Ad Fraud Estimates by Augustine Fou Technical Forensics

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Information about Ad Fraud Estimates by Augustine Fou Technical Forensics
Business & Mgmt

Published on March 14, 2014

Author: augustinefou



Digital Ad Fraud estimates vary widely based on the methodology used to detect and the rounding and estimating of what can be considered "fraud" or "suspicious" ads. Regardless of the methodology, the size of the fraud is large and needs to be addressed by the industry as a whole.

Augustine Fou- 1 - Digital Ad Fraud Estimates Impressions (CPM/CPV) Clicks (CPC) Search $18.1B $35.5B Ad Spend Display $8.0B Video $2.9B Mobile $3.5B$2.8B (U.S. digital ad spend only) DollarsAvg Fraud Rate $4B50%Display $2B60%Video $6B30%Search $2B40%Mobile $14BTOTALS 39% Multiple sources, see Appendix

Augustine Fou- 2 - Ad Fraud Ranges • Display ad fraud fake ad impressions created by bots • Video ad fraud fake video ad views generated by bots • Mobile ad fraud fraudulent or accidental clicks • Search ad click fraud click fraud on search ads 30-70% 50-80% 20-40% $3-7B $1-2B $4-8B (U.S. Only) 30-50% $2-3B 50% 60% 30% 40% Range DollarsAverage

Augustine Fou- 3 - Digital Ad Spend (IAB H1 2013) Impressions (CPM/CPV) Clicks (CPC) Leads (CPL) Sales (CPA) Search 43% $18.1B Video 7% $2.9B Lead Gen 4% $1.7B 11% Other $4.8B Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013 $35.5B Display 19% $8.0B Mobile 15% $3.7B$2.8B NOTE: revenues annualized from actual 1H 2013 figures from IAB (assumes $42B annual ad spend) CPM Performance • classifieds • sponsorship • rich media • email $6.5B

Augustine Fou- 4 - Online Ad Fraudsters Are Stealing $6 Billion From Brands Security firm White Ops claims 1 in 6 PCs infected by bots By Mike Shields Stealing $6 Billion From Brands Source: Adweek, October 2013

Augustine Fou- 5 - Fraud is endemic across today’s display advertising ecosystem. Luttrell estimates 20 to 30% of display ad inventory is fraudulent. For an empirical counterpoint, the Chameleon botnet spanned all the major US ad exchanges at the time of disclosure and was driving enough fake traffic—on its own—to account for 30% of the display ad inventory sold through one of these major exchanges. The Chameleon botnet is not unique. For example, we will shortly be disclosing details of a second major botnet, with a distinct signature, targeting a distinct cluster of websites. Botnet traffic is also not just limited to fraudulent publishers. We have come to understand that the Chameleon botnet, for example, has supplied traffic both to the website of one of the most highly regarded US newspapers and also to the websites of one of the world’s largest online media companies. 20-30% of Display is Fraudulent Source: AdExchanger April 2013 With display ad spend at $8B, that is $2-3B of fraud

Augustine Fou- 6 - Online fraud costs e-retailers $3.5 billion in 2012 CyberSource’s annual report notes an average fraud rate of .9% of online revenue. Online fraud costs e-retailers $3.5B Source: Internet Retailer, March 2013

Augustine Fou- 7 - Fighting Ad Fraud

Augustine Fou- 8 - What Others Focus On optimize

Augustine Fou- 9 - What We DoContinuously find and update list of bad guy sites

Augustine Fou- 10 - Digital Ad Forensics Process Sizing of ad fraud Forensic AnalysisPreliminary Scan Implementation Augustine Fou- 10 - • Technology Tools • Statistical analysis Maintenance Preliminary analysis of paid campaigns and analytics to determine magnitude of the ad fraud impacting client. FREE Creating recommended list of changes, including list of sites to exclude in each ad channel. $$$ Subscribe to triangulated, cross-industry database of “ad fraud offenders” to continuously update blacklists and whitelists. $ • Budget shifts • Further optimization

Augustine Fou- 11 - How We Do It 1. give us access to Adwords, Bing Ads, and Analytics 2. we estimate the size of the problem 3. client signs on to do the project 4. we run the advanced technical analysis 5. give them the large list of sites to blacklist 6. we provide ongoing “innoculation” updates

Augustine Fou- 12 - Dr. Augustine Fou – Digital Consigliere “I advise clients on optimizing advertising across all channels. One main area of focus is reducing ad waste due to fraud – fake impressions, clicks, leads, and sales.” FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM) MCKINSEY CONSULTANT CLIENT SIDE / AGENCY SIDE EXPERIENCE PROFESSOR AND COLUMNIST ENTREPRENEUR / SMALL BUSINESS OWNER PHD MATERIALS SCIENCE (MIT '95) AT AGE 23 @acfou ClickZ Articles: Slideshares: LinkedIn:

Augustine Fou- 13 - Related Articles Fake YouTube Videos By: Augustine Fou, December 2013 Motive and Opportunity for Ad Fraud By: Augustine Fou, February 2014 Fake Facebook Profiles By: Augustine Fou, Dec 2013 Fake Twitter Accounts By: Augustine Fou, August 2013 Display Fraud 101 (video) By: Augustine Fou, Feb 2014 Augustine Fou- 13 - ROI Case for Solving Ad Fraud By: Augustine Fou January 2014 Digital Ad Fraud Briefing By: Augustine Fou December 2013 How Display Fraud Works By: Augustine Fou, May 2013 How Click Fraud Works By: Augustine Fou, November 2013 The Magnitude of Digital Ad Fraud By: Augustine Fou, November 2013

Augustine Fou- 14 - APPENDIX

Augustine Fou- 15 - Digital Ads by Format Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013

Augustine Fou- 16 - Pricing Model Trends Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013

Augustine Fou- 17 - Real Time Bidding Ecosystem

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