File Photo: A patron uses his laptop while having an espresso at the Silver lake location of Intelligentsia Coffee and Tea in the Silver Lake area of Los Angeles October 19, 2010. REUTERS/Mario Anzuoni
The damage caused by advertising fraud on the Internet amounts to more than 10bil yen (RM395.50mil) a year, according to a survey compiled by a group including advertising-related agencies.
The practice of ad fraud boosts the reported number of page views for ads distributed on the Internet even though they are not actually seen by people.
For the first time, data concerning ad fraud in Japan has become public.
Advertisers, on the other hand, have called attention to the need to establish a monitoring mechanism as the fraud could quite possibly lower the credibility of internet advertising, which has seen a sharp increase in use.
Ads matched to users
One way of distributing online ads is for advertisers to decide where to distribute their ads. However, targeted online ads that seek to enhance the performance of the advertisements have become mainstream. Under this system, ads are automatically displayed on the smartphones or computers of people whose preferences match advertisers settings, such as men in their 30s or people interested in cars.
This type of advertising is helpful in matching ads to the characteristics and preferences of particular online users. At the same time, advertisers are not able to know beforehand which websites their ads will be placed on and it is difficult for advertisers to check whether their ads have been distributed as they expected. These are some of the reasons why ad fraud has become rampant.
The survey was conducted on such targeted advertising that had been distributed to about 900,000 websites from 2015 to 2016. By analysing the data, how those ads were displayed and whether they were clicked on by viewers was verified. The survey was jointly conducted by Momentum, a Tokyo-based company that offers measures against ad fraud, and five distributors of online ads.
According to the survey, a total of about 670 million ads were displayed on the 900,000 websites. Of them, about 11 million ads were believed to not have been seen by people. The fraudulent ads accounted for about 1.7% of the total. For a certain online ad distributor, the rate of fraud reached about 5%.
Estimated 10.5 bil yen loss
According to advertising giant Dentsu Inc, a total of 919.4bil yen (RM36.36bil) was spent on online advertising in Japan in 2015. Of that, the expenditure for such targeted advertising was 622.6bil yen (RM24.62bil), an increase of 112bil yen (RM4.42bil) from a year earlier.
If ad fraud accounted for at least 1.7% of such ads, the loss to advertisers would be estimated at 10.5bil yen (RM415.30bil) for fraudulent ads that did not reach viewers as expected.
According to the survey, the number of clicks on displayed ads was about 760,000. However, about 5% of the clicks were suspected to be fraudulent. Some of the clicks were made automatically with a malicious computer program in which a click was made 0.1 seconds after the ad was displayed.
It is believed that some website operators carrying online ads are conducting ad fraud because they can receive more advertising revenue by increasing the frequency of ad displays and the number of clicks on the ads. There is a fear that losses from ad fraud will increase further.
Shinji Suzuki, a senior official of the Japan Advertisers Association, said, "Both newspapers and television have mechanisms to monitor the effects of advertising, such as through audience ratings. For Internet advertising, it is also necessary to establish mechanisms to monitor the effects and the conditions of distribution."
Ad fraud
Fraudulent practices in which ads are not viewed as intended and therefore are worthless. In Europe and the United States, ad fraud has become a social issue. — ANN
