Last year, Aleksandr Zhukov went on trial and stood accused of defrauding US companies, including The New York Times and pet care brand Purina, out of millions of dollars. According to the court, the then 41-year-old set up a company that promised to show online adverts to humans, but he instead placed those adverts on an elaborate network of fake websites where they were seen only by bots.
“There was nothing to conceal,” he said on the stand in May 2021. “We were making a business. We are not making a scam or fraud.”
But if you’re delivering an inauthentic and artificial outcome is it really business? This was the stance the federal courthouse in Brooklyn took and Zhukov was therefore sentenced to 10 years in prison.
By extraditing the Russian cybercriminal from Bulgaria, the US justice system sent a message that this type of crime has consequences. Yet Zhukov’s testimony hints at an uncomfortable truth: The online economy is willing to look the other way while bots distort it and line the pockets of cybercriminals.
The reality is that bots are polluting the internet. Fake online users make up as much as 40 percent of all web traffic, according to some estimates, which is crazy. Researchers specialising in advertising fraud describe a Kafkaesque system where businesses pay millions to advertise to bots and research their “opinions.” Yet the digital advertising industry has grown so accustomed to working with inflated numbers that few are willing to unmask the fake clicks powering large swathes of the online economy. As a music artist, I often come across artist accounts which are verified and have a huge following but their engagement is crazy low and they don’t have any ‘similar artists’ page on Spotify.
In June, the Association of National Advertisers (ANA), a US industry group, published a blog post that estimated that ad fraud is costing US advertisers $120 billion each year. Hours after it was published, those statements were removed. John Wolfe, the ANA’s director of communications, tells WIRED that the figures were removed because they were out of date, but declines to provide any new figures.
Zhukov’s trial established how the trade in fake clicks works. Between 2014 and 2016, the so-called King of Fraud—a name he gave himself in a text message, revealed in court—ran an advertising network called Media Methane, which received payments from other advertising networks in return for placing brand’s adverts on websites. But the company did not place those adverts on real websites. Instead it created fake ones, spoofing more than 6,000 domains. It then rented 2,000 computer servers in Texas and Amsterdam and programmed them to simulate the way a human would act on a website—using a fake mouse to scroll the fake website and falsely appearing to be signed in to Facebook.
Other companies have taken matters into their own hands. In 2017 Uber sued one of its advertising agencies for charging it for ads that were not seen by real people or placed on real websites. The case started when Uber pulled all online advertising and discovered barely any drop in app instals or sales. Why? Some claim online ads target people who already plan on buying that product or service. Others argue that ads often target bots. But it’s hard to get a straight answer. Companies paying for advertising have an incentive to play down the number of bots to conceal how much cash they’re wasting. And cybersecurity companies have an incentive to exaggerate numbers to sell anti-bot products.
While the tech to spot bot activity on sites exists, companies can be unwilling to investigate traffic because, on-the-surface, the numbers make their websites look popular.
In marketing advertising we have yet to see such a flood of artificial activity. Many marketers believe the industry was corrupted around a decade ago, when a series of opaque middlemen entered the scene. Prior to that, advertisers would buy ads from publishers but now it’s typical for brands to approach a digital ad exchange – which facilitates the buying and selling of advertising from different ad networks – to place their adverts on huge numbers of websites and apps. And it is this part of the system that has become vulnerable to bots.
Making the matter worse is that the ad exchanges don’t want to solve fraud because fraud generates so much volume and the exchanges essentially make more money when more volume passes through their platforms. It’s not just the exchanges seemingly dodging the fraud issue. Advertisers are also reluctant as it can seem too embarrassing for them to admit that they purchased fraudulent inventory.
When it comes to fraud, it always seems to be somebody else’s problem.
