Ad Fraud Economics with Craig Silverman

Advertising fraud steals billions of dollars every year.

BuzzFeed reporter Craig Silverman reports on advertising fraud and its impact on the Internet. In one investigation, Craig uncovered a mobile advertising fraud scheme in which four people stole millions of dollars (perhaps as much as $75 million or even $750 million) by serving advertisements to automated users on mobile apps.

The scheme worked as follows:

1. A shell company called “We Purchase Apps” would buy legitimate apps from app developers
2. The new owners of the legitimate app would record the behavior of the users on those apps
3. The recorded behavior was used to train models of fake users who could replicate that behavior
4. The fake user models were spun up to use the apps, where they would view ads that would automatically be served to them
5. The owners of the apps would earn the money generated by displaying ads in these apps

This scheme was easy to pull off. It did not require much sophistication in terms of engineering or business skills. If a group of four people can generate tens of millions of dollars, how much ill-gotten capital is being generated by large corporations that are deeply involved in the advertising market?

Craig’s article went viral, and he has followed it up with other pieces about ad networks, fraud investigations by Google, and the potential for mobile apps to be used for large scale surveillance of Americans by the Chinese.

Craig is the most dedicated reporter covering advertising fraud today. His work is invaluable because he is asking difficult questions about the economics of our Internet. As we discuss in the episode, there is currently no effective automated means of detecting a bot from a human on the internet.

We have also discussed this in detail on previous episodes about ad fraud, the advertising industry, advertising analytics, and the techniques of ad fraud.

Ad fraud is not the fault of any one party. It is an emergent result of the way that our Internet is set up. It is as hard to imagine a world without advertising fraud as it is to imagine a world without email spam.

Transcript

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