Botnet Fraud to Cost $11.6 Billion
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Botnet Fraud to Cost $11.6 Billion

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When brands invest in digital advertising there are a lot of things they need to think about. Creating an engaging ad, targeting the right audience, figuring out what the right cost per click is and many things need to be considered or you’ll lose a lot of money on the ad campaign. One of the biggest threats to digital ad investments, however, comes in the form of botnets and other ad viewing or clicking fraud.

According to a new study from Solve Media, botnets will cost advertisers about $11.6 Billion in 2014. This is up 22% from 2013. ZenithOptimedia predicts that the total ad spend in 2014 will be around $48.2 billion, so brands will be losing out on nearly a fourth of their investments right off the top. Given the fact that digital advertising can be very affordable and effective, many brands will still find this to be a great place to spend marketing dollars.

The fact is, however, that if advertisers and marketing experts don’t find a way to combat the fraud, it will quickly begin to cause brands to rethink their investments. In many cases, it undoubtedly already has.

Combating ad fraud is a very difficult exercise because the hackers and others performing this fraud are able to quickly adapt their methods in response to any corrective action taken by the ad companies. Due to the fact that there is such a huge amount of money to be made, it is profitable for those committing the fraud to invest a significant amount of time and money into their botnets.

Solve Media CEO, Ari Jacoby, said “It’s a bit like the war on drugs. There are a ton of people perpetrating crimes, in lots of cases there’s no violence to report, and it’s an unusually profitable exercise that more and more people find appealing. And so, it grows.”

Jacoby believes that the problem will continue to get worse over the next few years, though according to a survey they performed, more ad networks and brands than ever before are expressing concern over this fraud. Many of them are starting to take more aggressive action to try to identify and stop the botnets. Over time, it may be possible to limit the amount of fraudulent activity that makes it through the filters and other security that is put in place.

Jacoby said, “The thieves are going to be really smart, so it’s a cat and mouse game. I think it will get worse before it gets better on a macro level. The problem is quite solvable, but it’s going to take industry-wide participation.”

This is where one major problem currently exists. Many ad networks, and even brands, are hesitant to invest in the necessary security and anti-fraud measures. They may be relying on the larger companies to come up with the technologies to fight the fraud, so they don’t have to pay for the research and development. This allows them to keep their prices lower, and sadly, many brands accept the higher rates of fraud as a result.

Written by Michael Levanduski

Michael Levanduski is the assistant editor of Performance Markting Insider. He fell into the world of freelance writing several years ago quite by accident, but knew quickly that it would be something he loved from then on. He has been honing his craft ever since. In addition to writing about performance and internet marketing, Michael enjoys researching and writing on a wide range of different subjects ranging from dog training to current events and just about anything else you can imagine. Michael was born in Grand Rapids, MI where he still lives with his wife and three children.

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4 Comments

  • Dana says:

    Enjoyed the read Michael, especially Jacoby’s take on the matter “The thieves are going to be really smart, so it’s a cat and mouse game. I think it will get worse before it gets better on a macro level. The problem is quite solvable, but it’s going to take industry-wide participation.”

    If these numbers continue to rise, eventually ad-networks/brands will have to step-up and invest in R&D to help combat the wasted spend.

  • James H. says:

    Wow, $11.6 Billion! That’s a hefty price! I remember reading about this before, but I didn’t know the damage was that extreme.

    But you’re definitely right if ad networks can’t find a way to combat this, they’ll be bleeding away their own money. It’s a shame that many of the smaller ones are waiting for the larger networks to invest in R&D.

    Can you imagine how profitable they could be if they figured out the right formula to combat hackers? Everyone would want to advertise with them. I guess it all comes down to putting your money in the right place.
    James H. recently posted..How Much Do Super Bowl Commercials Cost?My Profile

    • Michael Levanduski says:

      Yeah. One issue seems to be that many brands are willing to overlook the massive fraud that occurs in many networks, just to get the low cost per click. They seem to ignore the fact taht a large percentage of those clicks are never seen by an actual person, so it would make more sense to go with more reputable networks.

      This industry is growing so fast, however, that it can be hard to keep up.

      Michael

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