Online ad revenue at risk in war on 'click fraud'

Mon Mar 23, 2015 7:07am EDT
 
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By Jennifer Saba and Jim Finkle

NEW YORK/BOSTON (Reuters) - A growing number of U.S. companies, including MillerCoors and AIG, are stepping up the battle against online ad fraud by demanding proof that their ads have been seen by real people instead of computers hijacked by cybercriminals.

Spurred by a warning in December by the Association of National Advertisers (ANA) that businesses are losing $6.3 billion a year to so-called "click fraud," these companies now stipulate in advertising contracts that they will only pay for online ads when given proof that humans clicked on them.

"We don't want to be paying for non-human traffic," said Mark Clowes, global head of advertising at American International Group Inc (AIG.N: Quote), the largest commercial insurer in the country.

In a typical click fraud scheme, a crook infects many computers with malicious software, and directs the machines - called bots - to visit a webpage, click on an ad or watch a video. The fake traffic fools a marketer into thinking the site is popular, so it pays to place ads and links on the site.

A study conducted by cybersecurity firm White Ops for the ANA found that bots viewed almost one-fourth of online video ads and 11 percent of display ads. The study, published in December, involved 36 participants including AIG and MillerCoors SAB.L TAP.N.

    While click fraud has been going on for years, the ANA report has galvanized advertisers to fight back, ad executives said. What had been a trickle of references in contracts is becoming a flood. 

"We've written into all of our contracts that our clients insist on at least 95 percent human traffic and anything less requires a make good or credit," said Barry Lowenthal, president of The Media Kitchen, an ad buying agency whose clients include Victoria's Secret Pink.

"By the end of 2015 we expect that every major agency and every major advertiser will include these kinds of clauses in their terms and conditions."   Continued...

 
The AIG logo is seen at its building in New York's financial district March 19, 2015. REUTERS/Brendan McDermid