April 2017 / Page 2marketing.scienceconsulting group, inc.
Total digital opportunity: search + display
display spend left for good publishers
$83B digital spend (2017)
Source: eMarketer March 2017
Display Spend Other
Google Search FB+Google Display
CPC Fraud CPM Fraud
(75% of search) (52% of display)
$24 private exchange$9 open
April 2017 / Page 3marketing.scienceconsulting group, inc.
Top good domains vs “sites that carry ads”
“sites that carry ads”
Source: Verisign, Q4 2016
“sites you’ve heard of”
top 1 million + next 10 million
carry adsno ads
“Digital spend outside
April 2017 / Page 4marketing.scienceconsulting group, inc.
Display opportunity for good publishersAdvertisers
are left with 30%
siphon dollars OUT
of the ecosystem
users use ad blocking to
“plumbing” and verification
Source: The Guardian, Oct 2016
$5B to Google Display
$16B to Facebook Display
April 2017 / Page 5marketing.scienceconsulting group, inc.
retail finance automotive telecom CPG entertainment pharma travel cons.
indexed spend share
indexed fraud rate
Every industry is affected, CPC vs CPM
High CPC industries
Hit with CPC Fraud
Source: Ad spend share data from IAB, May 2015 | Fraud rate data from Integral Ad Science Q2 2014 Fraud Report
High Spend industries
Hit with CPM Fraud
April 2017 / Page 7marketing.scienceconsulting group, inc.
Ad fraud comes in large numbers…
Increased CPM prices
volume by 92%
< 20 cents
April 2017 / Page 8marketing.scienceconsulting group, inc.
Single botnet steals 15% of video spend
Source: Dec 2016 WhiteOps Discloses Methbot Research
“Methbot, steals $2 billion annualized;
and it avoided detection for years.”
1. Targeted video ad inventory
$13 average CPM, 10X
higher than display ads
2. Disguised as good publishers
Pretending to be good
publishers to cover tracks
3. Simulated human actions
Actively faked clicks, mouse
movements, page scrolling
4. Obfuscated data center origins
Data center bots pretended to
be from residential IP addresses
April 2017 / Page 9marketing.scienceconsulting group, inc.
40-50% web traffic is NHT (Non-Human Traffic)
Distil Networks March 2017 – 39% botsIncapsula Dec 2016 – 52% bots
“The equation of ad fraud is simple:
buy traffic for $1 and sell ads for $10
you make $9 of pure profit.”
April 2017 / Page 12marketing.scienceconsulting group, inc.
CPM and CPC buckets are most targeted
• rich media
Search 27%Display 10%
91% digital ad spend Source: IAB 1H 2016 Report
mobile display mobile search
April 2017 / Page 13marketing.scienceconsulting group, inc.
Two key ingredients of CPM and CPC Fraud
(includes mobile display, video ads)
1. Put up fake websites and
load tons of ads on the pages
(includes mobile search ads)
2. Use fake users (bots) to
repeatedly load pages to
generate fake ad impressions
1. Put up fake websites to
participate in search networks
2. Use fake users (bots) to type
keywords and click on them to
generate the CPC revenue
of fake sites
April 2017 / Page 15marketing.scienceconsulting group, inc.
Fake sites have no content, no humans
made by template
They can sell ad
“inventory” at low prices;
still make huge profits
April 2017 / Page 16marketing.scienceconsulting group, inc.
Ad dollars diverted to very low CPMs
$24 private exchange$9 open
100% bot traffic
“fraud (cash out) sites”
• No content
• Stolen content
• Fake content
“sites with real content that
real humans want to read”
Source: DCN/ WhiteOps 2015
April 2017 / Page 18marketing.scienceconsulting group, inc.
Bots are automated browsers used for fraud
April 2017 / Page 19marketing.scienceconsulting group, inc.
Bots range in sophistication, and therefore cost
page or scripts
Sophisticated (29%)Moderate (46%)Simple (25%)
in data centers
Malware on humans’
Less sophisticated More sophisticated
Source: AdAge/Augustine Fou, Mar 2014 Source: Forensiq Source: Augustine Fou, Oct 2015
1 cent CPMs 10 cent CPMs 1 dollar CPMs
Source: Distil Networks 2017
April 2017 / Page 20marketing.scienceconsulting group, inc.
Mobile fraud doesn’t even need bots
Bad apps load tons
of impressions in
Fake mobile devices
install apps and
interact w/ them
Download and Install
Launch and Interact
April 2017 / Page 22marketing.scienceconsulting group, inc.
Some campaigns have very little humans (blue)
Phone calls as conversion events
Comparing five paid display sources
April 2017 / Page 23marketing.scienceconsulting group, inc.
But only humans convert, bots don’t …
30X more human
• More arrivals
• Better quality
more humans (blue)
April 2017 / Page 24marketing.scienceconsulting group, inc.
About the Author
Augustine Fou, PhD.
acfou [at] mktsci.com
212. 203 .7239
April 2017 / Page 25marketing.scienceconsulting group, inc.
Dr. Augustine Fou – Independent Ad Fraud Researcher
Follow me on LinkedIn (click) and on Twitter
April 2017 / Page 26marketing.scienceconsulting group, inc.
Harvard Business Review – October 2015
Hunting the Bots
Fou, a prodigy who earned a Ph.D. from MIT at
23, belongs to the generation that witnessed
the rise of digital marketers, having crafted his
trade at American Express, one of the most
successful American consumer brands, and at
Omnicom, one of the largest global advertising
agencies. Eventually stepping away from
corporate life, Fou started his own practice,
focusing on digital marketing fraud
Fou’s experiment proved that fake traffic is
unproductive traffic. The fake visitors inflated
the traffic statistics but contributed nothing to
conversions, which stayed steady even after the
traffic plummeted (bottom chart). Fake traffic is
generated by “bad-guy bots.” A bot is computer
code that runs automated tasks.