. Source: Integral Ad Science, via BusinessWeek Nov 26, 2013 -6- Augustine Fou
  7. 7. How Display Fraud Works http://modernbab y.com/ http://interiorcom plex.com/ Bots load page repeatedly to generate ad impressions -7- Augustine Fou
  8. 8. Click (CPC) Fraud 22.3% of search ad spend ($16.8B in 2012) $4B Source: ClickForensics 2006 - 2010 -8- Source: IAB 2012 Annual Report Augustine Fou
  9. 9. How Search Click Fraud Works “vacuum cleaner” keyword Walmart search ad Bot clicks through to walmart.com -9- Augustine Fou
  10. 10. “Lead Gen” Fraud http://www.webranking.com/blog/lead-click-fraud-adsense-scamgoogle-adwords-advertisers - 10 - Augustine Fou
  11. 11. Affiliate Sales Fraud http://www.businessinsider.com/ebay-the-fbi-shawn-hogan-and-briandunning-2013-4 - 11 - Augustine Fou
  12. 12. IAB Full Year 2012 Source: IAB 2012 Annual Report - 12 - Augustine Fou
  13. 13. Related Articles Bad Guys Happily Rob Display Advertisers By: Augustine Fou, July 23, 2012 Everything Fake (Display Ad Fraud, Search Click Fraud) By: Augustine Fou, April 2013 Blacklisting vs Whitelisting By: Augustine Fou, October 2013 What Suspect Site Traffic and Gray-hat Techniques Look Like By: Augustine Fou, October 2013 Video Ad Fraud Investigation, Part 1 By: Augustine Fou, October 2013 - 13 - Augustine Fou
  14. 14. Dr. Augustine Fou – Digital Consigliere “I advise clients on optimizing advertising across all channels. One main area of focus is reducing ad waste due to fraud – fake impressions, clicks, leads, and sales.” FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM) MCKINSEY CONSULTANT CLIENT SIDE / AGENCY SIDE EXPERIENCE PROFESSOR AND COLUMNIST ENTREPRENEUR / SMALL BUSINESS OWNER PHD MATERIALS SCIENCE (MIT '95) AT AGE 23 ClickZ Articles: http://bit.ly/augustine-fou-clickz Slideshares: http://bit.ly/augustine-fou-slideshares LinkedIn: http://linkd.in/augustinefou - 14 - @acfou Augustine Fou

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