SYDNEY: Digital ad fraud is rife in Australia and could be costing the industry up to $560m a year according to leading executives.

An Ad Tech meeting in Sydney, reported by Ad News, heard that digital ad fraud was widespread, with estimates ranging between 6% and 14% of the total market.

Sam Smith, head of TubeMogul Australia, stated that there was "inventory that we know is 100% fraud that is traded in this market" and that this activity was the biggest threat the online advertising industry faced.

A major issue for him was the fact that clients continued to trade in traffic they knew to be fake. "We need to get more clients to investigate," he argued. "We have to get better as an industry at getting inventory out of the system when we know it is fraudulent."

But it was not just the clients that were a problem. Stephen Dolan, head of Integral Ad Science Asia Pacific, reported that publishers had been known to collude with fraudsters. He cited an example from the wider Asian market where a botnet operator had worked with a publisher, writing a script that subverted a $5.5m campaign for a major advertiser.

Some 95% of traffic was found to be bots. "And it was the client that figured it out and bought in the investigators and auditors – and went after the agencies first."

Dolan added that ad fraud was a logical business opportunity. "If you were thinking about a business to get into with a low cost base that needed a couple of engineers and fairly low overheads, ad fraud would rank highly on the list," he observed.

As well as bots, ad stacking and URL masking were highlighted as major challenges. Mitch Waters, head of AdapTV, was especially concerned about the last of these, describing syndication of iframes – used to display a web page within a web page – as the "scariest" thing he'd seen.

Dubious URLs were able to hide under legitimate ones and so appear in ad exchanges and demand-side platforms. "That can happen every day without people really taking any notice, because it is not this 'big thing' that gets blown out of the water," he said, "but it is my biggest fear."

Data sourced from Ad News; additional content by Warc staff