Digital ad fraud has been known for years. But the extent and dollars involved have not been well understood until recently. Now multiple cross-industry initiatives are starting to take shape to combat digital ad fraud. But is it enough? A Q&A with Augustine Fou on key topics related to digital ad fraud.

1. Digital Ad Fraud
Q&A
Dr. Augustine Fou
http://linkd.in/augustinefou
acfou @mktsci .com
January 2014
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Augustine Fou

2. Q: Everyone’s known about digital
ad fraud forever; why hasn’t it
been solved already?
A: Couple of reasons: 1) many constituents are
insufficiently motivated to aggressively solve
the problem, 2) bad guys don‟t play by the
rules and they have entire ecosystems set up to
defraud. Good guys need to band together,
rather than fight the fight individually, in order
to stand a chance.
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Augustine Fou

3. Why Now?
“As more ad inventory is bought and sold
programmatically on ad exchanges, bad
guys are finding it far easier to commit
fraud because few agencies and advertisers
actually check in detail the hundreds of
thousands of sites on which the ads are run.
It‟s easier to hide in a far larger haystack.”
-- Dr. Augustine Fou
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Augustine Fou

4. “The above countermeasures are all good, and
advertisers should continue using them. But they are
not enough. If the good guys fight the fight
individually, there is little chance they can overcome
the entire ecosystem of the bad guys. The good guys
need to band together into their own ecosystem and put
the bad guys on a „digital ad fraud equivalent
to the National Sex Offenders Registry‟.”
-- Dr. Augustine Fou
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Augustine Fou

5. Q: What are some things advertisers
are doing now to combat fraud?
A: There are a slew of fraud fighting techniques.
These include blacklists and whitelists of sites
where ads can be shown; enforcing
viewability or only paying for „viewable‟ ads;
using bot-detection platforms to mitigate nonhuman impressions and clicks, which can
never turn into paying customers.
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Augustine Fou

6. Blacklisting Sites
Value
Exclude sites from
serving your ads
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Caveat
For every site excluded,
bad guys put up more
(because they don‟t have
to play by the rules).
Augustine Fou

7. Enforcing Viewability
Value
Caveat
Only pay for ads which
are viewable (i.e. above
the-fold)
Bad guys have already
defeated “viewability” by
stuffing ads in hidden layers,
all above-the-fold.
Source: Spider.io May 2, 2013
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Augustine Fou

8. Bot Detection
Value
Caveat
Good guys use algorithms
to detect unusual
behaviors indicative of
bots (rather than humans)
It‟s an arms race between
good and bad; bots are more
sophisticated and can fake
mouse movements and keep
cookies.
Source: Spider.io March 2013
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Augustine Fou

9. Using CAPTCHAs
Value
Caveat
Captchas deter bots from
filling in forms and stealing
content and cookies.
Some bots can now solve some
captchas, most captchas don‟t
protect content pages.
Source: Solve Media Dec 31 2013
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“Startup called Vicarious
automatically solves
CAPTCHAs.” Oct 2013
http://bit.ly/1bFo9lZ
Augustine Fou

10. Q: What is the industry doing about
it; any actions by the associations?
A: “Yes, Nielsen, IAB, comScore, and other
groups are really getting active now to
help define and size the problem and then
propose solutions. For example, defining
viewability will help advertisers focus on
useful inventory (e.g. ads above the fold)
and therefore increase their ROI.”
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Augustine Fou

11. Industry Players
Nielsen/IAB
IntegralAds (AdSafe)
DoubleVerify
Industry working group to
define ad viewability.
Verify ad placement against
blacklist of known fraudulent
websites.
Ad placement, behavioral
compliance, fraud
detection
Viewable rates (of display ads)
ranged from 14% to 79%.
PageFair
Viewable rates (of display
ads) ranged from 14% to
79%.
Ad blocking detection
Spider.io
Solve Media
Algo detection of bot-like
activity and other malware.
Using CAPTCHAs to detect
humans versus bots.
Botnet Costing Display
Advertisers $6 Million per
month. Feb 2013
Global Bot Traffic on Pace to
Waste Up to $9.5 billion in 2013
Ad Budgets. Sep 2013
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WhiteOps
Realtime bot detection
algorithms
Augustine Fou

12. Q: Does reducing ad fraud mean
reducing ad spend?
A: No, in fact most brand advertisers can‟t take
the money back. They have an annual budget
and they will spend it all. What it does mean is
their ad dollars will be more „productive‟
because the ads will be seen on legit sites, by
humans, who can convert into paying
customers.
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Augustine Fou

13. Display Ad Productivity
Viewable
Total Ads Served
100 million
71%
Human
x
Viewable
(comScore)
46%
x
77%
x
Not Adblocked
On-Target
25%
Human (not bot)
(Solve Media)
Not AdBlocked
(PageFair)
On-Target Delivery
(Nielsen)
6%
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On-target
ads seen by
humans
Augustine Fou

14. “If I am only running 10 percent
productive impressions then if I
reduce waste by only 10 percent I
DOUBLE my ROI.”
-- Ted McConnell
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Augustine Fou

15. Q: Why should I invest money on
digital ad fraud mitigation instead
of other digital marketing tactics?
A: Reducing ad waste due to fraud is like paying
off high interest credit cards. It is a sure way
to “earn” the interest dollars immediately,
compared to any other way you can invest.
Once ad fraud and waste are eliminated, then
other tactics come into play.
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Augustine Fou

16. Low Hanging Fruit
The most immediate, direct impact on ROI comes from reducing waste
25% On-Target Delivery
(Nielsen)
54% Not In View
(comScore)
82% Ignored
(Harris Interactive)
23% Ad Blocked
(PageFair)
24 – 29% confirmed bot
(Solve Media)
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Augustine Fou

17. “Financial advisors always recommend paying
off credit cards before any other kind of
investing... as a sure way to „earn‟ 18%.
Reducing ad waste due to fraud yields
immediate ROI because your ad spend goes
towards legit sites with human visitors who can
actually convert into paying customers.”
-- Augustine Fou
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Augustine Fou

18. Q: How much savings can I expect
to achieve?
A: The exact dollar amount or percent of spend
will vary based on the industry, product
category, and how the ad dollars are allocated
– e.g. display vs search, search partner
networks vs on-Google/on-Bing, etc. But we
have consistently seen double digit shifts of
dollars from bad guys‟ sites to legit
mainstream sites.
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Augustine Fou

19. Before and After
BEFORE
AFTER
Top 2 “good guys” = 76%
Top 5 “good guys” = 94%
18% of spend shifted from fraudulent websites to good guys
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Augustine Fou

20. Q: What brand safety? I thought
those would have taken care of
the problem already.
A: “Unfortunately, those solutions rely on taking
samples and sometimes if the sampling
interval is not frequent enough or the sample
size is too small, bad stuff still gets through
the cracks. So it is very useful and
advertisers should be using those services;
but there is more work to be done.”
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Augustine Fou

21. Brand Safety Issue
Geico ad next to
AdultFriendFinder slideshare
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Augustine Fou

22. Q: How big of a problem is digital
ad fraud really?
A: “It‟s hard to pin down an exact dollar amount
or even a percentage, because it varies widely
by industry and product type (e.g. CPG brands
use a lot more display ads; consumer
electronics brands use search ads). But fraud
could be costing all advertisers significant
portions of their spend (i.e. big dollars)
because bad guys steal from every cookie jar.”
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Augustine Fou

23. 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 to earn
share of CPC.
Augustine Fou

24. Impression (CPM) Fraud
Display Ads
Video Ads
500 billion
35 billion
display ad impressions /mo
video ad impressions /mo
29%
40%
Source: Solve Media 2013
Source: Vindico, 2013
confirmed bot traffic
~$1 - $3.50
~$8 - $12
cost per thousand
cost per thousand
$2-6 billion
$1-2 billion
wasted ad spend (annualized)
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estimated fake views
wasted ad spend (annualized)
Augustine Fou

25. Q: How are the different types of
digital ads affected by fraud?
A: “Display ads are most prone to ad fraud
because bad guys can create pages, load tons
of ads on them and repeatedly hit those pages
with bots. Search ad fraud is harder to commit
so it is a bit less on a percentage basis. But
notice video ad fraud is on a significant tear,
because video CPMs are currently 10x more
lucrative than display ads.”
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Augustine Fou

26. Waste Due to Fraud
• Display ad fraud is the easiest to commit and bad guys
sell tons of “junk” inventory into ad exchanges; ad buyers
are goaled on number of impressions so that perpetuates
the problem.
30-75%
• Video ad fraud is the new area of focus because video ad
impressions are 10x more lucrative than display; ad
buyers are goaled on “tonnage” of impressions and
therefore perpetuate the problem.
50-80%
• Search ad click fraud is harder to commit and usually
occurs on “search partner network” sites; but high
spending categories like insurance and high CPC
categories like pharma are favorite targets of the bad guys
who can earn $78 per click.
20-40%
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Augustine Fou

27. Q: How is what you do different
from WhiteOps or Spider.io?
A: “Those sophisticated tech platforms help to detect
bot traffic and clicks on legit sites; but there is a
whole bunch of other bad guy sites which carry ads
(display and search) which do not rely on humans
visiting them; they simply use bots to load the page
and generate ad impressions and those sites
obviously don‟t deploy WhiteOps tracking
solutions. So we recommend using multiple
solutions to better combat different types of fraud.”
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Augustine Fou

28. White Ops Bot Analysis
Source: White Ops
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Augustine Fou

29. Q: Why doesn’t ad fraud detection
solve the problem?
A: Sometimes, it is not about detection of ad fraud –
from fake impressions to non-human traffic to a site.
For example, bad guys who start up fraudulent sites
don‟t install good guy‟s tracking code on their sites.
But they do show ads from various ad networks they
can make hundreds of millions of dollars
fraudulently, without raising red flags on standard
fraud-detection mechanisms and algorithms.
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Augustine Fou

30. Q: What’s in it for the bad guys? Is
it really that lucrative?
A: Yes, digital ad fraud is highly lucrative. In
fact, it is SO profitable and SO low risk
compared to other kinds of fraud (like robbing
banks) that individual criminals and
organizations are jumping on the bandwagon.
See the following data on the insane margins
(e.g. 94% profit) and the sheer amounts of
money $256M annually being stolen.
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Augustine Fou

31. Profitability of Ad Fraud Sites
“Highly Lucrative, Profitable
The aggregate ad revenue for the
sample of 596 sites was an
estimated $56.7 million for Q3 of
2013, projecting out to $226.7
million dollars annually, with
average profit margins of 83%,
ranging from 80% to as high as
94%.”
Source: Digital Citizens Alliance Study,
Feb 2014
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Augustine Fou

32. Related Articles
Digital Ad Fraud Briefing
By: Augustine Fou December 2013
Digital Ad Waste Estimates
By: Augustine Fou, January 2014
Ad Fraud Fighting Techniques
By: Augustine Fou October 2013
Fashion Brands Suffering Ad Fraud
By: Augustine Fou, January 2014
How Display Fraud Works
By: Augustine Fou, May 2013
High Ad Load Bad Guy Sites
By: Augustine Fou, December 2013
How Click Fraud Works
By: Augustine Fou, November 2013
How Bots Are Used in Ad Fraud
By: Augustine Fou, November 2013
The Magnitude of Digital Ad Fraud
By: Augustine Fou, November 2013
ROI Case for Solving Ad Fraud
By: Augustine Fou, Feb 2014
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Augustine Fou

33. Digital Ad Forensics Process
Preliminary Scan
Sizing of
ad fraud
Forensic Analysis
Maintenance
• Technology Tools
• Statistical analysis
• Budget shifts
• Further optimization
Implementation
FREE
$$$
Preliminary analysis of
paid campaigns and
analytics to determine
magnitude of the ad
fraud impacting client.
Creating recommended
list of changes,
including list of sites to
exclude in each ad
channel.
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$
Subscribe to triangulated,
cross-industry database of
“ad fraud offenders” to
continuously update
blacklists and whitelists.
Augustine Fou

34. Dr. Augustine Fou – Technical Forensics
“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 – in order to raise ROI.”
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