Hacking highlights risks for digital advertisers

By Glen Korstrom

Digital advertising’s effectiveness at targeting messages to consumers is likely to drive continued expansion in the sector despite online marketing’s vulnerability to manipulation and fraud, say industry insiders.

Deception is a risk because many forms of digital advertising rely on software code, or algorithms, that can be manipulated by hackers or misinterpreted by large media companies.

In November, Facebook admitted that it overcounted how many people were exposed to marketers’ posts because the social media giant was not accounting for repeat visitors. In December, Twitter began issuing refunds to some advertisers after the microblogging site admitted that it had inflated some advertising metrics.

The biggest digital advertising setback in December, however, was reportedly the biggest advertising fraud ever committed, in which Russian hackers allegedly set up thousands of web domains to impersonate high-traffic sites, attracted advertising placements that were determined by online auctions and then had bots “view” video advertising on these sites to artificially inflate and distort the length of time potential customers were exposed to the ads.

That scam allegedly provided the hackers with up to US$5 million per day in stolen advertising revenue, according to Forbes and the New York Times.