• by Steve McClellan  @mp_mcclellan, June 6, 2016

Ad fraud is likely to exceed $50 billion globally by 2025, according to a new report from the World Federation of Advertisers. The report said that ad fraud should be considered a form of “organized crime” and that the activity is “second only to the drug trade as a source of income.” 

The $50 billion figure is a conservative estimate, per the report, which advises that “without sufficient counter measures, it’s easy to produce scenarios where ad fraud revenues equate to $150 billion per annum in the same time frame.” 

The report, compiled by the WFA in conjunction with the Advertising Fraud Council and Botlab.io, concludes that “virtually any programmatic buy can be exposed to ad fraud.” 

The report also asserts that viral spam sites, providing little to no opportunity for advertising effectiveness, are “endemic across the internet.” 

Ad fraud is also found among premium publishers, for example. in the form of sourced traffic. “Low quality sourced traffic has become common place among publishers, often as a means to deliver campaign targets to advertisers.” 

“Until the industry can prove that it has the capability to effectively deal with ad fraud, advertisers should use caution in relation to increasing their digital media investment, to limit their exposure to fraud,” the report surmises. 

The WFA recommends a number of actions to help brands to reduce their exposure to ad fraud, including: 

• The development of in-house expertise to support vendor selection, work with cyber security partners to help understand common threats and demand full transparency of investment, including full disclosure of the Web sites being used to promote their products or services.
• Brands should set appropriate metrics that, where possible, relate back to business outcomes. They should also encourage open information sharing related to preventing ad fraud.
• Marketers should avoid run of exchange buys in favor of databases of safe sites. Advertisers that need to hit digital investment targets may have to accept that these will not be achievable without exposing themselves to high levels of fraud.
• Contracts with agencies and vendor partners need to be revised to ensure that there are clear penalties for misallocating spend to ad fraud related inventory, where preventing it could be reasonably achieved. 

“Advertisers are the sole victim of ad fraud and the WFA wants to equip them with the tools to minimize their exposure,” stated, Stephan Loerke, CEO, WFA. “There is much that advertisers can do  to improve the situation in terms of setting new standards, contractual changes and increased transparency, but ultimately behavior change is required across the industry,” Loerke added.

A full copy of the report can be viewed here .