Ad fraud is stealing billions from the US media industry

Summary:As much as $18 billion a year could be lost to advertising fraud...why isn't the media industry up in arms?

Suzanne Vranica at the Wall Street Journal reported that between $6 billion and $18 billion is stolen every year in the US  because of ad fraud.  The Secret About Online Ad Traffic: One-Third Is Bogus - WSJ.com

The fraudsters erect sites with phony traffic and collect payments from advertisers through the middlemen who aggregate space across many sites and resell the space for most Web publishers. 

Advertising is by far the largest revenue source for the news industry, reports Pew in its most recent State of The Media report released this week. It accounts for 69% of total revenues. If some of the lost billions in ad fraud were redirected here, it would make a massive difference.

Look at the $250m each pledged by Jeff Bezos and Pierre Omidyar for their media ventures, and how those relatively small sums have raised optimism about the future of journalism. While at least $6 billion a year is lost to advertising fraud in the US alone. What if one half of that money flowed into legitimate news sites? It would have an extraordinary effect on the industry. 

Low quality content = low performing advertising

Advertisers do better on trusted media with high quality content.  That’s why they’ll pay more for top newspapers and magazines.It’s in their interest to support a healthy, and growing media industry that’s producing high quality media content.

I’m shocked that the media industry hasn’t noticed this huge loss of revenues and isn’t outraged by the fraud, which is coming out of their pockets.

And I’m shocked that the journalism publications aren’t writing about this issue because it directly affects their profession. Follow the money and you’ll get the story yet journalism in the US seems inept with numbers especially numbers that directly relate to revenues that support the business of their work. 

Trust in  media…

There should be a trusted media ad network that only places ads on legitimate professional media sites. It’s not difficult to do. There’s only a limited number of legitimate online publications that have a history of consistent publishing and professional staff; it would not take much to check and verify each one.

The large media companies should group themselves and include smaller, legitimate sites in a “Trusted Media Ad Network - Where your ads are seen by real people.” It would have great auditing technologies, setting a standard that others would be forced to follow — further eliminating fraud and capturing more ad money for legitimate sites.

It would allow the newspaper ad group to sell large swathes of media across many regions. Pew Research reports that newspapers can’t compete against Google, or Facebook for advertising because they offer larger geographies. The Trusted Media Ad Network would level the playing field.

But does the ad industry want to admit that programmatic ad buying, and lack of audit technologies, have caused a multi-billion a year fraud problem? Do media buyers want to admit that they’ve been throwing away ad money without accounting for it properly? 

Brand loyalty…

There’s an opportunity here for large brands to band together and pledge only to support professional media sites with their advertising budgets. It’ll save them from wasting huge sums of money and at the same time, it’ll raise the performance of their ads because more ad money will be available to increase the quality of content on real media sites.

It’ll create a virtuous cycle and help towards building a healthy media industry.

It’s a win for society, too. We need a professional media class to watch over the powerful and the powerless.

Topics: Emerging Tech

About

In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.Tom arrived in San Francisco in 1984, and has covered US technology markets for leadi... Full Bio

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