in fact, reveal certain domains in which advertising remains highly effective. Famously, mesothelioma—the cancer caused by asbestos that has produced an active industry of class action lawsuits—remains one of the most expensive keywords to advertise against in search results, in part because people searching for this rare disease are in extreme need and are seeking treatment.21

But such domains are the exception, rather than the norm. Undermined by visibility problems, indifference, and ad blocking, online advertising overall is increasingly subprime. It fails to truly capture attention or influence consumer behavior. And it gets worse. As the quality of real attention on offer declines, fraudsters continuously work to inflate the value of the attention inventory being sold. This poses a problem that, unchecked, could destabilize the economy of the web.The Problem of Ad Fraud

The sheer size of the online advertising market invites attempts to fraudulently extract money from it. Exploitation is rampant in the online advertising ecosystem. Perversely, these activities actually boost the perceived value of advertising inventory—at least in the short term.

The basic idea of ad fraud is simple: buyers think they are purchasing attention and delivering their message to promising consumers, but instead they are given something worthless. There are numerous ways that this can happen.

Click fraud is a widespread practice that uses automated scripts or armies of paid humans in “click farms” to deliver click-throughs on an ad. The result is that the advertising captures no real attention for the marketer. It is shown either to a human who was hired to click on the ad or to no one at all.

The scale of this problem is enormous. A study conducted by Adobe in 2018 concluded that about 28 percent of website traffic showed “non-human signals,” indicating that it originated in automated scripts or in click farms.22 One study predicted that the advertising industry would lose $19 billion to click fraud in 2018—a loss of about $51 million per day.23 Some place this loss even higher. One estimate claims that $1 of every $3 spent on digital advertising is lost to click fraud.24

Display advertising, which still constitutes one of the largest segments of the digital advertising market, exhibits these problems in a particularly striking way. In 2017, Forrester Research concluded that the previous year, as much as 56 percent of all ad dollars spent on display advertising were lost to fraudulent or otherwise unviewable inventory. This accounted for $7.4 billion of waste, which was estimated to grow to $10.9 billion by 2021.25

There is good reason to believe that fraud will continue to destabilize the industry, even as advertisers find new ways of delivering marketing messages through the web. Video, one of the fastest-growing segments of the programmatic advertising market, is similarly plagued by fraudulent traffic. Fraud accounts for 22 percent of video spend, and 20 percent of nonmobile video traffic is driven by bots. If anything, the problem is worse in video than it is in display. One study concluded that fraud was twice as common in video traffic as in display traffic.26 Mobile, another quickly growing segment, is likewise vulnerable to fraud. Eighty-seven percent of all mobile devices on offer in the programmatic advertising markets in the United States in fall 2016 were fraudulent, meaning that they were either not real phones at all, or they were phones running automated scripts, unseen by any actual members of the public.27

Domain spoofing is another popular scam, in which inventory on the programmatic marketplace is made to look like space on a high-value website when it, in fact, is not. Unwitting ad buyers pay top dollar for these opportunities, not realizing that their ads appear somewhere else entirely. In 2017, the Financial Times discovered that fraudsters were pretending to sell Financial Times ad inventory on ten different ad exchanges. In fifteen ad exchanges, they also found offers to sell video advertising on the Financial Times site, a type of inventory the newspaper didn’t even offer its legitimate advertisers. The fake inventory was selling for approximately $1.3 million per month, which the advertising operations director for the publication called “jaw-dropping.”28

Ad fraud flourishes because it is highly lucrative. In 2018, The New York Times profiled one “entrepreneur” in the space, Martin Vassilev, who in eighteen months went “from being on welfare and living with his father in Canada to buying a white BMW 328i and a house of his own.” Small operators delivering fake YouTube views with software can earn more than $30,000 per month.29

Ad fraud also supports the development of more sophisticated criminal enterprises that can target established publishers and even threaten the Google-Facebook duopoly. These advanced operators leverage malicious code to direct the traffic of unknowing consumers to support these ad fraud schemes. In 2018, a BuzzFeed story exposed a $10 million scheme that used more than 125 Android apps and website ads to generate fake traffic.30 Methbot, a “professionalized” ad fraud scheme uncovered in 2016, generated between $3 million and $5 million per day at its height by impersonating inventory on nearly six thousand publications including The Economist, ESPN, Fortune, and Facebook.31

The vast cumulative impact of fraud in the programmatic advertising ecosystem is worth taking a moment to put in everyday terms. Imagine a supermarket with the level of inventory fraud that exists in the programmatic marketplace. In some aisles, one out of every five products on the shelves is a fake: you’d return home to find that these boxes contain nothing.32 Even when you stick to familiar brands that you recognize and trust—a six-pack of Coca-Cola or a box of Wheaties—your purchases turn out to be imitations filled with sawdust. You’d probably stop going to this supermarket, even if you did occasionally manage to get some of the groceries you wanted.

The perverse effect of ad fraud in the short and medium term is that it actually inflates the purported value of the global marketplace for digital advertising. Fake traffic driven by click farms and botnets makes ads look better and more effective than they actually are. Practices like domain

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