Published April 23, 2018

Advertising fraud is incredibly profitable because most ad buyers lack transparency into the ad buying process. This works because bot impressions can be bought for incredibly cheap, yet they can be sold as though they are high-quality users. So long as ad buyers are unable to tell the difference between bots and real viewers, fraudsters and unscrupulous publishers can sell ad buyers poor quality traffic and then keep the difference in pure profit.

In the advertising world, cost per thousand (CPM) is a term used to represent the cost of 1,000 advertising impressions on a given webpage (note – M is the roman numeral for a thousand in this context).

For example, if an ad publisher was to charge $8CPM, that means that for every 1,000 impressions of a given ad, the ad buyer would have to pay $8.00. If his is a worthwhile audience that leads to a lot of potential site traffic and possible conversions, this might be considered a worthy investment.

The problem, however, is that less honest publishers might buy bot traffic for a fraction of the cost of real users, and yet they can sell that traffic as high-quality impressions. This is why, according to Dr. Augustine Fou, an independent Advertising Fraud Researcher,

“The equation of ad fraud is simple: buy traffic for $1 CPMs, sell ads for $10 CPMs; pocket $9 of pure profit.” 1

At a cost of $10CPM, a million bot ad impressions could rapidly drain a $10,000 budget, and because they only cost $1,000 to setup, the rest is left as profit for the publisher. Even when that particular budget is spent, that same bot audience can be served ads over and over again from different businesses until all their advertising budgets have been completely drained.

The fact that fraudsters can see such high-profit margins for so little work means that they are constantly incentivized to find new ways to profit from ad fraud all the time.

All of this is possible because automated systems and lack of audience transparency make it very easy to sell bot traffic, and until ad buyers have the ability to filter through their ad campaigns, bot traffic is very difficult to detect. Even though ad buyers and ad exchanges are getting better at detecting low-quality traffic, businesses need better tools that can score ad campaigns for the presence of bot traffic.

Fraud solutions like NS8 Protect and NS8 TrueStats , score each advertising campaign, allowing businesses to recognize when a problem exists and adjust their strategy accordingly. By isolating and removing low-scoring campaigns, a company can minimize the damage done by fraud and focus on the campaigns that offer a high ROI.

References

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