Ad fraud – the quarter billion dollars we’re leaving on the table

Unless agencies can defeat ad fraud once and for all, Australian businesses are throwing a quarter of a billion dollars down the drain each year, argues Path 51 managing director Simon Larcey.

It’s a scary thought that of the $7.4 billion spent on digital ads in Australia in 2016, at least 4% is lost to ad fraud. That’s if the IAB’s ad fraud figures as they relate to display advertising can be applied more broadly to digital advertising in general. In my opinion – having looked at other markets around the world, where the figures are much larger – this is a conservative figure.

Take the USA, where the Association of National Advertisers estimate ad fraud in 2016 would cost more than $7 billion – as in, virtually our entire industry.

Sure, we’re a much smaller market here in Australia than the USA, but are we to believe we’re just that much better at detecting and avoiding ad fraud?

Key areas of ad fraud include bots, domain spoofing, click farms, cookie stuffing and ad stacking, all of which can be substantially reduced by technology already available.

Of course, it’s a more complex issue than simply listing the ways you could be getting ripped off – or we wouldn’t be discussing the issue.

The fact is, most people aren’t IT experts and have to rely on others to ensure they are kept safe from malicious attacks and fraud.

When it comes to ad fraud, those who are most affected are the advertisers spending big bucks – as in millions of dollars per year – of whom most have their media buying done by an agency.

So should clients pay for ad fraud detection or should it be part of the service provided by the agency?

Surely it’s the latter – an agency should be accountable for the inventory they buy. 

Agencies should embrace this as a way to increase their bottom line. Wouldn’t it be a great way to add value as an agency to demonstrate how much ad fraud you prevented in a particular period and put a value on it?

Maybe advertisers could offer some sort of bonus system on preventing fraud?

Think about it like this: while ad fraud at 4% sounds fairly negligible, if someone said to you each year they were just going to skim 4% of your pay cheque – just take it, never to be seen again – wouldn’t you prefer to pay someone a smaller bonus to keep that money in your wallet? Businesses would surely be happy to do the same.

What’s more, 4% of $7.2 billion (which, again, I think is too small a percentage to be accurate) is actually still more than a quarter of a billion dollars per year that we’re wasting here in Australia.

And since agencies are the facilitators of these major advertising transactions, it’s effectively a quarter of a billion dollars going missing on their watch.

Or, if you prefer to see the glass as half full, it’s a quarter billion dollar industry that agencies are letting go begging.

With agencies always looking for new ways to generate revenue, making ad fraud protection part of your offering genuinely adds value and demonstrates an agency is doing the job for which they were hired – and good work deserves rewards. 

Just imagine at the end of each quarter, Agency X provides a report on deliverables and questionable digital inventory on which they stopped their client advertising. The client reviews, perhaps having it verified by a third party, and if found to be accurate, the agency gets a bonus – say, a percentage of what they avoided wasting.

Or, rather than having the client pay the agency for saving money, we could have a competition that ranks the dollar value on agencies stopping fraud. This would bring a new level of respect to the industry.

As part of the ad fraud prevention bonus idea, we would see clients employing consultancies or accounting firms to audit digital inventory and evaluate how effective their digital advertising is.

The rankings could be put out each year and perhaps be sponsored by one of the ‘big four’, with the winning agency receiving a prize, as opposed to a bonus from a client.

One thing we know is agencies love money and if we give them a new way to make it, they will sing like a bird!

At the end of the day, advertisers want to get results for their work, the first step of which is making sure their advertising is seen. With ad fraud growing at about the same rate as digital advertising, measures need to be taken to solve this huge problem. 


A large amount of ad fraud is done through bots, which tend to operate at certain times when it is easier to miss. For example, they can happen throughout the night when we are all asleep, so be vigilant of traffic spikes occurring in the middle of the night


All publishers have some sort of analytics to demonstrate their source of traffic and elements of audience data. To ensure you are getting what you pay for, request a grab of publisher analytics and cross-reference with agency deliverables. 

Ensure fraud detection is used

Whether it be part of an agency package or supplied by the advertiser, give yourself the best chance to avoid fraud and not waste money by utilising software that is relatively affordable.

Simon Larcey is managing director of advertising platform Path 51.


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.



Sign up to our free daily update to get the latest in media and marketing.