IAB Study: Digital Fraud and Piracy Costs $8.2 Billion Annually

On December 1, 2015, the Interactive Advertising Bureau (IAB) released a new study entitled “What Is an Untrustworthy Supply Chain Costing the U.S. Digital Advertising Industry?” The study found that advertising fraud, piracy websites, and “malvertising” are costing the U.S. digital marketing, advertising, and media industry $8.2 billion annually.

Of the $8.2 billion annually, the losses are split into three categories:

• Advertisers lose $4.4 billion from invalid traffic, which induces systems to generate ad-related actions for purposes other than support of the delivery of the right ad at the right time to the right user.

• Infringed content represents a $2.4 billion loss for the digital marketing and media industry. Two billion dollars is lost revenue to content providers and $456 million is lost revenue to potential advertisers.

• The remaining $1.4 billion in losses come from “malvertising” (or malicious advertising) and the cost of fighting all these illegal activities. The $1.4 billion includes lost revenue from malware-related ad blocking ($781 million), lost revenue from search engine blacklisting when a website is impacted by malware ($57 million), and the cost of investigating illegal activities and documenting direct incidents ($423 million).

It is necessary to diminish ad-supported piracy and advertising fraud to help ensure that content providers, artists, innovators, and marketers can earn a return on their creative works – thereby incentivizing more innovation, investment, and economic growth.