WFA warns that ad fraud will hit $50bn a year by 2025
Click fraud will become so rampant that it will cost advertisers more than $50bn by 2025, according to The World Federation of Advertisers (WFA), with the trade body advising brands to apply caution to their digital investment until the ad tech sector more effectively deals with the problem.
The advice was issued today (6 June) at the WFA’s Compendium of Ad Fraud Knowledge for Media Investors – produced in association with research foundation Bottlab.io as well as the Ad Fraud Council – and advises members that on current trends, ad fraud is "second only to the drugs trade" as a source of income for organised crime.
The latest marketing news and insights straight to your inbox.
Get the best of The Drum by choosing from a series of great email briefings, whether that’s daily news, weekly recaps or deep dives into media or creativity.Sign up
The document also contains the WFA’s first guidelines to help marketers reduce their exposure to ad fraud, advising that brands are the only industry victims in the industry. It alleges that agencies, ad tech companies and media owners still benefit (albeit unintentionally) from both fees and commission when ad fraud occurs. In addition, the document also warns of the perils posed by ad fraud to internet users, whose computers can be infected with malware.
Botlab.io warns that there is no silver bullet to eliminate ad fraud and says that even with all the recommended counter measures in place, an advertiser could still suffer from single digit percentile exposure.
The document identifies clear actions to enable brands to reduce their exposure to ad fraud, advising advertisers to demand more transparency when interrogating their ad tech partners, and implementing for the likes of whitelists. Other advice given includes:
- People and technology: brands need to develop in-house expertise to support vendor selection and work with cyber security partners.
- Education and communication: Brands need to set clear expectations of what they demand from their partners. They should set appropriate metrics that, where possible, relate back to business outcomes. They should also encourage open information sharing related to preventing ad fraud.
- Standards: Brands should avoid runs of exchange buys in favour of databases of safe sites. Advertisers that need to hit digital investment targets may have to accept that these will not be achievable without exposing themselves to high levels of fraud.
- Governance: Contracts with agencies and vendor partners need to be revised to ensure that there are clear penalties for misallocating spend to ad fraud related inventory, where preventing it could be reasonably achieved. Those elements of the ad tech chain that have benefited from fraudulent activity in the form of commissions and fees should be requested to return them to the advertiser.
Stephan Loerke, the WFA's chief executive, said: “Advertisers are the sole victim of ad fraud and the WFA wants to equip them with the tools to minimise their exposure. There is much that advertisers can do to improve the situation in terms of setting new standards, contractual changes and increased transparency, but ultimately behaviour change is required across the industry.”
The report comes just weeks after JICWEBS – the UK's Joint Industry Committee for Web Standards, that represents members of the IAB, AOP, IPA, plus ISBA - published a Good Practice Principles against which companies, such as publishers, agencies and ad tech providers, can be audited to verify their processes reduce the risk of fraudulent ads being served.
However, advertisers in the UK are woefully under-equipped to adequately deal with those perpetrating such acts of fraud, primarily because the police are under-funded, and the advertising industry itself doesn't invest enough in the pursuit of such criminals, according to leading voices in the industry.
See video at top of the page, narrated by Botlab.io co-founder Mikko Kotila, to learn more about the intricacies of ad fraud.