Advertisers are beginning to make gains in the fight against ad fraud. According to a study from the Association of National Advertisers, the economic losses from fraudulent bots are on the decline.
The group's third annual "Bot Baseline Report" predicts that in 2017, the global market is expected to lose $6.5 billion from fraudulent bots, 10 percent less than the $7.2 billion reported last year. The findings of the study, which was conducted in partnership with ad fraud detection company White Ops, were revealed at ANA's Advertising Financial Management Conference in San Diego on Wednesday.
This is the first time the study has reported an estimated decrease in losses, although the number is still higher than the $6.3 billion predicted for 2015. The stat becomes more impressive considering that digital advertising spending is expected to increase by 10 percent in 2017, according to PricewaterhouseCoopers.
ANA CEO Bob Liodice said the results demonstrate that advertisers can beat the bots. "Marketers worldwide are successfully adopting strategies and tactics to fight digital ad fraud," said ANA CEO Bob Liodice in an emailed statement. "This is a powerful indicator that the war on digital ad fraud is winnable for those who establish proper controls and protocols. And that is exceptionally good news for the advertising, marketing, and media communities worldwide."
The report analyzed the digital advertising activity of 49 ANA member companies, including American Express, Clorox, Unilever and Coca-Cola, between October 2016 to January 2017. During this time period, these companies used White Ops detection tags to measure non-human traffic.
Additionally, "Bot Baseline Report" found that nine percent of desktop display is fraudulent, a two percent decrease from last year, and participants saw less than two percent of fraud in app environments and mobile web display buys.
The report also unearthed that, contrary to last year, programmatic buying is no longer riskier than direct buys. "Many study participants as a group observed comparable rates of fraud between programmatic buys and direct buys," reads the report. "This is thanks to the introduction of strong security measures that remove bad actors and discourage publishers from experimenting with risky traffic sources."
But rather than spending too much time congratulating advertisers for showing the bots who’s boss, the report concluded there is still much work to do. For instance, the report found that detecting bots is becoming harder; increasingly, they are better at resembling humans. In fact, of the fraud observed in the study, 76 percent came from a human and a bot on the same machine.
"Despite the proliferation of fraud detection mechanisms, bots continue to become more sophisticated and evasive," said Michael Tiffany, CEO at White Ops in an emailed statement. "As these declines are relatively modest, it’s critical that those affected by this threat remain vigilant."
While the results of the study are certainly promising, Jason Beckerman, CEO of business intelligence platform Unified, said it’s important to note that the study only examines fraud at the user level and misses a critical concern. "There is a much larger issue at the supply chain level," he said, "where agencies and partners who are tasked with maximizing ROI for brands, are purposely hiding poor performance, vendor fees, poor structural setup of campaigns and faulty optimization to the brands making the investment."
The study doesn’t offer any stats around those concerns, but it does recommend that advertisers should demand transparency from vendors and publishers about traffic sources, only pay for non-bot impressions and encourage walled gardens to seek Media Rating Council accreditation. The report states that the top performing advertisers of the 49 studied used these steps to decrease bot fraud.
Still, the study is perhaps the only positive news on ad fraud to come out since December, when White Ops exposed the Russian hacking operation MethBot of costing online advertisers up to $5 million a day. However, as Justin Kennedy, COO and co-founder at ad tech developer Sonobi points out, $6.5 billion is still a major deficit.
"We can’t let a minor victory like this one lull us into complacency," he said. "In order for this trend to continue, the issue of fraud and prevention needs to be an integral part in any media plan. We’re far from mission accomplished on this, but it’s a great step in the right direction."