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Rebecca Zisser / Axios

A new study estimates that $12.48 billion of ad spending in 2016 was fraud, or was the result in invalid traffic, which is double the earlier $7.2 billion industry estimate. This means that almost 20% of the $66 billion spent last year on digital ads globally may have been wasted on ads that were mostly either

  • Botnet fraud: never actually viewed by humans
  • Adware fraud: not properly loaded for a person to accurately view them

Why this matters: The amount of money lost to digital ad fraud is greater than the total digital advertising revenue for all of the 80 premium publishers of Digital Content Next, a trade group which includes the AP, NBC, NPR, PBS, Turner and many more, according to Jason Kint, the group's president.

  • Digital was supposed to solve this problem: Dan Jaffe, EVP of the Association of National Advertisers, tells Axios: "We thought in the digital age we'd know exactly where our spending went, but because digital and mobile are growing faster than any other industry, the regulatory and foundational steps that you see in more mature media — like good metrics reporting — didn't necessarily happen immediately. Now we're making major efforts to catch up."
  • Increased automation magnifies the issue: The report finds that 29% of programmatic ads (ads sold through an automated process) resulted in invalid traffic, as opposed to 12% of ads sold directly by humans. As the industry becomes more automated, comScore foresees the problem becoming worse "due to the lack of transparency in the ecosystem." eMarketer predicts that by 2018, over 80% of digital display ads will be sold programmatically, up 37% from 2014.

What's next? The report suggests that the amount of fraudulent ad spend will rise to $16.4 billion of the estimated $82 billion digital ad dollars spent globally this year. Experts suggest that the solution relies on regulation of the economic incentives that spur fraud, especially when it comes to bots. "The solution to ad fraud, like may other issues, is economic rather than technical," Kint says. "Advertisers, and importantly their agencies, need to know where their advertising and their investments are actually going."

The study was published by The&Partnership, a holding group under the umbrella of WPP, one of the world's largest ad agencies, m/six, an agency within the Group M ad agency conglomerate and a third-party ad audit vendor called Adloox.

Go deeper

2 hours ago - Health

FDA authorizes mix-and-match for COVID booster shots

Photo: Francine Orr/Los Angeles Times via Getty Images

The Food and Drugs Administration (FDA) on Wednesday gave its approval for Americans to get booster shots that are different from the COVID vaccine they initially received.

Why it matters: The recommendation from the FDA, which also authorized booster shots for people who received Moderna and Johnson & Johnson vaccines on Wednesday, paves the way for an expansion of booster shots.

GOP congressman forfeits committee seats after indictment

Rep. Jeff Fortenberry. Photo: Al Drago/Bloomberg via Getty Images

Rep. Jeff Fortenberry (R-Neb.) on Wednesday stepped down from his committee assignments after being indicted for lying to federal investigators amid a probe into illegal campaign donations.

What they're saying: In a letter to House Speaker Nancy Pelosi, Fortenberry said he is "grateful for the outpouring of support from my friends and colleagues as we work against the injustice confronting me."

Rahm Emanuel questioned on murder of Laquan McDonald in confirmation hearing

Rahm Emanuel during a Senate Foreign Relations Committee confirmation hearing on Oct. 20. Photo: Sarah Silbiger/Bloomberg via Getty Images

Former Chicago Mayor Rahm Emanuel spoke about the murder of Laquan McDonald during his Senate confirmation hearing Wednesday to become the U.S. ambassador to Japan, saying that "there's not a day or a week that has gone by in the last seven years I haven't thought about this."

Catch up quick: McDonald was a Black teenager who was fatally shot 16 times by Chicago police during Emanuel's tenure as the city's mayor. The 2014 shooting triggered massive protests, both because of its nature and the fact that the officers' body-cam footage was concealed for years.

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