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.

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

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
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Augustine Fou

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
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Augustine Fou

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.
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Bots type
search queries
to bring up
search ads and
then click on
the ads.
Augustine Fou

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)
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estimated fake views
wasted ad spend (annualized)
Augustine Fou

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
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Augustine Fou

7. How Display Fraud Works
http://modernbab y.com/
http://interiorcom plex.com/
Bots load page repeatedly to
generate ad impressions
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Augustine Fou

8. Click (CPC) Fraud
22.3% of search ad
spend ($16.8B in 2012)
$4B
Source: ClickForensics 2006 - 2010
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Source: IAB 2012 Annual Report
Augustine Fou

9. How Search Click Fraud Works
“vacuum cleaner” keyword
Walmart search ad
Bot clicks through
to walmart.com
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Augustine Fou

10. “Lead Gen” Fraud
http://www.webranking.com/blog/lead-click-fraud-adsense-scamgoogle-adwords-advertisers
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Augustine Fou

11. Affiliate Sales Fraud
http://www.businessinsider.com/ebay-the-fbi-shawn-hogan-and-briandunning-2013-4
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Augustine Fou

12. IAB Full Year 2012
Source: IAB 2012 Annual Report
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Augustine Fou

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
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Augustine Fou

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
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@acfou
Augustine Fou