Ad Fraud Value Chain by Augustine Fou Digital Forensics

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The various points in the ad fraud value chain where bad guys can extract value.

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Ad Fraud Value Chain by Augustine Fou Digital Forensics

  1. 1. Augustine Fou- 1 - Ad Fraud Value Chain impressions clicks leads sales DollarsEst. Fraud $4B50%Display $2B60%Video $6B30%Search $2B40%Mobile Multiple sources, see Appendix $7B $7B
  2. 2. Augustine Fou- 2 - Types of Digital Ads Impressions (CPM/CPV) Clicks (CPC) Leads (CPL) Sales (CPA) • Display ads • Mobile display • Video ads • Social display • Search ads • Mobile search • Affiliate revenue share • Completed lead forms sold on cost- per-lead basis
  3. 3. Augustine Fou- 3 - Digital Ad Spend (IAB H1 2013) Impressions (CPM/CPV) Clicks (CPC) Leads (CPL) Sales (CPA) Search 43% $18.1B Video 7% $2.9B Lead Gen 4% $1.7B 11% Other $4.8B Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013 $35.5B Display 19% $8.0B Mobile 15% $3.7B$2.8B NOTE: revenues annualized from actual 1H 2013 figures from IAB (assumes $42B annual ad spend) CPM Performance • classifieds • sponsorship • rich media • email $6.5B
  4. 4. Augustine Fou- 4 - Digital Ads: Fraud Estimates Impressions (CPM/CPV) Clicks (CPC) Search $18.1B $35.5B Display $8.0B Video $2.9B Mobile $3.5B$2.8B (U.S. digital ad spend only) DollarsAverage $4B50%Display $2B60%Video $6B30%Search $2B40%Mobile $14BTOTALS 39% Multiple sources, see Appendix
  5. 5. Augustine Fou- 5 - 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 30-70% 50-80% 20-40% $3-7B $1-2B $4-8B (U.S. Only) 30-50% $2-3B 50% 60% 30% 40% Range DollarsAverage
  6. 6. Augustine Fou- 6 - Vivek Shah, IAB (Feb 2014) Shah said. "According to comScore, 36 percent of traffic today is generated by machines, not humans. That's astonishing. If you peel the onion one layer, you see that an overwhelming majority of suspected non-human traffic comes from small publishers — not comScore 100 sites. The reason is simple. The ability to buy cheap bot traffic and arbitrage it via ad exchanges has created enormous financial incentive for bad-acters to engage in a deception that threatens the very integrity of our business." http://technorati.com/business/article/ad-expert-36-of-ad-traffic/
  7. 7. Augustine Fou- 7 - Buckets of Ad Fraud Impressions (CPM fraud) Botnets generate fake pageviews which produce ad impression “inventory” that is sold into ad exchanges. Clicks (CPC fraud) Leads (CPL fraud) Sales (CPA fraud) Bots type search queries to bring up search ads and then click on the ads. 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.
  8. 8. Augustine Fou- 8 - 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 @acfou ClickZ Articles: http://bit.ly/augustine-fou-clickz Slideshares: http://bit.ly/augustine-fou-slideshares LinkedIn: http://linkd.in/augustinefou
  9. 9. Augustine Fou- 9 - 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 Augustine Fou- 9 -
  10. 10. Augustine Fou- 10 - APPENDIX
  11. 11. Augustine Fou- 11 - Ad Fraud Value Chain impressions clicks leads 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) Fake leads (get paid for CPL minus cost of filling out lead forms) Click farms generate fake clicks (get paid for CPC) sales Fake sales via affiliate revenue shares; money laundering, especially on digital goods/subscriptions
  12. 12. Augustine Fou- 12 - 480 billion display ad impressions /mo Impression Fraud 29% confirmed bot traffic $1 - $3.50 cost per thousand $2-6 billion wasted ad spend (annualized) Display Ads 20.1 billion video ad impressions /mo 40% estimated fake views ~$10 cost per thousand $1 billion wasted ad spend (annualized) Video Ads Source: Vindico, 2013Source: Solve Media 2013
  13. 13. Augustine Fou- 13 - Click Fraud - $5B/yr Source: ClickForensics 2006 - 2010 Source: IAB 2012 Annual Report
  14. 14. Augustine Fou- 14 - Lead Fraud (sizing to come) http://www.webranking.com/blog/lead-click-fraud-adsense-scam- google-adwords-advertisers
  15. 15. Augustine Fou- 15 - Sales Fraud http://www.businessinsider.com/ebay-the-fbi-shawn-hogan-and-brian- dunning-2013-4

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