Ad fraud may cost industry $16.4bn in 2017 says study as questions continue about self-governance

Ad fraud could cost industry $16.4bn in 2017 says study, as Johnny Hornby implores Google and Facebook to ‘step up to the plate’

Advertisers could lose $16.4bn to ad fraud in 2017, according to a study which places the figure at double the original amount estimated to be lost in 2016.

The numbers come from a report commissioned by WPP-backed agency The&Partnership and its independent media arm m/Six. The research was conducted by fraud detection firm Adloox and found that over the course of the past year the real cost of bot fraud could have been as high as $12.48bn – almost 20% of the $66bn spent on digital advertising globally.

Analysts predict that in 2017 if ad fraud continues to evolve at its current rate this year and expenditure grows to $80bn - as predicted by eMarketer - then the number could be worse than initially feared clocking in at over $16bn this year.

At the start of 2016 US-based trade body the Association of National Advertisers (ANA) forecast that advertisers would lose just over $7bn to fraudulent ads over the 12-month period. The World Federation of Advertisers (WFA), meanwhile, said ad fraud is "second only to the drugs trade" as a source of income for organised crime predicting it would cost brands more than $50bn by 2025.

Today’s figures come amid a transparency blowback from advertisers around issues, with several brand marketers calling out non-viewable fraudulent impressions and a “murky at best, fraudulent at worst,” supply chain.

Back in January, a Methbot report alleging advertisers were being defrauded by up to $5m a day sent shockwaves through the industry, raising further questions about its ability to self-govern.

The&Partnership founder, Johnny Hornby, is now imploring Google and Facebook to engage with industry initiatives and “stop marking their own homework” in response to the rising tide of ad fraud.

Asserting that the responsibility to take protect clients doesn’t stop at trade desks, Hornby said media agencies and industry bodies need to come together with media buyers to combat the problem.

Pointing to efforts to tackle ad fraud from the likes of US-based industry body The Trustworthy Accountability Group (TAG) and the Joint Industry Committee for Web Standards (JICWEBS), he said Google and Facebook need to "step up to the plate" and "fully engage" with industry initiatives.

Touching on brand safety he said: "Big-platform media owners are neglecting their responsibility to do the right thing by the valuable customers who buy ad space with them."

"Finally," he continued, "the time has come for the Googles and Facebooks to stop marking their own homework, and allow specialist, third-party auditors inside their walled gardens – to verify the viewability, non-human traffic and brand safety scores they send back to clients. Only then will we truly break the back of the ad fraud problem."

Both Google and Facebook have bowed to expanded third-party verification in recent months, with the latter having also promised an audit from the Media Rating Council (MRC) along with improved data. However, just earlier this week WPP boss Sir Martin Sorrell said he believes the digital players are "clearly not doing enough" when it comes to measurement errors and ad fraud.

Facebook’s EMEA boss Nicola Mendelsohn addressed delegates yesterday (14 March) at the Market Research Society’s Impact conference where she reportedly re-iterated Facebook's commitment to transparency.

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Rebecca Stewart

Rebecca Stewart is a reporter at The Drum. Based in London, she has interviewed key figures from brands like Airbnb, Amnesty International, Facebook and Spotify. She has covered international events in Berlin and Amsterdam, as well as Advertising Week Europe.

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