Epic Bot Fraud: Up To 50% Of All Publisher Traffic Is From Fake Clicks; Billions In Ad Revenue At Risk

One of the more entertaining stories of the day has to do with the crackdown by Instagram to purge millions of fake users, in the process exposing "celebrities" who were such only thanks to the excessive purchasing of followers, but worse, once again revealing that on the margin, the biggest growth for social media services such as Instagram, Facebook, Twitter and so on, continues to be from fake accounts originating at shady clickfarm spin offs, whose only job is to collect modest fees in exchange for "following" or "liking" with non-existent accounts that will never engage with the user, or with advertisers.

Here is what the NYT said:

This week, we got a look at just how many junk accounts there really are on Instagram, the four-year-old photo and video sharing service owned by Facebook. In what has been called the “Instagram Rapture,” the company is deleting all the accounts it had previously designated as “spammy” from the follower counts of its users. And for some high-profile accounts, a lot of users have been vaporized.

No account has lost more users than Instagram’s own main account. More than 29 percent of Instagram’s followers, or 18.9 million users, disappeared from Wednesday to Thursday, according to a graphic of the top 100 Instagram accounts compiled by Zach Allia, a software developer.

Celebrities also saw millions of followers vanish. The singer Justin Bieber lost 3.5 million fans, or 15 percent of his total, according to Mr. Allia’s calculations. Kim Kardashian lost 1.3 million followers, or 5.5 percent of her fan base on the service.
It's not just the service used by people to share artistic images of their dinner: every other comparable outlet, where popularity or punditry is determined by followers, shares or likes is subject to the same rigging. A rigging so pervasive across the entire social media industry, that advertisers will have no choice but to notice, as every day they blissfully keep their heads in the sand costs them million in lost revenue.

Here is the math: according to Adweek, bot fraud, digital advertising's albatross, will suck $6.3 billion from the industry next year, according to a much anticipated report highlighting the threat from the Association of National Advertisers and WhiteOps.

Needless to say, this is important to very important for the likes of Facebook, Twitter and others, whose revenue and cashflow is entirely driven by projections of future ad spend by their clients, ad spend which will implode when after several years of being ripped off by robotic, inert eyeballs, the ad-spend budgeters decide they have had enough of being ripped off by bot farms, and put social media spending on hiatus until the social media outlets fix this issue once and for all, a fix which in practical terms is impossible.

From AdWeek:

Bot fraud is among the digital ad demons the industry has been trying to excise. The report outlines some of the risks associated with programmatic ad channels, but there are technology-minded players who feel such automated advertising networks could eventually solve the fraud issue.

Industry group Interactive Advertising Bureau recently set up a special task force called the Trustworthy Accountability Group to combat fraud. "Research like this is critical in building a program that will excise this type of criminal activity out of the supply chain," Linda Woolley, TAG's CEO said in a statement today. "Fraudulent traffic, as well as malware and IP piracy, are obstacles to the growth of the digital economy, and TAG is committed to eliminating them."
Here is the stunning scope of the problem, per analysts at SunTrust Robinson Humphreys:

Up to 50% of publisher traffic (!) is bot activity, just fake clicks from automated computing programs.
Bots account for 11 percent of display ad views and 23 percent of video ads.
Between 3 percent and 31 percent of programmatically bought ad
impressions were found to be from bots, with an average of 17 percent.
More than half of traffic from third parties claiming to lift publishers' traffic numbers comes from bots.
Digital advertising will take in $43.8 billion next year, and $6.3 billion will be based on the fraudulent activity.
Even the top publishers setting up private advertising exchanges to cater to elite brands are unsafe. Ten percent of ad impressions from such premium programmatic campaigns are from bots.
Bots are corrupting retargeted ads because of more sophisticated user Web histories than actual users, attracting cookie-based ads. Nineteen percent of retargeted ads, the ads that are directed at an intended audience based on previous Web activity, are from bots.
The ball is in your court, dear advertisers.