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I think a clearer way to put it is this: The 23% number was measured across networks displaying ads on many sites. Some of those sites employ botnets to gener

I think a clearer way to put it is this: The 23% number was measured across networks displaying ads on many sites. Some of those sites employ botnets to generate fake views, giving them much more than 23% fraudulent views, while other sites that don't do such things have 0% fraudulent views. The amount the advertiser is willing to pay is presumably set by their experience across the whole network, so if they were willing to pay $X per ad without fraud, they will pay 0.77 * $X due to fraud, which means that the honest websites get less than they deserve (based on the value they deliver) while the fraudulent websites get more than they deserve. So, the fraudulent websites are stealing from the honest ones, not stealing from the advertisers.

murbard2 12y ago
Not knowing the rate of ad fraud does make things worse, but is not necessary to explain why it's a problem. Even if the ad fraud rate was absolutely uniform across all websites, there would be a deadweight loss. The ad fraudsters are extracting money from someone.
- true_religion 12y ago
  If the ad fraud rate were uniform across all websites, then advertisers would simply pay less CPM because its less converting traffic. If website A is all fraud, and website B is 0% fraud. Then on the same network, you'd have a 50% fraud rate, and website A would be paid money it doesn't deserve (as it deserves nothing for its 100% fraud traffic). Fraudsters are being subsidized by legitimate traffic.
  - murbard2 12y ago
    No. The price is determined by supply and demand. So you're saying demand would fall - much as demand for a good falls when you impose a sales tax. There would be deadweight loss from the lack of traffic and advertisers would still end up diverting funds towards adbots.
- unreal37 12y ago
  The money comes out of the pockets of publishers. Collectively, they are making less than they should be for a pageview or a click. The advertisers have a budget for ads, and they will only pay that. At some point, when the ad is not effective and profitable, they will redirect that same ad money somewhere else. It's the Internet publishers that are losing.
  - murbard2 12y ago
    They're both losing, the advertiser's loss is opportunity cost.
fleitz 12y ago
Not really, many people price bids according to CPA, with a well managed campaign a click fraud site would receive a bid X% lower.

murbard2 12y ago

Not knowing the rate of ad fraud does make things worse, but is not necessary to explain why it's a problem. Even if the ad fraud rate was absolutely uniform across all websites, there would be a deadweight loss. The ad fraudsters are extracting money from someone.

true_religion 12y ago
If the ad fraud rate were uniform across all websites, then advertisers would simply pay less CPM because its less converting traffic. If website A is all fraud, and website B is 0% fraud. Then on the same network, you'd have a 50% fraud rate, and website A would be paid money it doesn't deserve (as it deserves nothing for its 100% fraud traffic). Fraudsters are being subsidized by legitimate traffic.
- murbard2 12y ago
  No. The price is determined by supply and demand. So you're saying demand would fall - much as demand for a good falls when you impose a sales tax. There would be deadweight loss from the lack of traffic and advertisers would still end up diverting funds towards adbots.
unreal37 12y ago
The money comes out of the pockets of publishers. Collectively, they are making less than they should be for a pageview or a click. The advertisers have a budget for ads, and they will only pay that. At some point, when the ad is not effective and profitable, they will redirect that same ad money somewhere else. It's the Internet publishers that are losing.
- murbard2 12y ago
  They're both losing, the advertiser's loss is opportunity cost.

fleitz 12y ago

Not really, many people price bids according to CPA, with a well managed campaign a click fraud site would receive a bid X% lower.