Invalid traffic on mobile devices costs US advertising industry $1.25bn a year

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According to the latest study from the Interactive Advertising Bureau (IAB), the US digital advertising industry stands to gain $8.2bn annually if it could eliminate fraud across impressions, content and malvertising. The What Is An Untrustworthy Supply Chain Costing the Digital Advertising Industry? report shows that over half of cash wasted in digital marketing comes from non-human traffic.

Having identified the three top categories of fraud, the IAB found that the industry is losing around $4.6bn a year to Invalid Traffic, with 72% of fraud happening on desktops and 28% on mobile. Interestingly, mobile video had a higher percentage of fraud (12%) than desktops (11%).

Invalid Traffic cost of impact

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Source: iab.com

Whilst the cost of impact from Invalid Traffic across mobile devices will continue to grow, levels of Invalid Traffic across mobile devices may decline due to an increase in human traffic.

IAB also identified Infringed Content to contribute $2.4bn to the overall cost of fraud. This includes stolen video programming, music and other content. Malvertising comes in at $1.1bn, with $781m of losses attributed to ad blocking and $204m associated with investigating incidences of malicious marketing.

Nick Terlizzi, Partner, Ernst & Young LLP and a member of its EY Media & Entertainment Advisory Services, says:

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“To help the industry reclaim some of the $8.2bn in costs, EY believes that improving some fundamental business practices is critical. Some basics include knowing your supply chain partners and investigating new potential relationships using address information, tax IDs, and background checks.”

The report includes advice on how to eliminate supply chain corruption and calls for an industry-wide collaboration to create a trusted supply chain under The Trustworthy Accountability Group (TAG) among others.

Wenda Harris Millard, President and COO, MediaLink, adds:

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“Fraud is a big business, not a cottage industry, so we applaud the IAB for their unwavering support and dedication to surfacing these dynamic issues to all constituencies within the advertising community. We must remain wholly focused on bringing this conversation to the forefront and developing systematic ways of eradicating this activity, enabling both publishers and marketers alike to thrive in this new age.”