QnA About Digital Ad Fraud With Augustine Fou Technical Forensics

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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 …

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.

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  • 1. Digital Ad Fraud Q&A Dr. Augustine Fou http://linkd.in/augustinefou acfou @mktsci .com January 2014 -1- 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. -2- 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 -3- 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 -4- 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. -5- Augustine Fou
  • 6. Blacklisting Sites Value Exclude sites from serving your ads -6- 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 -7- 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 -8- 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 -9- “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.” - 10 - 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 - 11 - 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. - 12 - 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% - 13 - 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 - 14 - 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. - 15 - 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) - 16 - 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 - 17 - 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. - 18 - 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 - 19 - 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.” - 20 - Augustine Fou
  • 21. Brand Safety Issue Geico ad next to AdultFriendFinder slideshare - 21 - 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.” - 22 - 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. - 23 - 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) - 24 - 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.” - 25 - 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% - 26 - 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.” - 27 - Augustine Fou
  • 28. White Ops Bot Analysis Source: White Ops - 28 - 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. - 29 - 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. - 30 - 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 - 31 - 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 - 32 - 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. - 33 - $ 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 - 34 - @acfou Augustine Fou