"When you bundle bots, clicks fraud, viewability and the lack of transparency [in automated ad buying], the total digital-media value equation is being questioned and totally challenged," warns one advertising group executive as the WSJ reports about 36% of all Web traffic is considered fake, the product of computers hijacked by viruses and programmed to visit sites. This means, simply put, that marketers, who are pouring billion of dollars into online advertising, are confronting an uncomfortable reality: rampant fraud... and the fraud is only going to get worse...
Spending on digital advertising—which includes social media and mobile devices—is expected to rise nearly 17% to $50 billion in the U.S. this year. That would be about 28% of total U.S. ad spending. Just five years ago, digital accounted for 16%.
The big question is whether attitudes will change if signs of fraud increase.
Billions of dollars are flowing into online advertising. But marketers also are confronting an uncomfortable reality: rampant fraud.
About 36% of all Web traffic is considered fake, the product of computers hijacked by viruses and programmed to visit sites, according to estimates cited recently by the Interactive Advertising Bureau trade group.
So-called bot traffic cheats advertisers because marketers typically pay for ads whenever they are loaded in response to users visiting Web pages—regardless of whether the users are actual people.
The fraudsters erect sites with phony traffic and collect payments from advertisers through the middlemen who aggregate space across many sites and resell the space for most Web publishers. The identities of the fraudsters are murky, and they often operate from far-flung places such as Eastern Europe, security experts say.
Big advertisers are in "crisis"
Chief Executive Vivek Shah, the chairman of the Interactive Advertising Bureau, said at the group's annual conference last month that Internet advertising was facing a "crisis."
"The clients we work with would love to spend more money in digital," says Quentin George, a co-founder of ad-technology consulting firm Unbound. "But until we give them more control and transparency on how the money is being spent, they will continue to have questions and hold money back."
"We're aware of the concerns within the industry about ad fraud and are working to address those concerns as they pertain to our business," a GM spokeswoman says.
One wonders just how "valuable" all those social media companies really are if the bots and fraud was removed? This isn't the first time we have discussed this, but it seems even the advertisers are now doubting the new word order of "social" and "mobile" as the panacea for ad spend.