Report: Online Ads Waste $9.5B in 2013

Online advertising firms will waste $9.5 billion this year advertising to bots guaranteed to buy nothing, according to numbers from Solve Media.

It may not come as a surprise that online advertising firms waste billions of dollars each year, but a new report claims that – even if you were to assume that the entire practice of targeting users with online ads is an effective and lucrative one – $9.5 billion this year will be wasted advertising to bots that are guaranteed to buy nothing.

According to Solve Media, an agency with expertise in the interplay between online advertising and Internet security, said that suspicious and potentially malicious traffic may account for as much as 46 percent of Web-based advertisement impressions and 35 percent of mobile-based ads in 2013, up from 43 and 22 percent respectively in the previous year. At the very least, the company claims that in the second quarter of this year, bots were responsible for interacting with between 24 percent and 29 percent of Web ads and between 11 percent and 14 percent of mobile ads.

“Analysis has shown that bot traffic affecting the online advertising ecosystem has grown from 10% to at least 24% in less than a year,” said Adam J. O’Donnell, Solve Media security council member and chief architect of the cloud technology group at Sourcefire.

Based on current levels of bot traffic and market values for online advertising space, Solve Media estimates that marketing firms will waste $9.5 billion this year catering ads toward bots that return no value on investments in that space.

Solve Media CEO Ari Jacoby and spokesperson Jonathan Kriner explained in an email interview that the company monitors two types of malicious activity: suspicious traffic accounts, traffic that is considered aberrant but can not be confirmed as bot traffic; and bot traffic, which is included in suspicious traffic figures, and accounts for known bot traffic.

China, Venezuala, and Ukraine generated the highest levels of suspicious traffic for Web ads, while Singapore, Macau, and Qatar were responsible for the largest amount of suspicious mobile-ad traffic. Solve Media’s report indicates that in the United States, Web-based ad traffic was 44 percent suspicious and mobile ad traffic was 22 percent suspicious in the second quarter.

Jacoby explained in an interview with Threatpost that most firms pay for advertisements on a cost per 1,000 impressions basis. They are obviously paying with the intent of reaching a human audience. However, they inevitably end up paying for automated traffic that brings no return on their investments as well. In the worst case scenarios, Jocoby claimed, certain sites are marred with such excessive bot traffic that firms pay for advertisements there that reach literally no human audience whatsoever.

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  • Deramin on

    The real question is whether statistics like this will drive enough companies away from online advertising to force companies like Google to actually deal with it. They'd need a big enough profit loss to outweigh the cut they get from this fraud taking place or we're not going to see change. After all, who cares if the customer or consumer gets taken advantage of as long as your share holders get paid.
    • adolf witzeling on

      I agree! Bots might create impressive statistics, but it's the human factor that drives sales.
  • Ari Jacoby on

    @Deramin companies should invest more money advertising online--not less. That said, they should make sure they are getting a human audience. Bots don't drive cars or eat snacks...
  • Sam Caldwell on

    Any advice on how to find out for yourself if your ads are only catering to bots? And how do we as online advertisers avoid this?
    • Brian Donohue on

      I'm not totally sure what you can do to avoid paying to have bots check out your ads. The people at Solve Media seem to tout themselves as experts on the matter, so it may be worth reaching out to them or some other company that does similar work.
  • Andrew Lawston on

    And this is exactly why I prefer sites that charge a monthly fee for banners/skyscrapers rather than a CPM basis.

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