Skewed analytics cost businesses as much as click fraud

New report shows that ad fraud, a $42 billion a year problem, and skewed analytics both cost businesses 4% of their revenue.

Netacea has published results from a new report that shows skewed analytics caused by bots cost businesses just as much as click fraud, despite click fraud’s much bigger profile.

Bots are used by hackers to buy goods before other customers, hack accounts using stolen passwords, check the validity of stolen card details and steal content or prices by bulk scraping. But even if they do not do damage directly, bots can skew data that leads marketing teams to make bad decisions. Analytics skewed by bots can hide what real customers are doing, making it impossible to target genuine audiences.

The report, The Bot Management Review: How Are Bots Skewing Marketing Analytics?, surveyed 440 businesses across the travel, entertainment, eCommerce, financial services, and telecoms sectors in the US and the UK. It found that click fraud, or ad fraud, affected 73% of businesses and cost an average of 4% loss in revenue. However, skewed analytics, while detected by slightly fewer businesses (68%), did a similar amount of damage, costing businesses an average of 4.07% loss in revenue. For the larger businesses surveyed for the report, with an annual turnover of over $7bn (25% of our respondents), 4.07% is $284,900,000 per year.

Ad fraud, where paid adverts are loaded and clicked on by bots rather than legitimate potential customers, is a phenomenon that receives far more attention than skewed analytics. Analyst house Juniper Research has calculated that ad fraud costs businesses $42 billion every year across the world, a number set to rise to $100 billion by 2023. Netacea’s research suggests that skewed analytics is a problem of a similar scale.

The report also found:

o Most businesses base at least a quarter of their marketing and other business decisions on analytics that are vulnerable to being skewed by bots.

o Over half of businesses have run special promotions (54%), ordered new stock (55%), or “burned through” a marketing budget (55%) because of incorrect data caused by bots.

o Most businesses think that DDoS protection (71%) and Web Application Firewalls (73%) will prevent bots when, in fact, they are ineffective against these specific attacks.

“Security teams are responsible for protecting websites from attack, but when it comes to bot activity it’s the marketing team that may be impacted first—skewed analytics affect their decision making and their effectiveness,” said Andy Still, CTO, Netacea. “Key to battling the issue of bot attacks is dialogue between these teams to ensure that any security solution put in place to stop bot attacks is also going to stop the bot impact on analytics.”

Earlier this year, Netacea’s previous report, The Bot Management Review: The challenge of high awareness & limited understanding found that automated bots operated by malicious actors directly cost businesses an average of 3.6% of their annual revenue, potentially causing losses of more than a quarter of a billion dollars ($250 million) every year for some businesses.

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