Artificial Intelligence Marketing Blog

by Nir Huberman
Head of Product

New Report Indicates Bot Fraud on the Rise

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Bot fraud is taking a big bite out of global advertising — with $6.5 billion lost just this year, it’s time for advertisers to get serious about monitoring their programmatic spend.

As noted in a recent article from MediaPost, bot fraud poses an enormous threat to digital marketing as we know it. But according to recently published statistics, fraud in digital advertising is a more serious, far-reaching issue than many of us could have imagined.

The statistics in question come to us from the Association of National Advertisers (ANA), whose 2016-2017 report on the extent of bot fraud in advertising has lead to some compelling and concerning revelations.

The report, which is in its third year of publication, has been instrumental in understanding the extent to which bot fraud has shaped spending in the digital marketing sector. The economic impact of this type of fraud has turned out to be more substantial than most advertisers thought — whereas the ANA predicted advertisers would lose $6.3 billion globally to bots in 2015, the number rose to a whopping $7.2 billion the following year. Although this year’s losses are projected to be closer to $6.5 billion (down 10% from last year), bot fraud is still a major threat digital advertisers should be working to protect themselves against.

The Stats

Whether you work in ad operations, media planning, analytics, or anything else in the realm of marketing, bots could be taking a big chunk out of your advertising budget. These software programs, which are built to imitate organic traffic, are likely to crop up any time advertiser demand exceeds consumer supply.

According to the ANA, it’s not just small, struggling companies that have something to fear from bot fraud — even premium sites are at risk. Part of this, again, is that some of our assumptions about bots are way off base. Case in point: despite the technical challenges posed by video inventory, bots didn’t shy away from video advertising. Quite the opposite in fact, since the ANA has consistently reported that fraud losses amount to approximately 22% of annual video spending.

Understanding the Issue

A large part of the problem, as the ANA discovered, was that advertisers often don’t understand the sheer volume of bot traffic they could be receiving. Although researchers expected most bot fraud to occur on sites built entirely for bots, the majority of bot traffic was actually directed to real sites, inflating the monetized audiences at those sites by anywhere from 5% to 50%, according to their original study. In fact, bot fraud could be coming from the computer you’re using right now, since over 67% of bot traffic observed in their original study came from residential IP addresses.

Unfortunately, for a long time, this kind of fraud was extremely difficult for advertisers to detect, and even now, without outsourcing their efforts, most digital marketers don’t have the resources to monitor and identify whether a real person is clicking on or rendering their ads.

How AI Can Help

Without the ability to quickly assess the quality of traffic sources and adjust investment accordingly, detecting bots isn’t just difficult — it’s impossible. That’s where AI comes in. By leveraging a machine learning platform like Albert™, businesses have a way to monitor traffic 24/7, analyzing their data to learn which sources are legitimate and which are fraudulent. Because Albert wants to hit a marketers KPI by the most efficient, effective means possible, he avoids suspicious sources of traffic that won’t turn into results.

To learn more about Albert, request a demo here.