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The advertising industry is scrambling to combat the growing threat of “ad fraud,” computerized bots that fool advertisers into thinking they are reaching consumers. By some estimates, this illegitimate online traffic means that for some brands, as much as 25 to 50 per cent of the money spent on online ads is wasted. (John Sopinkski/The Globe and Mail)
The advertising industry is scrambling to combat the growing threat of “ad fraud,” computerized bots that fool advertisers into thinking they are reaching consumers. By some estimates, this illegitimate online traffic means that for some brands, as much as 25 to 50 per cent of the money spent on online ads is wasted. (John Sopinkski/The Globe and Mail)

Advertisers scramble as ‘non-human traffic’ eats up online budgets Add to ...

The advertising industry is scrambling to combat the growing threat of “ad fraud,” computerized bots that fool advertisers into thinking they are reaching consumers.

By some estimates, this illegitimate online traffic means that for some brands, as much as 25 to 50 per cent of the money spent on online ads is wasted.

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“They’re trying to make decisions about where best to spend the money, and the illegitimate traffic is screwing up some of the metrics,” said Chris Williams, president of the Interactive Advertising Bureau of Canada.

Ad fraud takes many forms, but the most pernicious, many agree, is “non-human traffic” that leads advertisers to believe they are speaking to their target customers, when they are actually showing ads to bots that crawl the Web pretending to be human.

It’s a problem that does not just affect advertisers: It hurts legitimate publishers already scrambling for profit in a digital world. It further devalues an advertising medium whose rates already pale in comparison with traditional print media. And it hurts consumers, who are targeted with malicious software to create these networks of bots.

The trickery has become profitable because of a fundamental shift in the way advertising is bought and sold in recent years. Where advertisers used to buy ad space in a newspaper or during a television show because of the audiences that research showed were attracted to those media, now advertisers are able to target potential customers more directly. They follow behavioural patterns to create profiles of people online and on their mobile devices, and serve ads to them accordingly. (This is why you see ads all over the Web for shoes, after you’ve been browsing a shoe retailer’s website, for example.)

And the system for buying these ads has become increasingly automated. Just like the stock market or travel agents, companies are trying to make advertising transactions more efficient by eliminating the need for employees to pick up the phone to do deals. Ad space is traded online through exchanges where exposure to potential customers (such as young shoe fanatics) are sold to the highest bidder. Google has by far the biggest slice of this market. Other big exchange operators include AppNexus, OpenX, and Yahoo.

Now that the context of an ad – the pages of a particular magazine, for example – is no longer at the heart of the transaction, shady players are able to make money by using bots to behave like the consumers that advertisers want to bid on (by sending them to auto websites to look like a person in the market for a car, for example).

Because the system of online ad exchanges is not always transparent – and often includes intermediaries – advertisers do not always know their ads are on dubious sites.

“Sometimes people say ‘low-quality traffic,’ as if there was a gradient scale between a person and a robot,” said Ben Cormier, founder and former CEO of netProphets, a Toronto-based digital advertising technology company that was purchased in 2011 by advertising technology company AdGear. “Someone can spend $100,000 in online advertising and get incredible results and get a return on investment like nothing else. Someone else can spend $100,000 and get nothing.”

In April of this year, advertising technology firm TubeMogul published a list of websites where it said it had detected bot traffic. Ads paid for by major brands had registered fake views on sites such as tobe.tv and stylefactor.com, the company said.

Many of those sites are designed with content humans might plausibly look at, but not always.

Those who track the problem point to websites such as http://procpm.blogspot.com/. Its name refers to a metric used in ad buying: CPM, or cost-per-mille, which is the price advertisers pay for every 1,000 views of their ad. The site itself has little content on it at all, but visits this week revealed ads for brands including Ford, Aspirin, and Disney.

Big-name brands would likely not choose to advertise there. But the mere presence of their ads suggests that the site may be registered on digital ad exchanges as having more traffic than it likely does.

In February 2012, Tsavo Media, a unit of Toronto-based Cyberplex Inc. at the time, was required to pay Yahoo to compensate for 'low-quality traffic' to ads run on its websites. The sites were owned by Tsavo Media, which Cyberplex bought in 2010. The president in charge at the time of that acquisition resigned, and just two months later, Cyberplex sold Tsavo Media. Cyberplex has since changed its name to EQ Works.

Because fake bot traffic is easy and cheap to buy from hackers online, sites can often make more on ads than they spend to attract visitors. Some more sophisticated operators create both the bots and the shady sites they visit.

In addition to bot traffic, disreputable sites can take the fraud even further by employing what is known as “ad stacking” – putting a number of ads on top of each other so that only one appears, but multiple ads are registered as having been seen. They can also shrink ads to fit inside a single pixel on a screen – effectively invisible to a visitor. It is also easy for disreputable sites to “spoof” a URL, mimicking the Web address of a well-known website to make themselves look legitimate.

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