Ad fraud increased in Q4 2015, especially in the UK

Meetrics, the London-based ad monitoring and verification firm, has suggested that web ad fraud increased significantly in Q4 2015, with the UK among the poorest performers. According to Meetrics, which uses the Internet Advertising Bureau (IAB) measure of viewability “at least 50% of the surface of online ads have to appear in the visible area of the browser for at least one second (50/1)." If viewability does not happen in this way, the ad intermediary keeps the money, thereby preventing advertisers from obtaining a return on their investment, which is akin to "viewability fraud." Research suggests that in Q4 only 50% of UK display ads were viewable, Germany fell from 61% to 58%, France fell from 69% to 65% and Austria from 70% to 65%.

Figures indicate that web advertisement fraud grew significantly in the last quarter of 2015 – and also showed that the UK’s ad biz is one of Europe’s poorest performers.

Fraud checker Meetrics measures the “viewability” of online ads. If an advertisement isn’t viewable, one of several things may have happened, none of which are good. It may have appeared offscreen or in an inactive browser window. Or a botnet may have clocked up the required number of clicks.

The ad intermediary pockets the cash although the advertiser has seen no return on their investment. It’s wasted spending. So “viewability” is a reasonable proxy for fraud.

The issue became a crisis last year as the intermediaries, such as large ad agencies who had been only too happy to ignore hygiene issues and pocket the cash, faced a backlash from advertisers and publishers. The strongest criticism came from major brands, but smaller outfits have long complained about diminishing returns, too.

The rise of programmatic advertising, where machines buy ads, has brought the issue into the foreground. Last year the agencies and other intermediaries vowed to clean up the biz and take viewability seriously.

But it isn’t getting better. It’s getting worse.

Viewability levels for display ads dropped from 52 per cent in Q3 to 50 per cent in the last three months of 2015. Germany fell from 61 per cent to 58 per cent, France fell from 69 per cent to 65 per cent, and Austria from 70 per cent to 65 per cent in the final quarter.

Which ads are fraudsters targeting? A UK breakdown shows us

“Although in the UK, for example, the drop isn’t much, it’s the direction that’s more important. Current efforts to address the issue don’t seem to be working,” thinks Meetrics’ Anant Joshi.

It’s also possible, Joshi thinks, that efforts in one area are simply offsetting the inevitable falls generated by more programmatic buying. Meetrics estimates that in Q4, around £134m¹ was wasted on unseen banner ads alone.

Does this looks straightforward and transparent to you?

The global cost of ad fraud is mind-boggling, and dwarfs financial fraud: nearly 10 per cent of the $77bn that will be spent on digital ads this year will be or $7bn, according to one prediction. A programmatic trading model has great potential for lowering the cost of marketing – but the industry is struggling with fundamental hygiene issues.

By aping Google’s notoriously opaque "black box" model, the ad biz has created a market of great complexity. As the activist musician and maths quant David Lowery, who has documented the shadier corners of the ad biz and testified before Congress, likes to remind audiences:

"When things get complex it's typically to hide some institution from liability. In finance, there's a saying: 'Complexity is fraud'”.®

Bootnote

Meetrics uses the ad industry (IAB) measure of viewability: "At least 50 per cent of the surface of an online ad have to appear in the visible area of the browser for at least one second (50/1)"