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Ad fraud likened to ‘bank robbery of the digital age’, as cost predicted to hit $16.4 billion in 2017

Online advertising fraud could cost businesses up to $16.4 billion this year, according to an alarming report.

The study – carried out by media agency holding company The&Partnership, agency mSix and verification firm Adloox – estimated a fifth of the $66 billion spent online last year by advertisers was wasted on fraudulent advert placement. It said ad fraud cost $12.48 billion in 2016, nearly twice as much as when previously estimated in 2014.

Of the sample of 200 billion daily bid requests, four billion ad calls and 10 billion ad impressions examined, half were detected to be either non-human traffic, such as a bot or hijacked device, or from a fraudulent traffic source such as a fake domain name.

Marco Ricci, CEO of Adloox, said: “Advertising fraud is the bank robbery of the digital age – and it needs to be dealt with as such. Unless the industry takes concrete steps to combat it, it poses a serious threat to the future of our industry."

Johnny Hornby, founder of The&Partnership, said the industry must unite, and call for government help if necessary, to protect its future. Both agencies and clients were urged to invest in pre-bid verification software that reduces the risk of fraudulent placement.

According to Paul Wright, CEO at iotec, these findings should come as no surprise: “The actual cost may be much higher than this survey has indicated as there’s no real way of knowing how much money has actually been lost because so many actors lack transparency in their trading and ad placements."

The increase in programmatic ad spend is unlikely to diminish any time soon, with 70% of B2B marketers planning to increase their spending on programmatic advertising this year.

Additionally, Forrester research predicts just 20% of programmatic spend will be invested in open ad exchanges (versus 65% today) by 2021. 

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