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Bot Fraud: Scamming Advertisers and Damaging the Internet

July 17, 2014

On Monday, ANA announced the launch of a major new industry push to reduce bot (web robot) fraud.  For this new initiative, ANA is partnering with White Ops, a fraud detection firm, to conduct a study of over 30 member companies’ advertising campaigns.  By analyzing these campaigns, clearer data will be available to help advertisers reduce bot fraud and improve marketing ROI.  The companies in the study make up “The Marketers’ Coalition,” which will gain insights from a wide range of industries and brands and provide a clearer picture of the status of bot fraud and its impacts on the advertising business.  

Bots — computer-generated signals designed to mimic human web traffic in order to trick advertisers to pay for phony visits to websites — are a significant problem for digital marketers.  They cause serious damage in terms of CPM, revenue, and reputation.  Bots find their way onto premium content Internet sites and into premium content ads.  These sites and networks are the most severely injured by this fraud.  However, bots are not evenly or predictably distributed, making them exceedingly difficult to track. The most sophisticated bots which cause the most damage cannot be caught by traditional methods.  It has been estimated that as much as 25-50% of money spent on digital advertising is wasted because of these criminal bots, translating into multi-billions of dollars of wasted expenditures annually.  

In May, ANA held a legal and regulatory webinar on bot fraud.  For that webinar, Michael Tiffany, cofounder and CEO of White Ops, spoke about the dangers bots pose to advertisers.  Many advertisers don’t realize the severity of the bot fraud issue, and if they do, they don’t necessarily believe the problem applies to them. However, as was discussed in this webinar, all advertisers need to be aware of this issue and actively work to combat bots to protect their money and their brands.

To highlight the unfortunate significance bots have in today’s world, the Senate Judiciary Committee held a hearing on Tuesday on botnets and cybercriminals.  As if the destruction bots cause to the advertising industry was not enough, bots are also used by criminals to take over individual computers using malware.  Once the malware has been installed, criminals set up networks of bots which gain access to personal information and bank accounts, completely shut down business operations, and even use webcams to spy on individuals.  

Tuesday’s hearing was led by the Chairman of the Crime and Terrorism Subcommittee, Sen. Sheldon Whitehouse (D, RI), who has taken a key role in the push to eradicate cybercrime and cyberterrorism.  During the hearing, the witnesses from the Department of Justice and the Federal Bureau of Investigation stated that improved laws are needed to adequately take down bots.  The laws in place today are antiquated and have not been revised to keep up with the exponential growth of these new technologies.  Witnesses from the private sector noted that the Internet of Things is presenting additional challenges to those trying to combat bots.  Mobile phones and other devices that can access the Internet are turning into the newest hot spots for bots, but the current efforts by law enforcement are still mainly geared toward desktop computers.  Sen. Whitehouse, along with Sen. Lindsey Graham (R, SC), stated a firm commitment to either crafting new legislation or improving the current laws to make the take down and prosecution of cybercriminals operating bots a more seamless and effective process.

As can be seen from the new ANA initiative and the Senate Judiciary Committee hearing, bot fraud is gaining heightened attention across the board.  That attention is well deserved.  Around the world, the Internet is used daily by billions of people who trust that what they say or do while online is safe and protected.  However, it is increasingly coming to light that this is not the case.  It is essential – especially for online advertisers – for these fraudulent bots to be taken down so the Internet can continue to flourish and maintain its reputation as a safe and lucrative place to conduct business.  The ANA initiative will assist in this effort by helping to develop means to dry up a significant portion of bot fraud funding presently being siphoned from the advertising community.  The damage from bots will continue to occur unless a substantive method for combatting this fraud is generated and the business community fully gets on board to tackle this growing challenge.

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