Over $12 Billion of Ad Spending Possibly Wasted on Fraud in 2016

More than $12 billion of ad spending in 2016 was fraud, or the result of invalid traffic, according to a new study by The&Partnership, a finding that is nearly double the earlier estimate of $7.2 billion.

This statistic becomes all the more alarming when compared to the overall spending, as almost 20% of the $66 billion spent last year on digital ads globally may have been wasted on ads that were mostly either botnet frauds (never actually viewed by humans) or adware fraud (not properly loaded for a person to accurately view them).

How is this possible?

For an industry that is continually designing more accurate and more effective ways to use data and analytics, this appears to be a major failure. Digital, by many accounts, was supposed to fix these issues by pinpointing exactly where spending went and how it performed. However, it appears that fraudulent actors are outpacing the ability of the industry to ensure the ads are going to the right targets.

In fact, increased automation may magnify this issue, according to the report, as 29% of programmatic ads resulted in invalid traffic. And as the industry becomes more automated, companies like comScore and eMarketer predict it will become even worse by 2018, with over 80% of digital display ads will be sold programmatically, up 37% from 2014.

Fraudulent ad spending will rise to $16.4 billion of the estimated $82 billion digital ad dollars spent globally this year, according to the report.

There are a lot of causes of ad fraud, but is the industry any closer to the solution?

In “Eradicating Bot Frauds: The Path to Zero-Tolerance,” Videology and White Ops suggest that both advertisers and publishers need to be responsible for the solution. In the report, they wrote:

“Advertisers and Publishers should ensure their solution is measuring each impression at a transaction-level, evidenced-based bot/human decision, which reveals fraud including automation and hijacking, malicious adware, and ad injection, the first time they appear.”

Wherever the solution lies, one thing is for sure: the first step to recognizing a problem is admitting you have one, and the marketing industry has one.

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