Ad Fraud Estimates by Augustine Fou Technical Forensics

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Digital Ad Fraud estimates vary widely based on the methodology used to detect and the rounding and estimating of what can be considered "fraud" or "suspicious" ads. Regardless of the methodology, the …

Digital Ad Fraud estimates vary widely based on the methodology used to detect and the rounding and estimating of what can be considered "fraud" or "suspicious" ads. Regardless of the methodology, the size of the fraud is large and needs to be addressed by the industry as a whole.

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  • 1. Digital Ad Fraud Estimates Impressions (CPM/CPV) Clicks (CPC) Search $18.1B Display $8.0B Video $2.9B $2.8B $3.5B Mobile $35.5B Ad Spend Avg Fraud Rate Dollars Display 50% $4B Video 60% $2B Mobile 40% $2B Search 30% $6B TOTALS 39% $14B (U.S. digital ad spend only) Multiple sources, see Appendix - 1 - Augustine Fou
  • 2. Ad Fraud Ranges • Display ad fraud fake ad impressions created by bots • Video ad fraud fake video ad views generated by bots • Mobile ad fraud fraudulent or accidental clicks • Search ad click fraud click fraud on search ads Range Average Dollars 30-70% 50-80% 50% 60% 30-50% $2-3B 20-40% $3-7B $1-2B $4-8B (U.S. Only) 40% 30% - 2 - Augustine Fou
  • 3. Range of Ad Fraud Estimates DSPs/Networks Security Vendors 3% Dstillery, Oct 9, 2014 “findings from two independent third parties, Integral Ad Science and White Ops” 3.7% Rocket Fuel, Sep 22, 2014 “Forensiq results confirmed that ... only 3.72% of impressions categorized as high risk.” 57% Telemetry, May 26, 2014 “Telemetry found that 57 per cent were “viewed” by automated computer programs rather than real people.” 25 - 50% WhiteOps, Jul 14, 2014 “digital ad fraud outbreak – one that gobbles up roughly $14 billion in advertising spend and between 25 and 50% of ad spend per campaign” 45% Solve Media, Sep 19, 2014 “suspicious web activity dropped to 45% – still a high figure, but an improvement nonetheless from the high of 61% in Q4 2013” - 3 - Augustine Fou
  • 4. As more digital ads are placed entirely programmatically, the opportunity for fraud continues to increase. The Opportunity - 4 - Augustine Fou
  • 5. The Motive “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 - 5 - Augustine Fou
  • 6. Bot vs Human Web Traffic Nea3r9l%y h6u2m%an bot 61% bot traffic 51% suspicious 22-29% confirmed bot Source: Incapsula 2013 Source: Solve Media Dec 31 2013 - 6 - Augustine Fou
  • 7. Digital Ad Spend (IAB H1 2013) CPM Performance Impressions (CPM/CPV) Clicks (CPC) Leads (CPL) Sales (CPA) Search 43% $18.1B Display 19% $8.0B Video 7% $2.9B $6.5B NOTE: revenues annualized from actual 1H 2013 figures from IAB (assumes $42B annual ad spend) Lead Gen 4% $1.7B 11% Other $4.8B $2.8B $3.7B Mobile 15% • classifieds • sponsorship • rich media • email Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013 $35.5B - 7 - Augustine Fou
  • 8. Reported Cases - 8 - Augustine Fou
  • 9. Ad Budgets Spent on Porn Sites A large British packaged goods company that sells several household name brands in the U.S. was defrauded of $488,000 when its $10,000-a-day video ad budget was spent on a network of junk web sites, according to an internal document leaked to Business Insider. Source: Business Insider December 2013 - 9 - Augustine Fou
  • 10. Stealing $6 Billion From Brands Online Ad Fraudsters Are Stealing $6 Billion From Brands Security firm White Ops claims 1 in 6 PCs infected by bots By Mike Shields Source: Adweek, October 2013 - 10 - Augustine Fou
  • 11. 20-30% of Display is Fraudulent Fraud is endemic across today’s display advertising ecosystem. Luttrell estimates 20 to 30% of display ad inventory is fraudulent. For an empirical counterpoint, the Chameleon botnet spanned all the major US ad exchanges at the time of disclosure and was driving enough fake traffic—on its own—to account for 30% of the display ad inventory sold through one of these major exchanges. The Chameleon botnet is not unique. For example, we will shortly be disclosing details of a second major botnet, with a distinct signature, targeting a distinct cluster of websites. Botnet traffic is also not just limited to fraudulent publishers. We have come to understand that the Chameleon botnet, for example, has supplied traffic both to the website of one of the most highly regarded US newspapers and also to the websites of one of the world’s largest online media companies. Source: AdExchanger April 2013 With display ad spend at $8B, that is $2-3B of fraud - 11 - Augustine Fou
  • 12. Online fraud costs e-retailers $3.5B Online fraud costs e-retailers $3.5 billion in 2012 CyberSource’s annual report notes an average fraud rate of .9% of online revenue. Source: Internet Retailer, March 2013 - 12 - Augustine Fou
  • 13. 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 - 13 - Augustine Fou @acfou
  • 14. Related Articles Fake YouTube Videos By: Augustine Fou, December 2013 Motive and Opportunity for Ad Fraud By: Augustine Fou, February 2014 Fake Facebook Profiles By: Augustine Fou, Dec 2013 Fake Twitter Accounts By: Augustine Fou, August 2013 Display Fraud 101 (video) By: Augustine Fou, Feb 2014 ROI Case for Solving Ad Fraud By: Augustine Fou January 2014 Digital Ad Fraud Briefing By: Augustine Fou December 2013 How Display Fraud Works By: Augustine Fou, May 2013 How Click Fraud Works By: Augustine Fou, November 2013 The Magnitude of Digital Ad Fraud By: Augustine Fou, November 2013 - 14 - Augustine Fou
  • 15. APPENDIX - 15 - Augustine Fou
  • 16. Digital Ads by Format Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013 - 16 - Augustine Fou
  • 17. Pricing Model Trends Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013 - 17 - Augustine Fou