As bots become more prevalent in various spaces of the internet, it’s only a matter of time before we have to discover new ways of making sure that they aren’t causing absolute havoc in every corner of the internet. Currently one of the hottest topics is the act of purchasing bots. You can procure fake followers for yourself, for your friends, and even for complete strangers. But all these fake views can mean that ads are getting more hits and making someone more money.
In recent years, bot makers have been turning their attention towards that possible revenue stream. Ad fraud is done by creating a spoof of a page, then using a bot to request ads from ad networks. After that, the bots go to the races and generate tons of views to earn the original bot creator quite a bit of money.
Of course, there are ways that real people can also create online ad fraud. Most notably this is done with stacking or hiding ads behind things to generate impressions without a real person having laid eyes on the ad at all. There are even ways that ads can be injected into sites where they are not on the inventory of ads that the website uses. There are also click farms that are manned by real people that create empty clicks with no conversions.
Regardless of what method they are using, online ad fraud is a topic that not a lot of people talk about unless it reaches extreme levels such as the Methbot that generated millions of dollar for its creators. However, online ad fraud accounts for a lot of the problems that advertisers have online. There are some basic fixes, but at the current moment, companies aren’t always investing in solutions and even less is being done to add online ad fraud prevention to current solutions portfolios.
In the past five years, only a handful of companies specializing in the detection of online advertising fraud have changed hands through M&A, with most of the valuations remaining unreported. This is exceptionally low, especially when compared to “hot” areas such as AI, where over the same period of time over 200 companies have changed ownership.
The more notable transactions include the sale of RealTargeting to DoubleVerify, ClarityRay to Yahoo, and more recently, Forensiq to Impact Radius and Tapcore to Airpush.
This lack of activity is surprising as Ad fraud’s grip is tightening. Juniper Research estimates advertisers will lose approximately $19B to ad fraud this year, and as much as $44B by 2022. All verticals are affected, from purchasing leads online to buying traffic.
Recently, in an effort to help combat domain spoofing fraud, the IAB has released ads.txt, an Open Source Tool. Publishers opting in to use ads.txt, provide transparency to where ads will be served. Given this is in the infancy of being adopted, it is expected more programs like this will be rolled out in time to give as much transparency to the full chain as possible.
But it’s just one tool in the ad fraud toolbox. How any given company chooses to fight fraud will depend on its individual needs. Some organizations may opt to “build” their own in-house solutions and customize them for their own needs. More often, they may buy one of many third-party solutions they can add and scale faster - like Impact Radius did when they acquired ad fraud prevention platform Forensiq; or Oracle’s acquisition of Moat as a means to offer brands and publishers a targeting and measurement solution.
The choices that each company will make may also depend on the technology that is available. With blockchain becoming more of a talking point, is it possible that online ad fraud fights will feature the use of this technology as a way of tracking those clicking on ads and ensuring that there is less fraud out there.
To combat ad fraud, companies need to employ more robust countermeasures. Where are the innovative countermeasure companies? The low level of M&A activity would imply that either they’re not there (maybe), or that the industry feels that it has the problem well in hand (which it clearly does not), or that it just hadn’t taken the problem seriously enough to elevate fraud prevention to an important strategic imperative.
I think addressing ad fraud presents an excellent opportunity for enterprising CEO’s to build value by developing new and innovative countermeasure technologies that go beyond providing fraud probability statistics and simple vanity metrics such as viewability. This seems to be a real market gap that is just begging to be plugged.