The digital ad industry stands to gain $8.2 billion a year by eliminating fraud and issues with the Internet supply chain, a new study from the Interactive Advertising Bureau (IAB) and EY finds.
According to the study, fraudulent impressions, infringed content, and "malvertising" cost the industry that much annually. The solution, it posits, is to fix "badly designed business processes and repair obvious flaws" in the online advertising supply chain.
The research, conducted in collaboration with MediaLink, found that over half of the money wasted in the digital advertising ecosystem stems from "non-human traffic". In other words, it's coming from fake ad impressions that aren't being generated by real advertisers or received by real consumers. Eliminating just this would save $4 billion a year, the findings suggest.
“No other report in the market today captures the full range and scope of the illicit activities identified and quantified in this study,” says Sherrill Mane, Senior Vice President, Research, Analytics, and Measurement, IAB. “Its findings should mobilize the entire ecosystem to rally around collective solutions that will protect businesses and consumers.”
The study identifies three main supply chain costs: invalid traffic, infringed content, and malvertising-related activities. The invalid traffic as mentioned prior is split into 72% desktop traffic and 28% mobile traffic.
Infringed content, such as stolen video programming, music, and other editorial content that is illegally distributed, accounts for $2.4 billion in lost revenue.
"Two billion dollars of that total is based on an estimate of approximately 21 million U.S. consumers’ willingness to spend $8 per month on what is currently classified as infringed content," the researchers say. "The additional $456 million represents the loss of potential advertising dollars. The findings show that unless the industry takes significant steps, there is a likelihood that the number of people consuming stolen content on digital platforms will increase."
Malvertising-related activities account for about $1.1 billion with $781 million of that coming from losses being generated from ad blocking instigated by security/malware concerns. $204 million comes from costs related to investigating, remediating, and documenting incidents of malicious ads.
You can get a look at the full report here.
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