Ad Fraud Value Chain by Augustine Fou Digital Forensics
1. Augustine Fou- 1 -
Ad Fraud Value Chain
impressions
clicks
leads
sales
DollarsEst. Fraud
$4B50%Display
$2B60%Video
$6B30%Search
$2B40%Mobile
Multiple sources, see Appendix
$7B
$7B
2. Augustine Fou- 2 -
Types of Digital Ads
Impressions
(CPM/CPV)
Clicks
(CPC)
Leads
(CPL)
Sales
(CPA)
• Display ads
• Mobile display
• Video ads
• Social display
• Search ads
• Mobile search
• Affiliate
revenue share
• Completed
lead forms
sold on cost-
per-lead basis
3. Augustine Fou- 3 -
Digital Ad Spend (IAB H1 2013)
Impressions
(CPM/CPV)
Clicks
(CPC)
Leads
(CPL)
Sales
(CPA)
Search 43%
$18.1B
Video 7%
$2.9B
Lead Gen 4%
$1.7B
11% Other
$4.8B
Source: IAB, 1H 2013 Digital Advertising Report, Oct 2013
$35.5B
Display 19%
$8.0B
Mobile 15%
$3.7B$2.8B
NOTE: revenues annualized from
actual 1H 2013 figures from IAB
(assumes $42B annual ad spend)
CPM Performance
• classifieds
• sponsorship
• rich media
• email
$6.5B
4. Augustine Fou- 4 -
Digital Ads: Fraud Estimates
Impressions
(CPM/CPV)
Clicks
(CPC)
Search
$18.1B
$35.5B
Display
$8.0B
Video
$2.9B
Mobile
$3.5B$2.8B
(U.S. digital ad spend only)
DollarsAverage
$4B50%Display
$2B60%Video
$6B30%Search
$2B40%Mobile
$14BTOTALS 39%
Multiple sources, see Appendix
5. Augustine Fou- 5 -
Ad Fraud Ranges
• Display ad fraud fake ad
impressions created by bots
• Video ad fraud fake video ad
views generated by bots
• Mobile ad fraud fraudulent
or accidental clicks
• Search ad click fraud click
fraud on search ads
30-70%
50-80%
20-40%
$3-7B
$1-2B
$4-8B
(U.S. Only)
30-50% $2-3B
50%
60%
30%
40%
Range DollarsAverage
6. Augustine Fou- 6 -
Vivek Shah, IAB (Feb 2014)
Shah said. "According to comScore, 36 percent of
traffic today is generated by machines, not
humans. That's astonishing. If you peel the onion
one layer, you see that an overwhelming majority of
suspected non-human traffic comes from small
publishers — not comScore 100 sites. The reason
is simple. The ability to buy cheap bot traffic and
arbitrage it via ad exchanges has created enormous
financial incentive for bad-acters to engage in a
deception that threatens the very integrity of our
business." http://technorati.com/business/article/ad-expert-36-of-ad-traffic/
7. Augustine Fou- 7 -
Buckets of Ad Fraud
Impressions
(CPM fraud)
Botnets
generate fake
pageviews
which produce
ad impression
“inventory” that
is sold into ad
exchanges.
Clicks
(CPC fraud)
Leads
(CPL fraud)
Sales
(CPA fraud)
Bots type
search queries
to bring up
search ads and
then click on
the ads.
Bot or low
wage workers
fill in lead
forms with real
addresses and
get paid bounty
per lead.
Fake sites set
up to do cookie
stuffing or trick
users to click
on affiliate
links to earn rev
share.
8. Augustine Fou- 8 -
Dr. Augustine Fou – Digital Consigliere
“I advise clients on optimizing
advertising across all channels. One
main area of focus is reducing ad waste
due to fraud – fake impressions, clicks,
leads, and sales.”
FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM)
MCKINSEY CONSULTANT
CLIENT SIDE / AGENCY SIDE EXPERIENCE
PROFESSOR AND COLUMNIST
ENTREPRENEUR / SMALL BUSINESS OWNER
PHD MATERIALS SCIENCE (MIT '95) AT AGE 23
@acfou
ClickZ Articles: http://bit.ly/augustine-fou-clickz
Slideshares: http://bit.ly/augustine-fou-slideshares
LinkedIn: http://linkd.in/augustinefou
9. Augustine Fou- 9 -
Related Articles
Bad Guys Happily Rob Display Advertisers
By: Augustine Fou, July 23, 2012
Everything Fake (Display Ad Fraud, Search Click Fraud)
By: Augustine Fou, April 2013
Blacklisting vs Whitelisting
By: Augustine Fou, October 2013
What Suspect Site Traffic and Gray-hat Techniques Look Like
By: Augustine Fou, October 2013
Video Ad Fraud Investigation, Part 1
By: Augustine Fou, October 2013
Augustine Fou- 9 -
11. Augustine Fou- 11 -
Ad Fraud Value Chain
impressions
clicks
leads
Networks of algo-generated
content sites that attract free
organic search traffic
Botnets generate fake pageviews
which produce ad impression
“inventory” (get paid for CPM)
Fake leads (get paid for CPL minus cost of
filling out lead forms)
Click farms generate fake clicks (get
paid for CPC)
sales
Fake sales via affiliate revenue shares; money
laundering, especially on digital goods/subscriptions
12. Augustine Fou- 12 -
480 billion
display ad impressions /mo
Impression Fraud
29%
confirmed bot traffic
$1 - $3.50
cost per thousand
$2-6 billion
wasted ad spend (annualized)
Display Ads
20.1 billion
video ad impressions /mo
40%
estimated fake views
~$10
cost per thousand
$1 billion
wasted ad spend (annualized)
Video Ads
Source: Vindico, 2013Source: Solve Media 2013