Is ad-fraud syphoning your marketing budget? Interview with Mick O’Brien

Online affiliate marketing is one of the most valuable growth areas for advertisers, but a recent report from CHEQ states that affiliate marketing fraud will cost advertisers an astonishing $1.4 billion worldwide in 2020.

We recently caught up with Mick O’Brien, the managing director (AUNZ) of global cybersecurity company CHEQ, about ad fraud and why it is potentially siphoning your advertising budget. 

Mick O'BrienAccording to O’Brien, Australian brands and advertisers are currently wasting a “significant amount of money” on paid campaigns that are being intercepted by invalid clicks, fraudulent ad impressions and other forms of fake bot traffic.

With advertising budgets slashed, post COVID-19 marketers are already navigating difficult terrain and can’t afford to waste budget on fake clicks or leads that go nowhere. With the internet itself being made up of around “40 percent of bot traffic”, O’Brien says that there is pretty low awareness in the industry around click fraud and why it exists.

Having emerged from Israel’s ‘Unit 8200’ – an elite intelligence division within the Israel military with a focus on cyber warfare – the founders of CHEQ are particularly well-placed to understand the sophistication of cyber attacks in the adtech space.

The issue is twofold, with some fraud categorised under general invalid traffic in the form of web crawlers and bots, and other fraud being more sophisticated. Some web crawlers are trained to fill out forms and steal credit card information and can even go back at a later date to do chargebacks.

“When you start looking at sophisticated invalid traffic, that’s where it becomes much more complex – where the bot is really trying to mask itself as a human,” says O’Brien.

“There’s all this sophistication that’s happening today, which means that across the entire pay-per-click channels you have an ecosystem of fraudsters that are generating and taking from online advertising budgets.”

When it comes to sophisticated click fraud, companies like CHEQ need to employ techniques that understand context and work in real time to mitigate fraud.

“That’s where the cyber security techniques are coming in, which you would apply in general cyber crime – where your computer might be under attack and cyber security companies are applying these techniques to understand where it is coming from. Is it data centre location? We’re using these techniques to try to understand: is it a bot or is it a human? Once we do that, we can start removing them from campaigns.”

An area of focus for O’Brien is affiliate marketing. Research from IAB Australia says that almost a third of brands and agencies currently spend over 10 percent of their marketing budgets on affiliate marketing, and this is only expected to grow.

O’Brien believes that the growth in the affiliate marketing space makes a lot of sense, because it allows marketers to pay on a performance basis when budgets are under pressure due to COVID-19. While he believes that fraud has been “addressed quite well in the display and programmatic space”, we still have a way to go in regards to affiliate marketing.

No doubt many marketers have had the experience of advertising disparities – where clicks don’t match up with conversions – but most do not have the knowledge needed to identify the fraud that is occurring.

“We saw around 9 percent in affiliate marketing that was going towards fraud and a large portion of that is coming from what we classify as ‘cookie stuffing’,” says O’Brien.

So, what is cooking stuffing?

Cookie stuffing can occur when a web user unknowingly receives third-party cookies from a website without their knowledge or permission, meaning that if the user goes on to subsequently visit that site at a later date and make a purchase, the affiliate gains a credit, creating a wrongful attribution.

Another reason that O’Brien is concerned about affiliate marketing is the cycle of fraud and lost revenue that can occur through remarketing.

“Typically of marketers budgets, you have affiliate marketing, you have normal pay-per-click marketing and then you have retargeting or remarketing – where you are retargeting your own audience, which might include bot traffic. So the problem is exponential in that not only have I just received invalid traffic to my site, I’m now remarketing more dollars, so it could be 20 percent of my audience that are bots and are not going to do anything other than cause chaos.”

One of the most important takeaways from this research, O’Brien says, is being aware of the different types of fraud that exist within the affiliate marketing space. 

“If we’re able to help educate marketers, they’re able to have better conversations with the affiliate networks that they’re buying off and be aware of these issues.”

O’Brien’s hope for the future of the industry?

“Addressing ad fraud across pay-per-click channels and being able to help with affiliate marketing channels can only lead to better outcomes for marketers and for publishers. Helping to clean the traffic because we’re talking billions of dollars that have been siphoned off and lost to click fraud and invalid traffic in 2020.”

Mick O’Brien is the managing director AUNZ at CHEQ.

Photo by Jefferson Santos on Unsplash.

Jasmine Giuliani
BY Jasmine Giuliani ON 11 September 2020
Jasmine Giuliani is the Editor of MarketingMag