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Online Ad Fraud More Common as Landscape Changes During COVID-19 Crisis

3 min read
Apr 2, 2020
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Clean.io, a company that offers software to prevent ad fraud, is reporting a huge increase in online ad fraud, from scams and fake ads to more sophisticated tricks to redirect traffic. Analysts at clean.io started seeing spikes in fraudulent activity on March 11. By the end of the month, the spikes had reached 50 times the levels they saw in early March. Before this, experts estimated losses from online ad fraud to be in the billions of dollars, possibly even in the tens of billions. 

This comes at a bad time for ad exchanges and publishers alike. Many big advertisers have reduced ad spending of all kinds and reallocated those funds. Anheuser-Busch, for example, is in "non-advertising mode," according to comments from its CMO in a Digiday interview published today.

Smaller advertisers are in even worse shape. They have smaller budgets, but together represent a large amount of ad spending, especially online. Shop closures, social distancing, and other changes in consumer behavior have hit those budgets hard. They are struggling to pay employees or to stay open at all. Advertising budgets are understandably not at the top of their concerns.

Ad publishers depend on this revenue to survive. To give a sense of scale, Axios reported that the largest advertising platforms, Google and Facebook, could lose $28.6 billion and $15.7 billion of ad revenue, respectively. Compare this to 2019 revenue, from all sources, of around $160 billion for Google and $70 billion for Facebook. Nobody is worried about either tech giant collapsing, but the same cannot be said of smaller players in the market, such as digital ad exchanges, news media, and online media portals.

The irony is that internet traffic is higher than ever. Traffic is up even more for news media covering the COVID-19 pandemic. But advertisers don't want their ads next to stories about death and destruction, so they have added coronavirus-related keywords to advertising blocklists. Other popular sources of traffic in these times of isolation and social distancing, such as Netflix and Disney Plus, offer little to no advertising. The result is a lack of demand and falling prices for ad space and keywords.

Clean.io notes that high traffic and low ad prices are a "perfect storm" leading to higher rates of ad fraud. The additional losses could be hard to take. Many are urging large companies to keep money flowing into advertising if they can, just to keep publishers and exchanges alive. News media are asking governments for targeted stimulus to keep them and their employees going. Without support, they argue that only the largest ad platforms and media companies will be left after the crisis, a situation that would hurt everyone, advertisers included.

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