Digital ad waste is calculated via several methods and all of these methods arrive at a 20% or less "maximum possible effectiveness." If ads are not viewable, if impressions are generated by bots, if ads are not targeted properly, and if users are using adblock, then the ads won't lead to paying customers.

1. Digital Ad Waste
Sizing / Estimates
Dr. Augustine Fou
http://linkd.in/augustinefou
acfou @mktsci .com
January 2014
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Augustine Fou

2. UPDATE: January 2014
Display Ad Maximum Possible Effectiveness
Human (not bot)
(Solve Media)
Viewable
(comScore)
71%
46%
x
x
Not AdBlocked
(PageFair)
77%
25%
Source: Augustine Fou, Display Ad Effectivess
25% of ads are human/viewable/not-blocked
Other 75% wasted x
$7.7B Ad Spend
$5.8B
IAB: 21% of $36.6B FY 2012
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Augustine Fou

3. Inefficiencies of Exchange
Traded Media
Source: Attribution101, Jan 2014
Only 19% of ad impressionsserved
meet media plan objectives
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Augustine Fou

4. Forms of Ad Waste
Source: Ted McConnell, Brand Innovators Summit
I didn’t get what I paid for:
•
•
•
•
•
•
•
•
•
10% never get loaded into the browser – Moat
31% are never “in-view” (fraud or not) – comScore
20-80% are off demo target (depending on density) – Nielsen
29% are served to bots – Solve Media
20-40% are over frequency (bots or not) – Audience Science
5-30% are served outside your market geography – comScore
10% (est.) Dwell time < 1 second – SWAG
5% Overzealous Ad Verification – SWAG
20% Video: Autoplay, Sound off, Below the fold – TubeMogul
Net using average values and statistical overlap:
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87% wasted
Augustine Fou

5. Search Ad MPE
Search Ad Maximum Possible Effectiveness
Non-Click Fraud
(Adometry)
Global CTR
(Kenshoo)
83%
1.7%
x
1.4%
Since advertisers only pay for the clicks, this is already
highly cost effective. But the next area of focus should be
the quality of the click – what users do after they click
through to site. Counting clicks perpetuates click fraud.
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Augustine Fou

6. Digital Ad Fraud
Backgrounder
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Augustine Fou

7. Types of Ad Fraud
Impressions
Clicks
Leads
Sales
(CPM fraud)
(CPC fraud)
(CPL fraud)
(CPA fraud)
Bot or low
wage workers
fill in lead
forms with real
addresses and
get paid bounty
per lead.
Fake sites set
up to do cookie
stuffing or trick
users to click
on affiliate
links to earn rev
share.
Botnets
generate fake
pageviews
which produce
ad impression
“inventory” that
is sold into ad
exchanges.
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Bots type
search queries
to bring up
search ads and
then click on
the ads.
Augustine Fou

8. Display (CPM) Fraud
Display Ads
Video Ads
480 billion
20.1 billion
display ad impressions /mo
video ad impressions /mo
29%
40%
Source: Solve Media 2013
Source: Vindico, 2013
confirmed bot traffic
$1 - $3.50
~$10
cost per thousand
cost per thousand
$2-6 billion
$1 billion
wasted ad spend (annualized)
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estimated fake views
wasted ad spend (annualized)
Augustine Fou

9. How Display Fraud Works
http://modernbab y.com/
http://interiorcom plex.com/
Bots load page repeatedly to
generate ad impressions
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Augustine Fou

10. Click (CPC) Fraud
22.3% of search ad
spend ($16.8B in 2012)
$4B wasted
Source: ClickForensics 2006 - 2010
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Source: IAB 2012 Annual Report
Augustine Fou

11. How Search Click Fraud Works
“vacuum cleaner” keyword
Walmart search ad
Bot clicks through
to walmart.com
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Augustine Fou

12. Related Articles
Digital Ad Fraud Briefing
By: Augustine Fou December 2013
Video Ad Fraud Investigation, Part 1
By: Augustine Fou, October 2013
Ad Fraud Fighting Techniques
By: Augustine Fou October 2013
Fake YouTube Videos
By: Augustine Fou, December 2013
How Display Fraud Works
By: Augustine Fou, May 2013
Fake Linkedin Profiles
By: Augustine Fou, December 2013
How Click Fraud Works
By: Augustine Fou, November 2013
Fake Facebook Profiles
By: Augustine Fou, Dec 2013
The Magnitude of Digital Ad Fraud
By: Augustine Fou, November 2013
Fake Twitter Accounts
By: Augustine Fou, August 2013
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Augustine Fou

13. Dr. Augustine Fou – Digital Consigliere
“I advise clients on optimizing
advertising across all channels. One
main area of focus is reducing ad waste
due to fraud – fake impressions, clicks,
leads, and sales.”
FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM)
MCKINSEY CONSULTANT
CLIENT SIDE / AGENCY SIDE EXPERIENCE
PROFESSOR AND COLUMNIST
ENTREPRENEUR / SMALL BUSINESS OWNER
PHD MATERIALS SCIENCE (MIT '95) AT AGE 23
ClickZ Articles: http://bit.ly/augustine-fou-clickz
Slideshares: http://bit.ly/augustine-fou-slideshares
LinkedIn: http://linkd.in/augustinefou
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@acfou
Augustine Fou

14. APPENDIX
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Augustine Fou

15. IAB Full Year 2012
Source: IAB 2012 Annual Report
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Augustine Fou

16. 5% Ad Impressions Properly Targeted
Source: Nielsen, October 2011
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Augustine Fou