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I have been studying the problem of ad fraud for the last 8 years. Of course there was fraud before then, but ad fraud really took off when programmatic took off (circa 2012). That’s because with programmatic advertising tech, it was easy to place ads on millions of sites, sight unseen. While in theory, marketers thought they could reach more people by showing ads on long-tail sites, in reality, marketers are reaching bots, because long tail sites have few humans visiting, if any. Fraudsters’ eyes lit up at the opportunity brought about by programmatic exchanges and they started creating millions of fake websites, some with content, some without. Why bother with any content anyway? All they needed to do was generate ad impressions to sell by the billions through ad exchanges. Most marketers don’t even get or ask for placement reports [1]. These tiny, brand new websites could never tap into the “Amazon river” of digital ad spending by big brand advertisers, now they could via ad tech. Every year brands waste (oops, “spend”) $350 billion more in digital ads, most of which go to bots, in a veritable feasting frenzy.
And this form of fraud is easily scalable. There’s no physical product to move like counterfeit handbags or cocaine; it’s all just bots and bytes (oops, “bits” and bytes). Once they set up websites and copied and pasted ad tech code on them, they could point the traffic firehose at it and it would magically sprout money. It even made simple economic sense. The con, (oops, “arb”) was simply to buy low cost (bot) traffic and sell ads at CPMs higher than your cost. For example, if you bought bot (get it “bot, bot”) traffic for $1 CPMs and sold ads for $10 CPMs, you’d pocket $9 of pure profit from the comfort of your gaming chair. Your only risk of injury is “spilled soda on self.” And so goes the ad fraud merry-go-round, or should I say “fun house?”
When discovered, all the ad fraud looks pretty much the same. Remember these articles: Fraudsters Tricked The Reporting to Look Awesome and Attribution, The Weakest Link in All Digital Marketing. Pretty much every detail and every aspect is documented in the cases below. And you’ll realize those are just the ones that got caught; those were the “amateur-hour” fraudsters. The professional ones are still in operation, you just can’t see them yet.
For example, the latest CTV fraud called StreamScam featured 1) bots “pretending to be legitimate apps and devices,” 2) bouncing the data center traffic through residential proxies to make it appear to come from “28.8 million” households, and 3) rotating among “3,600 apps and 3,400 internet-connected TV device models” to disguise the fraud.
Uber vs Phunware
Another recent example…
