Record digital advertising buys & record ad fraud seem to characterize the paid side of digital marketing in 2016.
The Interactive Advertising Bureau (IAB) reports $17.6 billion spent on digital ads in the third quarter of 2016, a record and 20 percent increase over 3Q 2015 while at the same time security firm White Ops, working with IAB, reports a single Russian criminal gang is exploiting the digital ad market to the tune of $3 to $5 million each day in ad fraud.
“The momentum of advertising in mobile, digital video, and other innovative formats is undeniable,” said David Doty, Executive Vice President and CMO of IAB in a Dec. 28 press release. “These record-setting third quarter revenue figures reflect marketers’ trust in the internet’s power to connect with today’s audiences.”
With an equally strong – or better – digital ad spend in the 4th Quarter of 2016, digital ad buys may eclipse television ad buys in the current year, rather than in 2017 as previously predicted.
The White Ops report sheds a light on the Russian gang’s bot tactic, called Methbot, to generate fake clicks on digital advertising – largely video ads – and rip off the industry.
“Using an army of automated web browsers run from fraudulently acquired IP addresses, the Methbot operation is ‘watching’ as many as 300 million video ads per day on falsified websites designed to look like premium publisher inventory,” explains the White Ops white paper. “More than 6,000 premium domains were targeted and spoofed, enabling the operation to attract millions in real advertising dollars.”
Nearly half – 47 percent – of the record 3Q 2016 digital ad buys were on mobile platforms, according to the IAB, while spending on desktop platforms fell 12 percent from the 3Q 2015 levels. Spending on mobile search – meaning nearly always with Google – increased 105 percent.
Approximately 11 percent of that mobile ad buy increase came through mobile video, reports the IAB, and it’s the video ad marketing White Ops says is the target of the Methbot fraud campaign.
“The measured impact to the advertising ecosystem is unprecedented,” says White Ops. “By fabricating as much as $5 million in video advertising inventory per day, Methbot far exceeds the financial damages done by previously discovered botnets.
“To avoid detection, the group developed and cultivated an array of infrastructure dedicated to the Methbot ad fraud operation,” further explains White Ops. “Instead of the more traditional malware botnet structures, which involve attacks on existing IP addresses and piggybacking on residential computers, Methbot operators farm out their operations across a distributed network based on a custom browser engine running out of data centers on IP addresses acquired with forged registration data. Using these forged IP registrations has allowed the Methbot operation to evade typical datacenter detection methodology. This marks an innovation that transcends beyond traditional botnets, allowing Methbot to scale beyond anything the industry has seen before and placing it in a new class of bot fraud.”
- Desktop Search accounted for $4.5 billion (27% of total) of Q2 2016 revenues, compared with $5.2 billion (36% of total) in Q2 2015.
- Inclusive of Mobile Search revenue, the Search format totaled revenues of $8.4 billion (49% of total) in Q2 2016, up 17% from Q2 2015 ($7.1 billion).
- Desktop Display-related advertising accounted for $3.2 billion or 19% of total revenues during Q2 2016, down 8% from the $3.5 billion (24% of total) reported in Q2 2015. Display-related advertising includes Banner Ads (10% of revenues, or $1.7 billion), Video (7% or $1.2 billion), Rich Media (1% or $244 million), and Sponsorship (1% or $96 million).
- Inclusive of Mobile Display-related revenue, the Display-related format totaled revenues of $7.3 billion (43% of total) in Q2 2016, up 25% from Q2 2015 ($5.8 billion). Display-related advertising includes Banner Ads, inclusive of Rich Media and Sponsorship ($5.2 billion), and Video ($2.0 billion).
- Mobile revenues increased 86% from the $4.4 billion (31% of total) reported in Q2 2015 to $8.2 billion (48% of total) in Q2 2016. Mobile revenues consisted of Mobile Search ($3.9 billion), Mobile Display-related* ($4.0 billion), and Mobile Other** ($256 million).
- Desktop Classifieds revenues totaled $531 million or 3% of Q2 2016 revenues, down 29% from the $752 million (5% of total) reported in Q2 2015.
- Desktop Lead Generation revenues accounted for 3% of Q2 2016 revenues, or $482 million, consistent with the $461 million (3% of total) reported in Q2 2015.