Digital ad fraud-the next big organised crime?

The need for transparency and protection for online advertising has never been more important than it is now

e4m by Abhinn Shreshtha
Updated: May 29, 2017 8:31 AM

A 2016 Mashable article, citing a study by the World Federation of Advertisers, stated that digital ad fraud could become the second biggest organised crime enterprise, behind drug trade. And if this sounded far too dramatic, just months later, we witnessed a scam that shook the digital industry.

In December 2016, White Ops, a cyber security firm, uncovered what is being called the biggest digital ad scam ever. Nicknamed Methbot, it saw hackers make around $3-5 million (Rs. 30-50 lakh) a day by faking video ad clicks, money that was getting siphoned off from marketer budgets even as they thought they were paying for genuine views. White Ops says that it had been tracking the scam since as early as September 2015 before finally revealing its existence in December, when the creators of Methbot significantly stepped up their activities.

Even more recently, a study of the US market by research firm Borrell showed that, on average, fraud accounted for 6.4 per cent of digital ad spending last year, with it reaching even 10 per cent in some markets. Another research predicts that globally, advertisers will lose nearly $16.4 billion (Rs. 1,640 crore) to fraud in 2017.

“Unfortunately, not too many data points are available for India. But if one assumes that the problem is at the same scale in India as it is elsewhere (and there is no real reason to assume otherwise), the scale as you can guess, is enormous. It means the advertiser is paying 20 per cent higher rates to the publisher without realising it,” opined Sunil Punjabi, VP and Head of Business (South Asia) at C1X Adtech, when asked about how big a problem ad fraud is in the Indian context.

According to another ad tech professional we spoke with, the amount of fraudulent clicks on ads could be as high as 40 per cent. The head of an ad tech company opined that malvertising is costing digital ad companies and networks 5-10 per cent in revenue.

Why fraud occurs?

One thing that has always hounded digital advertising has been the question of transparency. As digital advertising grew and started getting more complex, the supply chain between the publisher and marketer started getting more and more convoluted. It has now reached a stage where many brand managers have little clarity on where their ad is being shown and who is actually clicking on the ads. This is not helped by most major platforms grading their own homework. The need for a single standard for digital advertising has long been mooted by advertisers, agencies and industry bodies alike, but this is easier said than done.

“We have a media supply chain that is murky at best and fraudulent at worst. We need to clean it up, and invest the time and money we save in better advertising to drive growth,” said P&G CMO, Marc Pritchard, speaking at an IAB event in January this year, as reported by CNBC.

Swapnil Shrivastav, Head (Ad Tech) at Times Internet, had told us that the publisher is usually in the dark as there is no in-built system in ad servers. “Frauds mostly occur when people buy on open RTB where it can go as high as 30 per cent. When people buy from premium publishers or closed networks it is less, but can be as high as 20-40 per cent for long tale publishers,” he had said.


As the calls for transparency become more vociferous, agencies, platforms and publishers are scrambling to assuage clients. The best example is what happened with YouTube just last month when marketers across the globe called for a boycott of YouTube ads after realising that some of their ads were getting placed next to objectionable content. Media reports suggest that nearly 250 companies have indefinitely suspended their ad campaigns.

The recent surge in cases of ad fraud and reducing visibility has prompted Google to think about adding an ad blocker in Chrome, as reported in media, and this could be a smart move.

Even earlier, Facebook got flak for admitting that it was reporting the wrong metrics to advertisers for years due to a flaw in its algorithm.

Of course, in these cases, it is not the platform that is indulging in fraud; neither are cases like these confined to only the likes of Facebook, Twitter and Google, but considering how important these platforms are to a brand’s digital strategy, it highlights the inherent problem that marketers are facing, which is that of transparency.

Solutions are available

It is not that marketers are completely blind when they go in for digital ads. There are a number of tools available for them to check the efficacy of campaigns. Most digital ad platforms have also tied up with third party agencies such as MOAT, Integral Ad Science, DoubleVerify, etc., which help them provide neutral verification to clients.

“There are various tools and certification services to prevent fraudulent traffic viz. TAG provides the Certified Against Fraud Guidelines as well as a suite of anti-fraud tools to aid compliance; the Payment ID Protocol enables companies to ensure that payments made in the digital ad ecosystem are going to legitimate companies; Data Center IP List is a database of data centers from which fraudulent non-human ad traffic originates; Domain Fraud Threat List is a database of domains identified as known sources of fraudulent bot traffic for digital ads and Publisher Sourcing Disclosure Requirements (PSDR) foster trust in the marketplace by disclosing the amount of sourced traffic for a given publisher,” informed Ashish Shah, Founder and CEO at Vertoz.


Rohit Pabalkar, SEO Head at Webmaffia, advises brands to analyse deeper and reduce wastage across media plans. “If you see a sudden rise in visitors/likes/subscribers flowing to your digital properties, analyse where they came from (entry path), always check for metrics such as page depth and browser behaviour. Usually, fraudulent bot traffic does not tend to achieve that engaging page depth and browser behaviour. Digital advertisers should spend more time on analysing the inventory bought for the brands rather than buying inventory in bulk. Even if you have one good publisher relevant to your brand, it would serve much more to your benefit against having multiple publishers who might be involved in purchasing traffic,” he said.

Major industry bodies are also stepping up efforts to combat ad fraud. In April, the Interactive Advertising Bureau (IAB) announced all 463 of its General Member publisher and technology companies must register with the Trustworthy Accountability Group (TAG) to fight ad fraud.

The battle against digital ad fraud has just begun and it will take constant vigilance from the digital and marketing community to protect the ecosystem.

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