Not all traffic or clicks are created equal. Thanks to the rise of ad networks, exchanges and other third-party resellers, the volume of phony ad traffic and clicks is on the rise, according to new research from MdotLabs.
Fraudulent or fake display-ad impressions account for as much as 30 percent of all online traffic today, says Timur Yarnall, CEO and co-founder of the firm that helps brands track and eliminate invalid traffic.
“That puts display fraud waste at $3.6 to $4.5 billion annually in the US alone. That doesn't include video, mobile, or the rest of the world. We believe the estimate would easily top $10 billion on a global basis," says Yarnall.
The problem is being compounded on two separate fronts. The so-called optimization of online ad buying and selling is making it more difficult for brands and agencies to follow the money trail. Meanwhile, much of the blossoming ad tech industry continues to look the other way out of an apparent fear that it might shine a light on the suspicious traffic that pads their bottom lines.
After posing as web publisher and signing up for traffic generation services, the Madison, Wis.-based company identified other sites that work with the same Pay-Per-View (PPV) networks.
MdotLabs focused its investigation on 10 PPV networks that reach across hundreds of publisher sites. Major brands with instant recognition and affinity among most US residents--American Express, Allstate, AT&T, Audi, Avis, Comcast, Disney, EA Sports, Farmers, Honda, Maybelline, Priceline, Samsung, Staples, Subway and another dozen or so--are paying millions of dollars every year for ad impressions that are never seen by humans, according to the firm.
“It’s important to note we’ve had a chance to thoroughly research only a small fraction of the PPV networks currently in operation,” notes Yarnall.
"We conservatively estimate the number of invalid impressions that are generated from these PPV networks alone to be on the order of 15 billion per month. Assuming the modest quality level for sites that are part of PPV networks, we estimate the cost to advertisers for this fraudulent traffic to be on the order of $180 million annually," says Paul Barford, chief scientist and co-founder at Mdotlabs.
"Traffic which is not the result of genuine interest from a desired human user, including malware generated traffic, non-human (bot) traffic and fraudulent traffic generation techniques - especially from traffic exchanges - is costing online advertisers and their partners, tens of billions of dollars in wasted impressions," Barford adds.
MdotLabs launched last month and released these latest results October 3rd, as a follow-on to their earlier study Impression Fraud in Online Advertising via Pay-Per-View Networks.
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Matt Kapko has been writing about mobile since 2006, before it became cool. Based in Long Beach, CA, he has covered mobile entertainment, digital media, marketing, and advertising for several business media outlets. A former editor and reporter for RCR Wireless News, paidContent, and iMedia Connection, Matt is a regular freelance reporter for ClickZ. You can follow Matt on Twitter at @MattKapko or drop him a line at email@example.com.