#Digitalskeptic: Malware and Bots Are Murdering Web Advertising

NEW YORK (MainStreet) -- Ari Jacoby is getting darn worn out of fighting the Internet advertising zombies all by his lonesome.

"Fifty percent of all ads are not seen by humans. And 50% of that traffic is nothing more than bots," Jacoby practically yelled at me over the phone. "It's insane."

The man's frustration is understandable. He's founder of Solve Media, a 43-employee advertising security firm that polices the Web for more than 7,000 advertisers and publishers checking that the people using Web ads really are people -- not some automated bot, malware or other sort of Web software zombie.

"That all means that only 25 some-odd cents of any ad dollar is going anywhere near a living person," he said. "Considering that bots cannot eat snack cakes and cannot drive cars off dealer lots, they don't add to the bottom line."

What's truly freakish about Jacoby's tales of Web advertising ghosts and ghouls is how blithe the Internet continues to be about advertising the automated threats Jacoby studies. He very articulately points out that even after 15 years of trying, the Web takes an almost grisly pride in caring not one bit about the automated criminal element in Web marketing.

"Shortly after organic SEO became a recognized marketing channel, problems with click validity arose," Jessie Stricchiola, founder of San Francisco-based search engine optimization firm Alchemist Media wrote in a company blog post.

Stricchiola goes on to say that click and automated ad fraud is in fact not only continual, but can spike in certain product types, verticals, keywords and bid prices.

There is "increasing evidence," Stricchiola said, "that the higher the bid price, the more rampant the click fraud."

Either way, Jacoby said, Web publishers and marketers simply covered the cost of non-human and fraudulent traffic. "Basically, it was all priced into the cost of a click," Jacoby said.

Brand advertising gets zombied
The laissez-faire attitude toward Web zombies began to change about two years ago when more sophisticated, so-called brand advertising dollars began to flow online. These types of brand advertisers are usually top-end marketers, such as carmakers and food companies. And since such ads are pricier investments for these advertisers, they become much fussier about where ads run, how they are viewed. And how well they perform.

Jacoby says that the chief marketing officers for these brand advertisers began to dig into the Web data spinning from emerging brand Web media purchases -- and noticed a significant problem with shrinkage.

"They wanted to know 'Where was all my traffic,'" Jacoby said.

This interest sparked a round of industry disclosures about the deep and stubborn problem of sophisticated advertising malware. In May 2012, it fell to Philippe Beaudette, director for community advocacy at San Francisco's Wikimedia Foundation -- which operates Wikipedia -- to 'fess up publicly that brand advertising fraud was a serious issue for the online encyclopedia.

"If you're seeing advertisements for a for-profit industry," he wrote, "then your Web browser has likely been infected with malware."

The feeble state of Web advertising security is also not limited to the traditional Web. Lookout, the San Francisco online security firm, reported in August that not only are sophisticated fraudulent mobile ads routinely delivered to Android mobile devices; they are delivered by a series of "easy-bake" automated Web ad fraud kits sold to independent fraudsters by a large, centralized malware franchiser branded as Malware Headquarters.

"Like any other large business, Malware Headquarters provides customer support, posts regular newsletters, reports downtime or new features," said the Lookout report. "And even run regular contests to keep their affiliates engaged and motivated."

The $9.3 billion problem
What really sends Jacoby over the edge is the pounds of flesh that advertising zombies will eat out of the Web marketing industry: He estimates that a cool $9.3 billion dollars will be stolen this year. And that almost 46% of all ad impressions will be from bots.

"It would be incomprehensible to have these kinds of metrics in any other industry," Jacoby said. But such is the sad state modern Web advertising.

To be fair, Jacoby makes the case that his firm and others are creating the tools advertisers can use to ward off the Web's advertising undead. And certainly there are impressive features in the products sold by Solve Media. But at least to these tired eyes, something is terribly wrong with a Web marketing business that needs a decade and a half to figure that its products are deeply flawed -- and probably no more secure or efficient than its analog predecessors.

Pretending otherwise not only is the biggest mistake Web marketers can make -- it only brings the coming Zombie web ad apocalypse closer to hand.

Be afraid, advertisers. Be very afraid.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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