Fraudulent activities are rampant in the digital ad ecosystem, says former Forbes.com CEO

Forbes.com ex-CEO Jim Spanfeller, who is now the Chairman emeritus of the Internet Advertising Bureau, exposed the fraudulent strategies poisoning the digital ad ecosystem.

As stated on VentureBeat, "The onion is slowly and surely getting peeled back," referring to the current problems surrounding the digital ad business.

With all the massive, real-time, buying and selling of ad space and other forms of ads in thousands of different platforms, Spanfeller said, there is too little transparency in the digital ad ecosystem.

The digital ad business strategies are manipulative but are not illegal. But prominent advertising networks and other media websites are using plain deception to make extra money for their brands. Last year, a study from comScore found that more than half of the display ads shown in multitudes of campaigns from May 2012 to February 2013 were never seen by human beings. These ads were only seen by bots.

Meanwhile, SunTrust analyst Robert S. Peck showed information from WhiteOps and the Association of National Advertising claiming that there is significant fraud going on in the digital ad business. According to the data, some 25 percent of video ad impressions come from bots and advertisers lose over $6 billion due to fraudulent practices in the digital ad industry in 2015.

There are other industry observers who even believe that there is some kind of arbitrage going on in the digital ad business, which brings about the fraud in the system. There are publishers and ad networks that simply turn a blind eye on these questionable activities so that they can continue making money through fraudulent strategies.

The advertisers are the main losers. The publishers also get hit by these fraudulent ad strategies. Advertisers pay $10 per thousand impression while there are publishers that get a buck.

Spanfeller is not suggesting that there is an evil effort from ad agencies and exchanges to create these frauds, but with the massive scale of impressions, "you lose control over who's on the exchange."