I recently read an article in the Wall Street Journaldiscussing the problem of fraud in online advertising. It’s a practice I have known about for a while, but the article really highlighted the impact it can have on companies, especially those that rely heavily on digital marketing.

There are various forms of online ad fraud, but the one causing firms headaches is the practice of using bots to boost website traffic. Scammers exploit a loophole in the pay-per-click advertising system in that marketers pay out on ad clicks regardless of whether the clicker is human or not.

So, by creating websites loaded with ads, then using a bot to click those ads, the website owner can rake in the dollars for minimum effort. In fact, the WSJ article reveals that as much as 36% of web traffic is fake, and $6 billion was made through bot traffic last year in the US alone. That’s a $6 billion marketing budget wasted.  

For advertisers, simple supply and demand theory (albeit false demand) means that the cost of online advertising is being driven ever upwards. And since there are currently no standards for determining which clicks are real, the problem is set to get worse.

Online advertising becomes more important to companies as consumers continue to increase their internet use. But for small businesses, start-ups and online-only firms, diverting more funds to an online marketing budget will surely prove unsustainable.

What will happen if the cost of online advertising continues to spiral upwards?