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Businesses could lose $16.4 billion to online advertising fraud in 2017: Report

New figures released today suggest that ad fraud will cost brands $16.4 billion globally this year, and that nearly 20 percent of total digital ad spend was wasted in 2016.

So-called invalid traffic, where bots rather than humans view or click on adverts on websites, was estimated to cost advertisers $12.5 billion in 2016 by ad verification company Adloox.

However, today's figures from agency group The&Partnership estimates the cost will increase by almost $4 billion this year. It worked with Adloox to look at 200 billion "bid requests," a method by which online publishers sell advertising inventory, across 2016. It also examined ad "calls", when a publisher automatically contacts its ad server to "serve" or show an ad on its website, and ad impressions – the number of times an ad is displayed or viewed on a web page.

Andrew Brookes | Getty Images

The "viewability" of online advertising, a measurement relating to whether it has been seen, or clicked on, by a person, is a major concern for brands. In January, Procter and Gamble's chief marketing officer Marc Pritchard called for the media supply chain, which is involved with the placement of adverts online, to reform, telling a meeting of internet leaders:

"We serve ads to consumers through a non-transparent media supply chain with spotty compliance to common standards, unreliable measurement, hidden rebates and new inventions like bot and methbot fraud."

Online advertising campaigns bought using automated, or programmatic, technology are at higher risk of fraud, according to The&Partnership's research. It calculates that 29 percent of the $27 billion spent on this kind of advertising globally in 2016 was on invalid traffic, equivalent to $7.8 billion.

Meanwhile, 12 percent of the online adverts bought directly from publishers, and not via programmatic methods, suffered from ad fraud, equating to $4.65 billion.

Marketing departments are reviewing almost $3 billion-worth of contracts with programmatic media suppliers, according to research from the World Federation of Advertisers published in January 2016.

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