Advertisers have a new menace draining their ad budgets, except this time it’s legal, and encouraged by many ad networks

Arbitrage is a technique used by publishers to get low quality website visitors to click on high value adverts. According to Trey Vanes, Chief Marketing Officer at cybersecurity firm Polygraph, arbitrage is similar to click fraud.

“Advertisers pay an ad network like Bing Ads to display their adverts on publisher websites. Every time the ads are clicked, the advertisers pay fees to Bing Ads, and Bing Ads shares these fees with publishers. Click fraudsters are taking advantage of this system by creating scam publisher websites and generating huge amounts of fake clicks on the ads. This earns them hundreds of thousands of dollars each month, and can be devastating to advertisers, as the ad clicks are worthless, and never result in any sales,” said Vanes. “Arbitrage is very similar to click fraud. The publishers use click bait ads to send low quality traffic to their websites where the visitors are forced to view seemingly random adverts, and out of confusion, a percentage of these visitors click on the ads, earning money for the arbitragers and draining the ad budgets of advertisers.”

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Unlike click fraud, arbitragers do not force the visitors to click on the ads, however by purposefully targeting naive internet users with click bait ads, and then directing these visitors to unrelated, but high value, adverts on the publisher’s website, some of the visitors end up clicking on the ads, not fully understanding they are clicking on an advert.

“The arbitragers entire scheme targets unsavvy internet users who don’t fully understand what they’re clicking on,” said Vanes. “By using purposefully terrible ads to attract visitors to their websites – think of adverts such as ‘One weird trick’, you’ve probably wondered why these ads exist – the arbitragers attract naive internet users who end up on a website which has nothing to do with the advert they clicked on. Unsure of what to do next, a percentage of these visitors click on whatever is in front of them – in this case, it’s a high value advert.

“The main problem with this is these visitors offer little to no value to advertisers, so the end result is the advertisers pay for the clicks, and the ad network and publishers get paid. It’s a problem.”

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Unlike click fraud, which is illegal and sometimes results in criminal prosecution, arbitrage is legal and encouraged by many ad networks. “We’ve spoken to people who used to work for arbitrage websites, and they told us the goal was to fleece advertisers. To make matters worse, the ad networks recommended which high value adverts they should use, ensuring maximum profits for the ad network and arbitrager, and losses for the advertisers,” added Vanes.

Polygraph monitor the activities of click fraud gangs, learning the techniques they use to defraud advertisers, and how to prevent click fraud. Arbitrage offers a new challenge, since it is legal and encouraged by many ad networks, however Vanes has advice for worried advertisers. “Most ad networks let you block specific websites from displaying your ads. Advertisers can use this tool to block arbitrage websites. Be aware that arbitrage companies try to get around this system by changing their website addresses and subdomains, so it’s important you continuously update the list as new arbitrage websites are exposed.”