Nearly a quarter of the money spent by brands on online advertising is falling into the hands of fraudsters, according to research company Juniper Research. Companies believe that humans are clicking on their ads, but in reality, the clicks come from robots in massive “click farms” operated by organized criminals. These criminals are also able to take control of connected TVs, computers, and smartphones without the owners’ knowledge to generate clicks on advertisements around the clock.
Many large American companies are becoming aware of the extent of the issue and are ceasing to invest in online advertising. Procter & Gamble, for example, drastically cut its budget in 2018, reducing spending by nearly €200 million with little impact on sales. Companies like Uber, Chase Bank, and eBay have also significantly reduced their online advertising spending in recent years. Globally, Juniper Research Report estimates that over $80 billion (approximately €74.71 billion) was spent in 2023 on advertisements that did not result in any sales.
The complex organization of the online advertising market contributes to the difficulty in controlling it. Companies entrust their advertising budgets to specialized platforms that operate on marketplaces where millions of advertising spaces are auctioned off. Transactions between the various actors in this market happen at ultra-rapid speeds, on the order of microseconds. Cybercriminal communities, who specialize in ad fraud, collaborate to exploit funds more effectively. Some specialize in technical expertise, such as identity theft on social networks or infecting connected cameras to view ads. Others create the illusion that the robots behind fake identities are behaving like normal humans by clicking on ads or installing mobile apps. Some even rent servers to host fake websites that receive funds from advertisers.
These cybercriminal communities, spread across the globe, are constantly evolving to maximize their profits. Europol and the French National Gendarmerie have conducted studies on six cybercriminal communities that interact on dedicated forums for ad fraud. These studies demonstrate how these communities organize themselves to divert funds. By working together and combining their various skills, these criminals are able to earn more money through fraudulent advertising schemes.
The scale of online ad fraud is a major concern for businesses, as a significant portion of their advertising budget is being wasted on non-converting clicks. With the involvement of organized cybercriminals in this space, the problem becomes even more challenging to address. Companies are increasingly reevaluating their online advertising strategies and considering alternative approaches to reach their target audiences effectively while minimizing the risk of falling victim to ad fraud. This ongoing battle between brands and fraudsters highlights the need for continued vigilance and innovation in the digital advertising industry to protect advertising investments and ensure legitimate engagement with consumers.
